regional infrastructure in sub-saharan africa: challenges and

Regional Infrastructure in Sub-Saharan Africa: Challenges and Opportunities

Presentation Praful Patel Moderator Hal Wackman Commentators Maryvonne Plessis-Fraissard (Transport), Letitia Obeng (Water), Ananda Covindassamy and Eugene McCarthy (Energy) 1818 Society � World Bank Room MC10-100 20 February 2014

1 | P a g e A f r i c a n R e g i o n a l I n f r a s t r u c t u r e


Regional Infrastructure in Sub-Saharan Africa: Challenges and Opportunities This note has been prepared as a background note for the 1818 Society presentation of 20 February 2014 on the above topic. The note includes, as an attachment, a paper written by Letitia Obeng and Praful Patel (Africa2050: Regional Infrastructure) as part of a study on a 2050 vision for Africa by the Centennial Group in 2013. Together, these two documents are intended to provide an overview on regional infrastructure in Africa. Background. Africa is the least connected continent as clearly evident from the 2012 NASA satellite image of the earth at night on the cover page of this note. This is costing Africa a cut in its GDP estimated to be between 2 to 3%. Progress on the ground on improving connectivity (via better regional infrastructure and integration) has been and continues to be grossly inadequate. All of the key stakeholders – the African leaders, countries and donor agencies have grappled with this challenge, all with limited success. Reasons for the lack of progress are complex and varied: inadequate data, lack of programs and plans, weak political commitment, inadequate financing, weak governance environment, corruption, environmental issues etc. In the 2000s, two major positive developments gave fresh impetus to Africa’s infrastructure agenda– the World Bank-sponsored AICD diagnostic study which filled the data gaps and produced an estimate of financing required for the continent’s infrastructure development ($93 billion per year), followed by the AFDB-sponsored Program for Infrastructure Development in Africa (PIDA) study which identified priority projects for immediate implementation. This note provides a brief overview of the PIDA study – its origins, what it produced and the progress made since its approval by the AU Heads of States in January 2012. The overview is followed by some thoughts looking ahead. What is PIDA? Building on several past and ongoing initiatives, the AUC, NEPAD Secretariat and ADB (PIDA Sponsors) jointly launched PIDA. The continent-wide infrastructure program’s objectives were to a) establish a strategic framework for the development of regional and continental infrastructure in four sectors (Energy, Transport, Information and Communication Technologies, and Transboundary Water Resources); b) establish an infrastructure development program over a time horizon up to 2040 (with a focus on the immediate term up to 2020); and c) prepare an implementation strategy and processes, including in particular a priority action plan. Following a bidding process in early 2010, a French firm, SOFRECO was selected as the lead consultant to carry out the PIDA Study. The Study started in June 2010 was completed by the end of December 2011. It was endorsed by the African Heads of States in January 2012. What are the main outputs of PIDA? The key output of PIDA is what is called he Priority Action Plan (PAP), a list of 51 immediately actionable projects across four key infrastructure sectors for implementation between 2012-2020. Unlike other such efforts, this one has true African ownership, as it was formulated with very close consultation from the outset with all key stakeholders -- sector ministers, the Regional Economic Communities (RECs), the power pools, the water basin organizations, and others. Approval by the AU Heads of States in January 2012 represents a sign of strong political commitment. Besides identifying priority projects and associated basic technical and financial data (initial feasibility analyses) PIDA’s other important outputs include several technical contributions such as approaches to raise financing, PPPs, institutional models etc. Priority Action Plan (PAP) for 2020-2040 Presented below is a brief overview of the 51 projects identified in the four sectors for the immediate term (2020). This is the heart of PIDA and provides a good point of departure for any forward-looking discussion of regional infrastructure in Africa.


Overall PIDA envisages investments of US$ 360 billion up to 2040 in the critical infrastructure sectors of energy, transboundary water supply, transport and information and communications technology(ICT). This is reflected on the maps of Africa (all from PIDA) in the summary below. From that broader long-term program, PIDA identified a priority list of 51 investments totaling $67.9 billion for implementation for the short-term period unto 2020. PIDA: Priority Action Program Energy Transport Water ICT Total # of Projects 15 24 9 3 51 Cost ($ b) 40 25 2 0.5 67.5 % of total cost 59.2 37 3 0.8 100 To illustrate what these projects focus on, the summary below presents details on the top 3-5 priority investments in each of the four sectors.

Energy 15 projects including major hydroelectric projects, and power pools to meet the forecast increase in demand. One regional petroleum products pipeline is also included. Total cost $40 billion

Energy Sector Illustrative List of the top 5 projects in Advanced Stages of Preparation and/or Readiness for Funding and Implementation (source: PIDA) Project Description Cost

(US$ millions)

Countries Region

1 Great Millennium Renaissance Dam

5,250 MW plant to supply domestic market and export electricity on EAPP market

8,000 Ethiopia, Nile River Basin

Eastern

2 Uganda-Kenya Petroleum Products Pipeline

300 km long pipeline for a lower cost mode of transport of petroleum products

150 Uganda, Kenya Eastern

3 Sambagalou 128 MW of hydropower capacity,930 km from the mouth of the Gambia River to supply Senegal, Guinea, Guinea Bissau and Gambia

300 Senegal, OMVG Western

4 Batoka Hydroelectric plant with a capacity of 1,600 MW to enable export of electricity

2,800 Zambia/Zimbabwe Zambezi basin

Eastern

5 Kaleta Hydropower generation of 117 MW 179 Guinea – OMVG Western


Transport 24 projects focused on connectivity, corridor modernization, ports and railways modernization, air transport modernization Total Cost $25 billion

Transport Sector Illustrative List of Top 5 Projects in Advanced Stages of Preparation and/or Readiness for Funding and Implementation (source: PIDA) Project Description Cost (US$ m) Countries Region 1 Yamoussoukro

Decision implementation

Accelerate Yamoussoukro Decision implementation by identifying countries that are ready to fully implement it, and discussing and agreeing with both their governments and airlines to launch the voluntary club on a full membership basis

5 Africa Continental

2 Abidjan-Lagos Coastal Corridor

This program would modernize the most heavily travelled ARTIN corridor in West Africa (trade facilitation, OSBPs, capacity enhancement and implementation of PPP) for five countries: Côte d’Ivoire, Ghana, Togo, Benin and Nigeria

290 Nigeria, Benin, Toga, Ghana, Côte d’Ivoire

Western

3 North-South Multimodal Corridor

This program is designed to modernize the highest priority multimodal ARTIN corridor in Southern Africa on modern standards and facilitate travel of people and goods across the borders between South Africa, Botswana, Zimbabwe, Zambia, Malawi and DRC

