A total of $23-billion a year needed to be invested in power infrastructure development in Africa over the next ten years to enable the continent to become internationally competitive, John Rocha, the senior project manager for the New Partnership for Africa’s Development (Nepad) Business Foundation said at the recent African Renaissance Festival.
“Because of the huge upfront costs, the private sector has shied away from investing in the sector but, in many cases, African governments cannot afford to foot the bill themselves,” he said.
“Foreign assistance is, therefore, imperative.”
While international response to Nepad infrastructure had been initially lukewarm, it, nevertheless, improved in the latter part of the decade, Rocha said.
There were at least 20 bankable projects in Africa, and China, in particular, had
responded to the opportunities and had
invested more than $10-billion.
Africa’s biggest advantage is its natural resources, and a study commissioned by Nepad in 2005/6 found that these must be used to attract private-sector investment in development corridors where large-scale investments would be promoted.
Rocha pointed out that, in the Maputo Development Corridor, there had been an opportunity for an aluminium smelter, which had resulted in a highway being built between Gauteng and Maputo, at a cost of $5-billion.
Two corridors are currently in the pipeline – the central corridor, which would soon go out to tender and would comprise a refinery and oil storage tanks in a plan to upgrade the Dar-es-Salaam port – and the $1,6-billion north–south development corridor, in Zambia.
Rocha said there were four key priorities to Africa’s infrastructure development: energy, informationa and communication technology (ICT) and transport, and water and sanitation.
“While the Inga dam, in the Democratic Republic of Congo (DRC), has huge potential and can supply enough energy for the whole of Africa, as well as other countries, the continent is still suffering from an energy crisis,” he said.
“In fact, Spain uses more electricity than the entire African continent.”
The problem with the ICT sector in Africa was that it was very expensive compared with the ICT sectors of the developed world and contributed significantly to the cost of doing business.
However, Rocha said the submarine cable running up the west coast of the continent would connect African countries directly with their destinations and thus help reduce business costs.
ICT companies had, however, invested in the continent while there were serious constraints in other sectors.
Transport was also a huge cost to business and it was sometimes cheaper to fly to London than to other African countries, Rocha said.
High transport costs added to the cost of building materials, making it nearly impossible to build roads in the DRC, with a bag of cement, for example, costing $4 in South Africa, compared with $25 in some other African countries.
Rocha said there were tremendous opportunities for engaging with governments on the need for rail infrastructure upgrades.