Africa’s infrastructure and recent climate report

30th November 2018 By: Saliem Fakir

It was my first attendance at the yearly Africa Infrastructure conference, held in Sandton this year on October 9 and 10. Infrastructure has always been an interest of mine but this year it has consumed all my time as I work with colleague and co-lead Dr Yemi Katerere on the African Ecological Futures initiative, a World Wide Fund for Nature project being done in collaboration with the African Development Bank, the Luc Hoffman Institute and the United Nations Environmental Programme.

The infrastructure conference provided a lot of information on developments in Africa. Africa’s infrastructure deficit is significant, given that the continent’s population will double in the next three decades, and by then most Africans will be urbanised. African governments are not keeping up with the demand emanating from the increasing population.

The challenge for Africa as far as infrastructure goes is threefold: to develop a strong pipeline of large-scale bankable projects, to have a balanced portfolio of infrastructure between the extractive industries and urbanisation needs, and to find a way to reduce the cost of capital through better governance and more sustainable government budgets.

Finance is not the issue, but risk-free projects are. Dealing with corruption and better public choices are the other issues.

Having a balanced infrastructure portfolio is a redistributive issue, as governments have to rely on stable and robust national proceeds to drive the supply of domestic infrastructure needs in mainly urban centres. But all this is also dependent on growing the national income share as it ‘trickles’ down to ordinary citizens.

Urban centres are the future engines of economic growth and where much of the youth bulge will be concentrated. This year, at its yearly gathering, the Mo Ebrahim Foundation highlighted the importance of public service, given that Africa is a continent with the youngest people in the world. A shift in the way public service is delivered and measured will have profound implications as to whether Africa meets its future needs or not.

A more balanced spread of infrastructure would not only serve to boost growth but also ensure the interlinkages between infrastructure for extractives and broader public needs can be facilitated at the outset.

The fact that infrastructure development is one-sided is most apparent in the energy sector, where there is a vast gap between the abundance of the resource and the lack of access to affordable energy.

Africa’s balanced and sustainable growth cannot be hinged solely on resource-linked infrastructure development. A World Bank study on African cities points out that urban areas are home to some 472-million people and the number will double in 25 years. The same report mentions that the rate of capital investment in new infrastructure in African cities lags far behind that of Asian cities, which has lead to fragmented and costly living conditions in many fast-growing cities.

Ensuring a balanced infrastructure development trajectory becomes pertinent as great and small powers compete for a long-term claim on a variety of resources on the African continent.

The scramble is characterised by intrigue and also brings about an almost zero-sum game between African countries as they too scramble for foreign direct investment. The scramble for resources can jeopardise a balanced infrastructure trajectory as deals that are negotiated end up being asymmetric rather than meeting public infrastructure needs for the long term.

While Africa’s total debt burden sits close to $200-billion at present – not all of which is to the Chinese, as some media reports may suggest – illicit flows over three decades that have been stashed in tax havens are now three times the debt of African governments.

Illicit money stashed in secret bank accounts alone can pay for Africa’s development. This is why the recommendations of the panel on illicit flows – chaired by former South African President Thabo Mbeki – needs to be implemented as a matter of urgency.

Greed and self-interest will mean that the general populace in Africa will not enjoy the fruits of their own abundant endowments. The inability to finance a structured and continuous infrastructure pipeline has possible unsettling implications for Africa’s ability to deal with climate change issues.

Infrastructure financing takes a notoriously long time to conclude because of political risk and bankability issues. Such delays reduce growth and may also not bode well for climate-resilient infrastructure.

In my travels throughout Africa, I see lots of empty space and underdevelopment. This should not belie the fact that the major cities are teeming with lots of people who are yearning for a prosperous future. And, even though the diverse African landscape is underdeveloped, the continent’s politics of redistribution needs to change if Africa is ever to experience its own nirvana.