2,325 DRC, Zambia, Zimbabwe, South Africa, Mozambique

Eastern

4 Central Corridor

This program would modernize the third priority ARTIN corridor in East Africa and facilitate travel for people and goods across the borders between Tanzania, Uganda, Rwanda, Burundi and DRC

840 Tanzania, Uganda, Rwanda, Burundi, DRC

Eastern

5 Trans-Maghreb Highway

This program is designed to improve travel for people and goods across the Maghreb countries, which have had their trade and travel limited by artificial barriers between countries at the borders. This program would design and implement a smart corridor system along the highway and install one-stop border posts

75 Morocco to Egypt through Algeria, Tunisia and Libya

Northern


Water Resources 9 Projects targeting multipurpose dams, capacity building of lake and river basin organizations and water transfer Total Cost $2 billion

Transboundary Water Resources Sector Illustrative List of Top 3 Projects in Advanced Stages of Preparation and/or Ready for Funding and Implementation . (Source: PIDA) Project Description Cost

(US$m) Countries Region

1 Nubian Sandstone Aquifer System

Implementation of regional strategy for the use of the aquifer system

5 Nubian Sandstone Aquifer System

Northern

2 Fomi Hydropower station in Guinea with irrigation water supply for Mali and regulation of the Niger river (nine countries)

384 Niger River Basin

Western

3 Lesotho HWP Phase II – water transfer component

Water transfer program supplying water to Gauteng Province in South Africa

1,100 Orange-Senqu River Basin

Southern


ICT 3 Projects focusing on capacity building, land interconnection infrastructure, and internet exchange points – each country connected to two different submarine cables. Total Cost $0.5 billion

ICT Sector Illustrative List of Top 2 Projects in Advanced Stages of Preparation and/or Ready for Funding and Implementation . (Source: PIDA) Project Description Cost

(US$ millions)

Countries Region

1 ICT Terrestrial for Connectivity

This program has two main components: secure each country connection by at least two broadband infrastructure and ensure the access to submarine cable to all landlocked countries

320 Africa wide

Continental

2 Internet Exchange Point (IXP) program

The aim of this program is to provide Africa with adequate internet node exchange to maximize internal traffic

130 Africa wide

Continental

Status of PIDA It is noteworthy to mention that the PAP was considered to be an entirely do-able program, both technically as well as financially. The total cost represented less than 1% of Africa’s GDP in terms of annual outlays for the period up to 2020. So why has progress on the ground slow? At the time the AU Heads of States approved PIDA, a number of problems had already been identified:

(i) weak connections between the economic analysis and the prioritization of projects; (ii) inadequate discussion of PPPs and private investment options (despite it being a PIDA

priority); (iii) lack of clarity in institutional architecture for implementing the PAP - major confusion

over how the projects would be prepared, who would do that, the role of the RECs, etc; (iv) inadequate dissemination of information on PIDA including lack of user-friendly

summaries of projects. Lack of resolution of these problems is the main constraint to moving faster on implementing the PAP.


Key developments over the last two years1. Notwithstanding the overall assessment of unsatisfactory progress, some positive actions undertaken by AfDB that together have the effect of filling in many of the major PIDA gaps should be acknowledged. In mid-2012, AfDB commissioned Cambridge Economic Policy Associates (CEPA) to do a review of all the donor-supported project preparation facilities that might be able to help prepare the PIDA infrastructure projects. The review concluded that there really was not much accessible money available for preparation. It also concluded that even AfDB's prep facility, the NEPAD Infrastructure Project Preparation Facility (IPPF) needed to be completely reorganized, much better staffed and funded, and moved out of AfDB. CEPA recommended that donors consolidate their preparation funding and put it into a single, big facility, like a revamped IPPF. In May 2013, AfDB presented a paper done by the Boston Consulting Group at the World Economic Forum. It talks about PIDA, moving into a long discussion about how to do detailed prioritization, how to prepare the projects, how to finance them, how to bring in private finance, etc. and ends with a reference on the need for a more effective and large financing facility for African infrastructure. In July 2013, AfDB announced the launch of Africa50, the facility referred to in the BCG report. This is supposed to be a giant new facility that will prepare and finance big "transformative" infrastructure projects, like those identified by PIDA. It will focus particularly on projects that need both public and private sector finance. It is supposed to be a separate corporate entity as recommended by CEPA . The idea of a project preparation facility is good and timely. But for it to be successful and sustainable, much more work is needed. Currently, it is unclear how this would be pursued. From what has happened subsequent to completion of the PIDA study, AfDB’s posture implies they believe PIDA has served its purpose -- it told the world that Africa is serious about transformational infrastructure (G20 documents talk about how PIDA is one of the first regional attempts to identify these projects). AfDB seems to see PIDA as old news. Africa50 mentions PIDA, but then also refers to another list of 76 projects that "has been identified" for priority action. This is unfortunate – it places an avoidable roadblock on the perfectly do-able agenda embodied in the PAP. It repeats the same old problem faced by Africa’s regional infrastructure agenda: Lack of attention and focus on implementation of what is on the table rather than constantly moving on to new things and studies. Current Status of PAP This note does not attempt to assess the status of individual projects and programs listed under the PAP because of lack of current information which in itself represents a problem. Such an assessment would be useful to monitor actual developments in each of the priority areas, whether prompted by the PAP or otherwise. That would in turn help identify specific constraints to next steps on implementation. AfDB should give priority to such monitoring and timely sharing of the results and analysis of implementation of the PAP. To cite example of energy2, of the 9 hydro projects, two are under construction, the Great Millennium Renaissance Dam in Ethiopia (but PIDA has had pretty much nothing to do with this)

1 Based on information provided by James Leigland 2 Based on information provided by Anton Eberhard


and Kaleta in Guinea. Both have Chinese funding. AfDB appraisal reports have been completed for a few of the other hydro projects, for example, Ruzizi and Rusomo , and recommendations were made in November 2013 for AfDB loans. The Lesotho Highlands Phase 2 project is 2 years late. And talks continue on Npanda Nkuwa in Mozambique and Inga in the DRC – both great projects but complicated by multi-country off-take agreements and associated financing. There does not appear to be much progress on any of the transmission or pipeline projects, again highlighting the difficulty of cross-border projects. Looking Ahead: Some Thoughts The above section is entirely focused on PIDA, summarizing its origins and taking stock of progress on implementation since its approval by the AU Heads of State January 2012 The following section summarizes what we (the team that worked on Africa 2050 study done by the Centennial Group last year) formulated as a vision for regional infrastructure in Africa needed to achieve the 2050 overall vision for the continent. The vision can be described in terms of what Africa will look like in 2050 if it takes timely actions on its regional infrastructure agenda. In other words, what success will look like: Today è In 2050 Continent with 54 countries and myriad and often overlapping regional entities

