Africa needs to spend US$ 93 billion per year on Infrastructure

A new study by the World Bank says sub-Saharan Africa needs to spend US$ 93 billion per year on infrastructure to maintain growth - equivalent to about 15% of GDP. The Bank estimates that that current under investment in electricity, water, roads and information & communications technology (ICT) is reducing economic growth by two percentage points each year and reduces business productivity by as much as -40%.

The study, Africa's Infrastructure: A Time for Transformation, found that a group of 24 sub-Saharan African countries already spends US$ 45 billion per year on infrastructure - a higher figure than previously estimated. Most of this is domestically financed. However, the study also found that this figure could rise by another US$ 17 billion per year with the elimination of waste and efficiency improvements.

This leaves a gap of US$ 31 billion per year, to meet the US$ 93 billion investment that is needed. The Bank says more than half this amount needs to be directed to the power sector, and adds that water supply infrastructure in the region is also in a fragile state.

World Bank vice president for Africa, Obiageli Ezekwesili said, "This report shows that investing more funds without tackling inefficiencies would be like pouring water into a leaking bucket. Africa can plug those leaks through reforms and policy improvements which will serve as a signal to investors that Africa is ready for business."

Sectors

The report describes the region's creaking energy infrastructure as, "The single largest impediment to economic growth." It says that the 48 sub-Saharan countries have a generation capacity of just 68 GW - about the same as Spain's but that 25% of this is unavailable because of aging plants and poor maintenance. At the same time, the cost of US$ 0.18 to generate 1 kilowatt-hour of electricity is high by global standards.

On transport, the report highlights the shortcomings of Africa's rural roads. It says only 40% of rural Africans live within 2 km of an all-weather road, compared to 65% of the population in other developing regions. In addition, delays due to unnecessary bureaucracy at borders means the overall speed of freight movement is less than 12 km/hour.

In the water sector, the report highlights that less than 60% of Africa's population has access to drinking water, and that the pace of irrigation development is poor. In the last 40 years, Africa has added only 4 million Ha of newly irrigated land compared to 25 million H in China and 32 million Ha in India.