The long winding road defining Africa’s infrastructure development

Experts agree that Africa can accelerate its development by investing in infrastructure which stimulates trade and economic growth. Yet, thirteen years after PIDA – the Programme for Infrastructure Development in Africa was launched, research by the Economic Commission for Africa (ECA) indicates that Africa’s infrastructure deficit reduces economic growth by 2% annually and cuts productivity by up to 40%.

To catch up, an impressive list of 69 PIDA projects is now in place, adopted by the African Union in 2021, with an estimated cost of US$160.8 billion. The projects cover transport, energy, water and digital connectivity. If fully implemented, this consolidated infrastructure programme for the continent – PIDA – would facilitate trade, transform connectivity and foster inclusive growth.

“These projects are about empowering people – connecting farmers to markets, entrepreneurs to customers and students to access educational opportunities,” according to Claver Gatete, Executive Secretary of the Economic Commission for Africa (ECA), speaking at the recent 8th PIDA Week held in Addis Ababa, Ethiopia, in November 2024.

The journey towards the 69 PIDA projects has been decades in the making, according to infrastructure expert, Robert Lisinge, Director of the Technology, Innovation, Connectivity and Infrastructure Development Division at the ECA.

“Convinced of the need for a continent-wide transport network, the Trans-African Highways network (TAH) was conceived in the 1970s and the African Transport Policy programme in the 1980s. TAH became part of the New Partnership for Africa’s Development (NEPAD) Short-Term Infrastructure Action Plan after African leaders realised that an infrastructure programme was needed to fast-track Africa’s development. PIDA was developed in 2011 as Africa’s Marshall plan to for a consolidated infrastructure programme for the continent,” he says.

ECA has played a key role in developing the second PIDA Priority Action Plan (2021-2030). A task force mandated by the PIDA Steering Committee was appointed to select projects for implementation. ECA, as the Secretariat of the task force, together with other members of the task force, developed the criteria for selecting the projects which were presented to African Heads of State.

Linking large infrastructure projects to development outcomes

However, the challenge of physical assets- roads, rail, etc. that are either incomplete or that are not interlinked in ways that contribute to real development outcomes, such as the opportunities found in the AfCFTA, worries the ECA Executive Secretary, Mr. Gatete and his team of infrastructure experts.

For this reason, “creating robust and integrated infrastructure is key to realising the AfCFTA’s transformative potential,” he says and explains that the Lamu Port, South Sudan-Ethiopia Transport (LAPSSET) Corridor, which connects Kenya, Ethiopia and South Sudan, is an example of the type of linkage that enhances connectivity, reduces trade costs and catalyzes regional economic integration. It’s about translating big visions into real outcomes.

According to Gatete, the AfCFTA represents a market of 1.3 billion people and a combined GDP of over US$3.4 trillion, but intra-African trade accounts for only 15% of the continent’s total trade. Studies by ECA also project that adequate infrastructure and implementing the AfCFTA could increase this figure to 33%.

“Infrastructure is the game changer. It’s the glue that can make a real difference to our economies – moving from potential to connecting dreams and transforming lives – he says and adds that the AfCFTA is an opportunity to develop road and railway networks to increase intra-Africa freight demand by 28%. Estimates by the ECA also show that Africa will need to upgrade over 60,000 kilometers of regional roads and complete the missing links in the Trans-African Highways to meet the increased volume of trade.

Lisinge, for his part, sees a two-way relationship between transport and trade and states, “good transport will facilitate trade, and if the quality of the infrastructure is good, it means the cost of transport is lower and that increases trade and boosts intra-African trade.”

Lisinge, who has led the research on this two-way relationship says that by 2030, 1,844,000 trucks for bulk cargo and 248,000 trucks for containers would be needed under the AfCFTA. While 97,614 wagons for bulk cargo and 20,668 wagons for container cargo would also be required by 2030. This increases to 132,857 and 36,482 wagons respectively if planned infrastructure projects are implemented. Furthermore, 126 vessels would be required for bulk cargo and 15 vessels for container cargo by 2030 while 254 cargo airplanes would be required.

Wherewith the financing?

The financing, while daunting can be achieved by attracting private sector participation through innovative de-risking mechanisms. The success of PIDA lies in our collective resolve to act decisively, mobilize the necessary resources, and align our efforts with the broader aspirations of the AfCFTA,” says Gatete.

ECA has developed a partnership strategy for the implementation of PIDA. This follows the realization that development partners have their own projects which should not derail the implementation of PIDA. For example, the Chinese have the Belt and Road Initiative, and the Europeans have the Global Gateway.

“PIDA should be the building block for infrastructure partnerships with non-African countries and organisations,” Lisinge says, noting that international partners are keen to connect to the rest of the world including Africa. Hence, it would be strategic if they invest in PIDA projects.

Already, the Global Gateway a European strategy to boost smart, clean and secure links in digital, energy and transport sectors and to strengthen health, education and research systems across the world has prioritised support to some projects that are part of PIDA, such as the highway between Lagos and Abidjan in West Africa. The US and the EU are supporting the development of the Lobito Corridor, which links Angola, Zambia and the Democratic Republic of Congo.

He adds that “PIDA is a unique platform for engagement. The infrastructure challenge in Africa is much bigger than its 69 projects and there is a need to prioritise, with countries able to have the leeway to implement their own projects,”.

Closing the gap

The African Development Bank (AfDB) notes that between $130–$170 billion per year is required to fund infrastructure development. In other words, we have a financing gap of up to $108 billion per year because of poor regulatory frameworks and red tape. AfDB has rolled out a financing strategy which identifies different options for financing PIDA projects. Member countries can raise domestic resources from national budgets or borrow from the market.

But, as cautions Mr. Lisinge, finance has been a critical challenge for infrastructural development in Africa and many countries are in a financial dilemma. They are unable to tap into domestic resources for infrastructural development, and international loans are expensive. Besides, many countries are experiencing poor credit ratings, which means the cost of borrowing is much higher for them in the financial markets.

“Countries can make use of the NEPAD service delivery mechanism which helps in developing and translating ideas to concrete projects. The mechanism helps in project preparation and feasibility studies to improve economic and financial viability to attract investors,” he says.

“Furthermore, beyond development finance institutions, countries can tap into green funds that support green projects and private-public partnerships are also an option for funding infrastructural development in Africa where the government and the private sector can come together, share the risks and combine resources to implement commercially viable projects,” he adds.

Source: ECA