Continent with six subregions, each with seamless borders within the subregion and interconnected regionally for movement of goods and people

54 separate markets, majority small unviable markets

6 subregions representing viable markets comparable to global competitors

Share of world trade 2% Share of world trade 4-6% Limited/low level of job creation Up to 20 million new jobs will be created

for the construction, operation and maintenance of infrastructure projects, with many more millions created indirectly increased economic activity

Intra-African trade shares very limited – 11-12%

Intra-African trade shares will grow to 25%

Water resources and basins not managed well

Water resources and basins will be secured for future generations

Water for urban centers – no cities in the continent with 24/7 water

Achieve world standards of access to 24/7 water

ICT bandwidth lowest among regions ICT bandwidth will handle demand swells by a factor of 20

Access to electricity limited Access to electricity will be no less than 60% in any African country, providing access to an additional 800 million people. Global standards for access to 24/7 power.

Inefficient transport logistics for goods Achieve or exceed world standards for transport logistics, e.g., number of days to reach ports of export, air connections, efficiency of ports etc.

Infrastructure services performing below par have created challenges that need to be addressed also at the country level to enhance their competitiveness and ability to trade as well as for supporting domestic, agricultural, education, and health needs in rural and urban space. Continent-wide action is also needed. Costs need to be competitive enough to make doing business attractive, logistics need to be smooth, regulations and enforced legislation need to be in place, and barriers to efficiency in all infrastructure areas need to be removed. Energy – delivery of electricity services has been the biggest infrastructure challenge limiting opportunities for businesses and industries to function effectively. Business also needs access – transport services, 2 Based on information provided by Anton Eberhard


means of communication, and water for industrial and agricultural needs. Successful businesses can engage in trade – a discussion of how transport can affect trade highlights the importance of infrastructure for eventually enhancing jobs. The needed improvements are ones that can be made. Trade—whether within countries, with neighbors, or global—means moving goods, people, and data. The cost of transport and related logistics is thus a key element in being competitive. Africa has high transport costs. Part of this is related to inadequate infrastructure but most is attributable to polices and how infrastructure is managed. Logistics performance— where Africa has three countries in the global top 50 (South Africa, Tunisia, and Morocco) but 27 in the bottom 50—is one indicator of such performance. International norms for port performance (the number of days to get a container out) are 3–4 days from arrival. Durban, Casablanca, and Tunis are close to such performance, but the average for Africa’s other large ports is 16 days. Land transport costs are another area where transport cartels in much of the continent lead to high costs. Finally, air transport costs are particularly important for tourism, business and high-value products. Opening access and eliminating ownership restrictions would increase the number of flights, reduce fares, and improve service, as Morocco’s open sky policy has demonstrated. Africa will not be able to achieve the above nor any of the scenarios laid out in various visioning exercises done recently without well developed and integrated regional infrastructure. The continent today faces serious deficits in its regional and national infrastructure. The agenda of what needs to be done is now well documented and appreciated. The PIDA Priority Action Plan summarized earlier (and presented in greater detail in the Attachment to this note) serves very well as a robust description of that agenda. The imperative now is to give a singular focus on the task of building the priority infrastructure.


Regional Infrastructure in Sub-Saharan Africa: Challenges and Opportunities 1818 Society Presentation – 20 February 2014 Attachment: Background Paper on African Regional Infrastructure Africa 2050: Regional Infrastructure3 Letitia A Obeng and Praful Patel Introduction The crucial role of Infrastructure in economic growth is universally acknowledged. Power, transport, water, and telecommunications are the foundation of every development endeavor affecting the livelihood and quality of life of every person. The challenge for Africa is to achieve regional integration of its infrastructure towards turning the continent’s geography of 54 separate countries into an economic and social advantage. The continent is highly fragmented, with a large number of landlocked countries and generally poor transport and communication infrastructure. Effective regional integration of the continent’s strategic infrastructure would lead to two critical success factors for the continent’s future. First, it would enable the formation of viable sub regions of groups of countries with “porous” or seamless borders within individual sub regions thereby creating the space for larger, more viable markets. Second, the combination of such sub regional markets and regional integration of the continent’s trunk infrastructure would enable Africa to become much more competitive globally. This chapter highlights some key opportunities for the continent to evolve exponentially, presents a vision for 2050 focusing specifically on the role that regional infrastructure can play, recommends some key actions towards realizing that vision and highlights some challenges that need to be addressed. The chapter lays out what can and needs to be done by 2020 towards the 2050 vision rather than presenting different scenarios. A Continent of Opportunities The relationship between Africa and the rest of the world is evolving and could take different paths. The continent has been described as having “the greatest room to boom”4 building on two centuries of global progress. Health and education levels have been improving and globalization has made the world “smaller” for all. There are opportunities here to bypass or leapfrog the development paths of other continents. However, this will only happen with real leadership, crucial to the success of the continent in the years to come. Despite the current challenging infrastructural base in many countries, the continent is growing and opportunities to evolve are being taken every day. The future population of the continent will be vibrant and youthful, living primarily in urban space, with the means to innovate and contribute to and lead the global economy. Regionally integrated infrastructure will provide lasting support to the them in their endeavors. The continent already has entrepreneurs, innovators and risk takers who are contributing to a new development agenda. For example, Equity Bank of Kenya which previously opened its services to farmers and other rural dwellers has now taken a second innovative step to establish banking by mobile phone. It advertizes on its website that customers can access their accounts via mobile banking known as “Eazzy 24/7”. With a development focused regional governance system and a friendly global context, as indicated by Figure 1 below, Africa’s renaissance could be truly powerful. Investments in regional infrastructure services will lead to reduced energy costs, increased access, with much reduced transport costs boosting intra-African trade as well as external trade, water and food security, increased global connectivity and subsequently strong and vibrant socio-economic growth. There is momentum towards that better future and now is the time to seize it.

3 This paper is part of a study conducted by the Centennial Group in 2013 on a vision for Africa in 2050. 4 Charles Robertson The Fastest Billion, Renaissance Capital page 7, (2012)


Figure 1. Alternative Futures for Africa5 - Horizon 2040

Indeed, the countries of the continent have an unusual resilience. During the recent global financial crisis, 13 African countries showed consistent albeit slower growth6 overcoming hardships that more developed countries succumbed to. The continent could look forward to long-term, sustained GDP growth averaging 6.2% per year, resulting in a GDP of 5 to 6 times current GDP in 40 years or so. In order to have a regionally integrated continent, a key pre-requisite will be well functioning shared regional infrastructure which goes together with robust national infrastructure systems and services. At the national level, there would have to be functioning institutions, good neighbor relations, and comparable systems (see later). Filling the Infrastructure Deficit at the Regional Level It has been predicted that developing countries will dominate global trade in the future. Africa is currently the least developed continent in the world in terms of regional integration of infrastructure. For most countries also, infrastructure continues to be a binding constraint on economic growth and productivity. The adverse impact of deficient infrastructure translates into a significant percentage loss in GDP7. The continent has to address this issue seriously because of the potential it has for boosting trade, competitiveness and markets for all countries of the continent, but also particularly for the landlocked and small island states. Regional integration of infrastructure provides for larger and more competitive markets, reducing prices, helping to lower the costs of essential transport, communications, electricity and fosters scientific and technological research. Africa’s opportunities for integrating regional infrastructure have not been fully tapped in the past for a variety of reasons including the complexity of financing projects across different sovereign countries, inadequate capacity for implementation and lack of well-prepared projects. A regionally integrated continent would have free movement of labor and capital and full cooperation on transport, management of shared water resources, electricity and broadband connectivity ensuring sustainability of development efforts in water supply, sanitation, food, education, health services and industrial growth. Experience in other regions shows that integrated regional and continental infrastructure networks would increase efficiencies, accelerate growth and help Africa’s rise as a global pole. In fact, if the continent as a whole were to attain the current level of infrastructure in Mauritius, for example, this would mean an over 2% increase to annual GDP (AICD). The vision 2050 presented below will be realized if the demands for development of the four main infrastructure sectors (energy, ICT, transport and water resources) are met. A Vision for 2050 Africa is on the rise. By 2050 Africa will be a vibrant continent. Interlinked by regional infrastructure, the continent’s economic potential will be fully realized. At least a quarter of its overall trade in goods and services will be within the continent, fully supported with improved regional transport, internet/tele-

5 Jakkie Cilliers, Barry Hughes, Jonathan Moyer, African Futures 2050 The next forty years (2011) page 88 6 Mo Ibrahim foundation African Agriculture From Meeting Needs To Creating Wealth, Tunis, November 2011 (revised edition) 7 Estimated in some recent studies to be 2-‐3% of GDP


communication, energy distribution, and water resources management. The prosperity of the continent’s dynamic and innovative population will be a reality. Each of the infrastructure sectors contributes to the continental vision, in different ways depending on the opportunities and potential for development. Energy Vision for 2050: the majority of the continent’s population to have 24/7 electricity, access to modern energy services, with energy security for social and economic development. There would be physical energy integration across the continent for win-win benefits for all. Every country would have an electricity access rate of more than 60% providing access to an additional 800 million people. Key steps towards achieving this: Ø generation and transmissions that are shared regionally and are clean; Ø oil and gas pipeline projects and refineries that have requisite capacities and; Ø renewable energy sources that are in line with current global considerations. ICT Vision 2050 The 2050 vision for information and communication technology services is that every individual, business, organization and government entity will have access to mobile telephony and broadband that is reliable and affordable. African broadband demand will have been satisfied at least cost while leapfrogging technology as appropriate and assuring security of access. The quality of all services will be reliable and they will be secure. Key steps towards achieving this: Ø ICT’s contribution to GDP across the continent will need to be doubled from 5% to 10% by 2025; and Ø there will be a working legal and regulatory framework in each country supportive of an integration of

competitive services (both mobile and broadband) across the continent. Transport Vision 2050 The 2050 vision for transport would be free transport/movement of goods and passengers safely and cost effectively across the continent supporting national and regional economies. Key steps towards achieving this: Ø access to a range of modern, safe and secure transport services (road, rail, river, lake, air, ports, and

safety) will be maximized while minimizing any negative impact on the environment. Ø transport safety will be improved. Water Vision 2050 The 2050 vision for water is that countries will be water-secure allowing for sustainable socio-economic development. The increasing demand for water from a rapidly growing population, for its supply, food, health, energy, industrial needs will be met, whilst ensuring that adequate, social, environmental and economic protection are met. Key steps towards achieving this: Ø there will be improved knowledge of opportunities for sharing and managing water resources for win-win

benefits for all stakeholders; Ø there will be increased understanding of the benefits and challenges to the continent of climate change

and the need for adaptation; Ø integrated management of water resources by all national development sectors will have to be a reality,

making it possible for regional cooperation on shared water resources to happen; Ø additional storage large, small and multipurpose will be needed to meet increasing water demands while

protecting people and the environment and; Ø there will be increased and improved financing and institutional support for water development and

management across national borders.

The visions for the individual infrastructure areas above are specific to each area but they are of course closely linked in terms of their role in overall outcomes. While it would be difficult to single out a specific priority, the one intervention that would have a transformative overall impact on the continent including on realization of all the visions above, it would be ensuring that there is broadband access across the continent. This would transform the connectivity with the world, providing access to knowledge, tertiary education, agricultural markets, opportunities to innovate, to educate, and to do business. A pre-requisite for this is of course would be 24/7 local power for the internet. Some of the general outcomes that would be expected from countries investing in regional infrastructure would be increased and improved access for people, domestic, agricultural and industrial goods and services. Box 2 below highlights these outcomes.


Box 2. General Outcomes from Regional Infrastructure Development Key among the benefits of regional infrastructure are: § Increased development of value-added industries replacing goods and services imported from overseas. International trade

volumes increasing at growth rates of 6-8% per year with higher growth rates for container traffic; Greater regional integration as regional trade and transport shifts from overseas partners to regional partners

§ Internet broadband connectivity across the continent § 24/7 access to electricity for both rural and urban populations for homes, education, industry, business § Increased efficiency and viability of the regional and continental transport networks (roads, airlines, waterways, rail) and services

(ports) leading to the realization of suppressed demand and efficient transport of people and goods § Well-managed water resources allowing for food, domestic, industrial and energy needs to be addressed both nationally and

across borders in transboundary basins (built on integrated management of water resources) § Water security in most countries of the continent

Regional Infrastructure Services: Pre-Requisites Building Towards 2050 There are several prerequisites that need to be in place for the visions above to be realized. These are discussed below. Subsequently, the current situation in each of the four areas being discussed is briefly presented, followed by the steps towards realizing the vision. Then high priority investments needs are briefly presented as an illustration of the kind of investments that need to be made in the next 10 years and details are provided in the Annex. Finally, a schematic map of Africa is presented to show how the continent would look like in each of the sectors by 2040. Harmonization In order for the vision to be realized, there would have to be: § progress in the continent’s regional cooperation strategies would be conducted in a manner consistent

with WTO guidelines on regionalism within the multilateral trade system and minimizing trade diversion. Furthermore, each country would have updated its policy and regulatory frameworks to ensure successful partnering with neighboring countries;

§ harmonization of economic policies to facilitate cross-border trade and investment; § close collaboration in managing industrial policy in identifying niches of competitive advantage (in

addition to comparative advantage) that generate “transformation” opportunities; § liberalization of factor markets, allowing free movement of labor and capital and; § full cooperation on management of common pool resources (air, water, fisheries...), to ensure

sustainability; and § the many regional organizations with overlapping responsibilities for infrastructure, water resources and

related services would have to be streamlined. The Role of Leadership. The leaders of the continent play and will continue to play a crucial and important role in the work ahead towards achieving the vision for 2050. Although the continent faces some serious global challenges, it also has huge opportunities to tackle those challenges and thrive - attracting investment, becoming globally competitive, allowing its youth to innovate and creating a brighter future for its people. How well this will happen will depend on all the leaders of the continent taking full ownership of the infrastructure agenda. They need to be committed to developing infrastructure and related services nationally, regionally and across the continent. It is encouraging that current African leaders are working not only to address their national issues, but also for the good of the continent. Box 3 below highlights one African Leader’s vision for his country. Box 3. African Leader’s Vision Address on Infrastructure by South Africa’s President Jacob Zuma (excerpts) “This year we decided to single out infrastructure for special focus. Our view is that infrastructure development is a catalyst to sustainable economic development and to the improvement of the quality of life of our people in a most fundamental way. Today’s conference is specifically about the crucial role of partnerships on infrastructure development in the present and future of South Africa. We have paid very special attention to the lessons we have learnt from building infrastructure in the past. We have developed an integrated, aligned and coordinated 20 year infrastructure pipeline. On economic infrastructure, we are creating enabling infrastructure such as rail, ports, energy, broadband and roads. No one can imagine a successful producer who lacks access to transport, telecommunications, water or electricity. There is a further benefit for economic development. Public investment requires huge amounts of inputs such as equipment, building materials, generators, cranes, trains and even tar for the roads. If all of these materials are bought locally, their production will give a


real boost to the economy. That is particularly important given the uncertain global outlook. Therefore as a job creator, the infrastructure program is a clear winner. Construction and maintenance alone will employ tens of thousands of people. Compatriots, the strength of the National Infrastructure Plan is the central coordination in the Presidency, through the Presidential Infrastructure Coordination Commission that I chair, assisted by Deputy President Motlanthe. Another strength is the fact that it brings together the three spheres of government. We meet as national, provincial and local government at the highest level to discuss the implementation of all Strategic Infrastructure Projects and to monitor progress. The infrastructure on the scale needed to transform our economy and social landscape will not come cheap. The costs of the Strategic Infrastructure Projects (SIPS) are estimated at about four trillion Rands over the next 15 years. Some of this cost includes projects that the private sector will need to pay for, such as industrial projects connected to infrastructure. The state itself will invest about 844 billion rand in the coming three years alone. It is worthwhile. Current and future generations will be able to benefit from these investments that we are making now. Given that our economy is intertwined with the global economy, especially with regards to trade, we have to seriously work on measures of staying afloat as we did during the 2009 recession. Compatriots, the National Infrastructure Plan is a key contribution to the socio-economic development of our country.” Presidential Infrastructure investment Conference Issued by The Presidency, South Africa 19, Oct. 2012.

Leaders have clearly embraced the importance of building and strengthening the continent’s regional infrastructure even though implementation progress is slow. Two initiatives provide encouraging signs of good progress. The first is the recently completed Program for Infrastructure Development for Africa (PIDA)8

which was designed to support the African Union Abuja Treat and the Africa Economic Community has been endorsed by the AU Heads of State and has committed support from development banks and other ESAs. Another program, Africa Infrastructure Country Data (AICD)9 is also endorsed by NEPAD, the development Banks and several other ESAs. The key focus areas of both of these programs are summarized in the footnotes below. Because of their comprehensive and current nature, these reports are a valuable basis for the substantive content of this chapter. Given that regional infrastructure development is a long term effort, leaders, going forward, will need to continue to work together in partnership for the common good of the continent - seeking innovation, building capacity, seeking and providing financing, and forging strong inter-regional links – all transcending successive governments. Addressing Interlinked Global Challenges The world is less predictable and more risky than even 10 years ago. Climate change, urbanization, population growth, and globalization are fundamentally challenging traditional norms. Industrialized countries must address these challenges and are also facing unprecedented competition for jobs and threats to the sustainability of their basic infrastructure. Developing countries face greater challenges to secure their basic infrastructure and to compete in the global market. Every continent will be impacted in some way by these global challenges and Africa which has historically been more vulnerable will have to develop its own responses. As shown in the paragraphs below, infrastructure will be crucial to tackling these challenges both nationally and across the continent. Without power, transport, water resources and telecommunications, investment, trade and production cannot be sustainable. Furthermore, sectors such as agriculture, education, and domestic water supply and sanitation

8 The Program for Infrastructure Development in Africa (PIDA), (2011) provides new analysis and insights to bring together, under one coherent program, existing or previous continental infrastructure initiatives such as the NEPAD Short Term Action Plan, the NEPAD Medium to Long Term Strategic Framework and the AU Infrastructure Master Plans. Underpinned by an extensive consultation and analytical process, the proposed program provides an agenda of sensible, affordable priority regional projects aligned with Africa’s long-term goals. PIDA provides a common framework for African stakeholders to build the infrastructure necessary for more integrated transport, energy, ICT and transboundary water networks to boost trade, spark growth and create jobs. It provides a vision for 2040 with clearly identified regional projects for initial implementation. 9 A new report released in 2009, Africa’s Infrastructure: A Time for Transformation, highlights the results of the Africa Infrastructure Country Diagnostic (AICD), a study conducted by a partnership of institutions including the African Union Commission, African Development Bank, Development Bank of Southern Africa, Infrastructure Consortium for Africa, the New Partnership for Africa’s Development, and the World Bank. The study was designed to expand knowledge of infrastructure in Africa. It is one of the most detailed studies ever undertaken on African infrastructure and provides baseline data and information to facilitate monitoring and help with designing policy reform and prioritization of investments in infrastructure sectors in African countries. A series of reports provides an overview of the status of public expenditure, sector performance and investment needs in energy, ITC, irrigation, transport, and WSS. Surveys conducted at the country level provide the basis for detailed analysis, identification of issues, policy recommendations and projects at the national level. Based on this, each country can formulate its own program of infrastructure development.


will not function effectively, affecting the livelihoods and quality of life of all rural and urban dwellers. Indeed, Africa holds huge potential for a dynamic future if it can address these challenges through managing its natural resource base, developing its infrastructure and embracing opportunities for sustainable socio-economic growth. Climate Change. Africa is described by the IPCC10 as one of the most vulnerable to the impacts of climate change, because of the ‘multiple stresses” such as endemic poverty, ecosystem degradation, disasters/conflicts, and limited access to capital, infrastructure and technology. Many countries in the continent are not yet equipped to deal effectively with changing rainfall patterns, droughts, floods and other water-related impacts (such as destruction of access roads, bridges and power lines). Box 1 below demonstrates the importance of building resilience to climate impacts given the social and economic outcomes that countries have to deal with. That said improved and multipurpose storage will go a long way to help mitigate against floods and droughts. Furthermore, given that water is the primary medium through which climate change will impact people, ecosystems and economies adaptation efforts with water security as a key objective will help countries to build resilience in the years to come.

Box 1. Economic and social impacts of weather-related disasters is severe Droughts and floods cause significant losses and negatively affect economic growth. The aggregate impact of drought on the economies of Africa can be large — 8 to 9 percent of GDP in Zimbabwe and Zambia in 1992, and 4 to 6 percent in Nigeria and Niger in 1984. Floods are among the most devastating natural hazards in Africa and flash floods are one of the greatest hazards arising from tropical cyclones and severe storms. Devastating floods have been reported in major cities across the region. The cost of the year 2000 floods in Mozambique was an estimated $550 million, with a reduction in the GDP growth rate of 1.5 percent (during the period 1994 to 2003 the annual average growth rate was 7.5 percent). The 1997/98 flood in Kenya destroyed $1.8 billion worth of infrastructure and property. Source: World Bank (2005)Source: Report No. 46947-AFR, Making Development Climate Resilient: A World Bank Strategy for Sub-Saharan Africa October 30, 2009

Urbanization and Population Growth As the world is urbanizing, so is Africa, but with increasing challenges to serving those living in urban space. It is expected that by 2050 sixty per cent of all Africans will be living in urban space11. Africa is one of the fastest urbanizing continents. Indeed, it has been projected that between 2010 and 2025, 16 of the top 20 fast growing cities will be on the African Continent12. Each country must therefore rise to the challenge of providing basic services to underpin socio-economic growth. In particular, there needs to be adequate road infrastructure, mass transit/road safety provision, power for domestic and industrial use, connectivity to support business development, and water resources for domestic water supply and sanitation. As the continent is urbanizing, its population is growing rapidly. The current population of the continent is just over 1 billion and it is expected to be just over 2 billion by 205013. With the increase in the number of people on the continent, comes an increasing demand for food, shelter, education, health care and the infrastructure services that support their livelihoods – power, ICT, transport and water resources. Fortunately, the increasing work force of young people provides a great resource for the development of infrastructure and related services both nationally and regionally. Well functioning municipalities will ensure coordination and sound management of infrastructure services to serve all urban dwellers. Filling the Infrastructure Deficit at the Country Level While this paper’s focus is on the regional dimension of infrastructure, the national infrastructure agenda is equally critical, not only for individual countries’ own development but also as a basis for regional and continental integration. For regional infrastructure to be effective and the vision for regional integration to be achieved, there are national prerequisites – filling the infrastructure deficit at the country level - that have to be in place and issues addressed. Most countries have articulated their own infrastructure challenges, opportunities (see example of Ghana in Box 4 below) and pipelines of national projects which should be given priority

10 Boko, M., I. Niang, A. Nyong, C. Vogel, A. Githeko, M. Medany, B. Osman-Elasha, R. Tabo and P. Yanda, 2007: Africa. Climate Change 2007: Impacts, Adaptation and Vulnerability. Contribution of Working Group II to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change, M.L. Parry, O.F. Canziani, J.P. Palutikof, P.J. van der Linden and C.E. Hanson, Eds., Cambridge University Press, Cambridge UK, 433-467. 11 UN Habitat/UNEP., The State of African Cities 2010, Governance, Inequality, and Urban Land Markets 12 Mo Ibrahim foundation African Agriculture From Meeting Needs To Creating Wealth, Tunis, November 2011 (revised edition) 13 UN data statistics database 'United Nations Population Division' (World Population Prospects: The 2008 Revision).


attention. AICD has identified major gaps at country level -- lack of data, synthesis and needed programs – and this information is now available online. The imperative now has shifted from waiting for the knowledge gap to be closed to “just doing it” at the country level. Box 4. Country Level Infrastructure Challenges – Example of Ghana v Infrastructure contributed just over one percentage point to Ghana’s annual per capital GDP growth during the 2000s.

Raising the country’s infrastructure endowment to that of the region’s middle-income countries could boost the annual growth rate by more than 2.7 percentage points.

v Ghana has an advanced infrastructure platform when compared with other low-income countries in Africa. The country’s coverage levels for rural water, electricity, and GSM signals are impressive. A large share of the road network is in good or fair condition. Institutional reforms have been adopted in the ICT, ports, roads, and water supply sectors.

v Ghana’s most pressing challenges lie in the power sector, where outmoded transmission and distribution assets, rapid demand growth, and periodic hydrological shocks leave the country reliant on high-cost oil-based generation. Exceptionally high losses in water distribution leave little to reach end customers, who are thus exposed to intermittent supplies.

v Addressing Ghana’s infrastructure challenges will require raising annual expenditures to $2.3 billion. The country already spends about $1.2 billion per year on infrastructure, equivalent to about 7.5 percent of GDP. A further $1.1 billion is lost each year to inefficiencies, notably under pricing of power.

v Ghana’s annual infrastructure funding gap is about $0.4 billion per year, chiefly related to power and water. Following its recent oil discoveries, Ghana can raise additional public funding from increased tax receipts. The country has several strong areas on which to build and a solid economic base from which to fund incremental efforts.

Source: AfDB (The Africa Infrastructure Knowledge Program) Key areas to be addressed for all the infrastructure areas (energy, ICT, transport water resources) under discussion by each nation include sectoral reform (policies and strategies), institution building, capital financing requirements/sourcing, improving investment climate, addressing O&M, establishing favorable PPPs, environment and impact of climate change. All of them require strong political ownership to be in place. Some highlights are presented below. Political Will and Leadership • Political leaders and decision makers need to demonstrate ownership of a common agenda for

establishing extensive infrastructure services and coordinating them to facilitate regional integration. • There needs to be commitment and prioritization that transcends political parties, presidents and prime

ministers. There has to be continuity. • There needs to be trust or at the very least agreement with leaders of neighboring countries on the win-

win benefits of regional programs and projects. National Reform • Each country needs to have a working legal and regulatory framework to support intercontinental and

inter country infrastructure initiatives in each of the infrastructure service areas. • Each country needs to have sound sector strategies and policies. Furthermore, these need to be

developed taking into consideration the need to ensure coherence with regional and continental policies and legislation as needed even after treaties are signed and ratified. And where policies do appear in national legislation, they too often are not enforced.

• Reform of customs facilities at borders and ports is needed. • Good governance and transparent fiduciary management are required.

Investment Climate • Each country needs an investment climate which is favorable for private sector initiatives and public -

private partnerships and supported by a level playing field for the interactions. Companies and industries need reliable electricity, broadband, transport, and water resources to support their production and delivery of goods and services.

Institution Building • Each country needs to have functioning institutions in each of the infrastructure service areas, able to

dialogue with neighboring countries, in order to be better able to support improvement of inter country/regional dialogue. There has been progress in this across the continent, but it is not uniform across the infrastructure service areas. The most advanced is in the area of ICT.


Investment and Operations & Maintenance Costs addressed • Each country needs mechanisms for cost-sharing investment, O&M and revenue generation where

appropriate.

Environment • Delivery of infrastructure services nationally, must take into account the potential negative impact on the

environment. Impact of climate change • Countries need to address mitigation needs, although the continent has the lowest CO2

emissions/capita. • Countries need to implement adaptation programs to help build resilience to climate change, with

achieving water security14 as a key part of the programs, given that water is a key means by which populations will experience the impact of climate change.

Establishing favorable PPP in Infrastructure • The private sector has had a range of differing roles with the infrastructure services. At the country level,

it is important to ensure that there is a working regulatory framework, regardless of the type of private participation (concessions, BOT, partnerships, with leases, management contracts, and performance contracts). Furthermore there needs to be a level playing field for the interaction between the public and private sectors. An example of a successful public-private partnership is Senegal Water15. The long term development of the sector, has led to a major turnaround with 1.6 million people living in cities having access to safe water, tariff collection at 98%, much reduced water losses and, the water company has been described as the most efficient in West Africa – these and many other results have come out of institutional reform and a partnership between the private sector and national water company. Box 5 demonstrates how infrastructure services (port container services) can be made more efficient in partnership with the private sector.

Box 5. Containers in African Ports Privatization in African Ports Containers in Dar Es Salaam (AICD) A lease in the container terminal port of Dar es Salaam, Tanzania, produced, within five years, a doubling of throughput, a 70%percent reduction in container dwell time, greater customer satisfaction, record profits, an vastly increased government revenues (from taxes, lease fees, and payments of $14 per container cleared). The number of expatriate managers fell from 17 to 4; the number of Tanzanian senior managers doubled. More than half the original workforce was dismissed, but salaries for those remaining increased by an average of 300 percent – ad post lease expansion in operations created 5oo new jobs, far more than the number previously laid off. Dar es Salaam became the fastest container terminal in Africa, with performance exceeding that of many European and Australian ports. In 2004, Nigeria started a major effort to reform its clogged, inefficient, and very expensive ports. The government enacted “upstream” policy and legal reforms while hiring, through concessions, experienced private operators to manage, operate, and rehabilitate 26 ports. The new autonomous regional port authorities, now the “landlords” of the ports, negotiated the concession contracts. The Federal Ministry of Transport took on the role of sector policy maker. Just a few months after the concessioning of the Apapa-Lagos container terminal, delays for berthing space had dwindled, and leading shipping lines reduced their congestion surcharge from $525 to $75, saving the Nigerian economy an estimated $200 million a year. Observers credit the improvements as much to the upstream reform of the institutional setting as to bringing on board private operators. Worth noting is that Tanzania and Nigeria are the top two countries in institutional reforms. Source: World Bank 2005 for Tanzania; Leigland and Paisson 2007 for Nigeria

14 Water security:- the availability and acceptability of water for health, livelihoods, ecosystems and production, coupled with an acceptable level of water-related risks to people, environments and economies (Grey and Sadoff, 2007) 15 World Bank


For each of the infrastructure sectors/services, there are particular opportunities and challenges. Table 1 below highlights some of these.

Costs and Financing of Regional Infrastructure There are increasingly limited opportunities for borrowing and fiscal space is constrained in the continent. The constraints faced by countries are many and prioritization is often a challenge. Then as countries are at different stages of development and have a mixed natural resource base, the constraints can be further complicated. The bottom line is that at the present time, the cost of African infrastructure (Box 6) is generally higher than in other continents. Box 6 The High cost of African Infrastructure (Charles Robertson, The Fastest Billion (2012) Sector Africa Other Developing Regions Power tariffs ($ per kWh) 0.02 - 0.46 0.05 - 0.1 Water tariffs $ per m3 0.86 - 6.56 0.03 - 0.6 Road freight rates ($ per ton km) 0.04 - 0.14 0.01 - 0.04 Mobile telephony ($ per basket per month) 2.6 - 21.00 9.9 International telephony ($ per 3 min call to US 0.44 - 12.5 2 Internet provision ($ per month) 6.7 - 148.0 11 Source: Banerjee et al., 2008; Anton Eberhard et al., “Underpowered: State of the Power Sector in SSA; Minges et al., “Information and Communications Technology in SSA: A Sector Review”, 2008; Supee Teravaninthorn and Gael Raballand, Transport Prices and Costs in Africa: A Review of the Main International Corridors, 2008

Determining the future cost of Africa’s infrastructure, both at the regional level as well as the national level has always been a complicated task. According to the World Bank, the cost of addressing Africa's infrastructure needs going forward is around $93 billion a year which is more than double of what is being spent today16. Of the $93 billion, the amount being spent today, $45 billion can be assumed to be on the table and about $17 billion can be released by measures of efficiency and other savings. That leaves a funding gap of $31 billion a year. Closing this gap should be given high priority

16 The future investment needs of developing countries in infrastructure exceed by far the amounts being invested at present by governments, the private sector and other stakeholders, resulting in a significant financing gap (UNCTAD, 2008).

Table 1. Public Private Partnerships – Opportunities and Challenges (AICD) Sector Current PPP Opportunities and challenges ICT Generally good reform; regulatory

institutions established; more than 90 countries have mobile operators.

Markets not as competitive as they could be; public sector still in charge of telecom in some countries; constraints with licensing. More competition needed

Energy Sector modernization has occurred, but reform limited; there is frequent renegotiation of contracts; hybrid power markets established; power distribution concessions in 16 countries; 17 management/leases among 24 countries; 34 IPPs provide 300MW new capacity.

Private investment is problematic,- small power systems; need better policies;

Transport High consensus on reform § Roads Road funds and agencies becoming the

norm and working; 10 toll roads in RSA. Fuel levy must be at appropriate level

§ Ports Limited reform, but container terminal concessions awarded (26)

Need for broader institutional reforms

§ Rail Rail corridors awarded as concessions and more planned (14)

Low traffic volumes; funding needed for rehabilitation of tracks and renewal of rolling stock, realism in terms of what contracts can do

§ Air Persistent non-viable state owned operators, which depend on subsidies; routes and aircraft sizes being adapted to markets; some concessions(4)

Further liberalization needed; fifth freedom carriers airlines do not belong to country of origin or destination) are on the rise,

Water Resources

Involvement in a few hydropower projects. Need to build capacity of transboundary RBOs; explore win-win benefits of cooperation also in partnership with the Private sector; political commitment, lower donor support, low capacity hinder progress.


Looking at the program proposed under PIDA which focuses only on the regional projects in the four specific sectors covered under that study, that regional infrastructure program’s long-term implementation through 2040 is estimated at about $360 billion (or $12.4 billion per year). As part of that program, PIDA has also delineated a pipeline of 51 high priority projects - Priority Action Plan (PAP) - to be delivered by 2020 at an estimated total cost of $68 billion (or $7.5 billion per year for the nine year period 2012-2020 – see Annex 1 for details). By way of context (and not comparable to the figures above), Booz Allen Hamilton, estimated in a 2007 report, that investment needed to “modernize obsolescent systems and meet expanding demand” for infrastructure worldwide between 2005 and 2030 was around US$ 41 trillion broken down by region as shown in Table 2 below.

Table 2. Infrastructure Investment Needed 2005-2030 Region $ Trillion % of Total Middle East 0.9 2.2 Africa 1.1 2.6 US/Canada 6.5 15.9 South America/Latin America 7.4 18.5 Europe 9.1 22.3 Asia/Oceania 15.8 38.7 40.8 100 Source: Booz Allen Hamilton – Aheadoftheheard.com

As clearly evident in the table above, Africa lags behind by a huge margin compared to other regions of similar size and complexity. Another comparison worth noting is the India – China comparison. India spends just 6% of its GDP on infrastructure compared to China’s 20%. To achieve its targeted GDP growth rates the country will need to invest about $250 billion on infrastructure over the next 5 years. The most glaring deficit in India is its infrastructure deficit. The table below illustrates the overall low investment and diversity of countries in infrastructure

A review of recent work on Africa’s future infrastructure indicates three trends which this paper recommends giving special attention to. First, the baseline or historical expenditure in infrastructure has been relatively low and this in combination with the small size of the economies has tended to overstate the percentage share of infrastructure investment. Second, as the figures above show, the estimates of infrastructure investments

Table 3. Total Spending on Infrastructure - % of GDP of Selected African Countries 2005

Country % of GDP 1 Zambia 4.00 2 Ethiopia 3.94 3 Republic of the Congo 3.48 4 Senegal 3.30 5 Cape Verde 2.39 6 Nigeria 1.70 7 Tanzania 1.68 8 South Africa 1.47 9 Lesotho 1.45 10 Malawi 1.28 11 Mozambique 1.21 12 Madagascar 1.11 13 Namibia 0.99 14 Ivory Coast 0.96 15 Niger 0.95 16 Kenya 0.75 17 Ghana 0.50 18 Chad 0.40 19 Uganda 0.37 20 Benin 0.33 21 Rwanda 0.27 22 Cameroon 0.21 Average 1.48 Source AICD 2005


needs are very much understated compared to other regions. An analysis carried out for this paper17 using percentage of GDP as a measure of comparing infrastructure indicates that the figures being used at this time are grossly understated. (to add numbers here). Predicting the future is difficult given the current global challenges. However, there is an estimate of $360 billion as the capital cost for long term (to 2040) implementation with a smaller sum of $68 million needed for all the sectors, to put them on the right track now. Unfortunately, this amount which is about $7.5 billion a year is below what is needed and the money will have to be carefully sourced. Figure 2 below shows the requirements by sector and by region. Figure 2. Projected Infrastructure costs

source: PIDA It is important to note that although energy and transport represent around 95% of the total cost, many of the necessary investments include hydro power as well as fiber-optic investments along power lines, railways and roads. Substantial investment is needed to support African trade, promote growth and create jobs, accompanied by appropriate reform in each of the different sectors and service areas. The proposed investment is within reach, being well below 1% of African GDP. The key to appropriate decisions and actions being taken is political will. Where will the funding for Africa’s regional infrastructure come from? If the leaders of the continent are serious about seizing the opportunities for Africa, then they will have to prioritize putting their resources to that use. Continued funding at current levels will not lead to realization of the visions elaborated above. PIDA’s estimated costs for immediate investment through 2020 are $68 billion for investment. New sources of funding will be needed, from a government’s own coffers, the private sector, IFIs etc. Innovation will be important for resource mobilization. Africa is a continent of innovation. Already innovative financing has helped the continent make progress in development efforts. Some of these are highlighted below (PIDA and others). § Infrastructure bonds are used by many countries today. With them, South Africa finances toll roads,

while Kenya has raised nearly US$1 billion over the last four years to fund road, energy, water and irrigation projects. The Southern Africa Development Community, Common Market for East and

17 Modeling of infrastructure spending (to be done by Centennial research team)

INTERCONNECT ING, INTEGRAT ING AND TRANSFORMING A CONTINENT 5

ICT: capacity building, land intercon-nection infrastructure, internet exchange points (annex 4).Africa is already making significant prog-

ress on regional infrastructure through proj-ects such as the Mombasa-Nairobi-Addis Road Corridor, Tema-Ouagadougou-Ba-mako Road Corridor, Trans-Maghreb Road Corridor (TAH 1), Kazangula Bridge and Bamenda-Enugu Road Corridor. Projects and programmes under the PAP represent the first batch of agreed priorities resulting from the analysis, criteria review and con-sultations on the REC master plans. It rep-resents the priority pipeline required to meet the PIDA outcomes. Projects that are on-going or that have reached financial close are not included. The PAP is not static and will be updated regularly to reflect progress and make way for new priorities as Africa’s needs continue to evolve. This reflects the need to ensure coherence with REC master plans and consistency with the PIDA strategic frame-work. Therefore, the PAP should be viewed not as a single list cast in stone, but as the first (and necessary) step in a dynamic process for delivering the PIDA programme over the next three decades.

During the consultations, the particular conditions of island states and fragile coun-tries were acknowledged. The PAP includes maritime traffic and ports as essential ele-ments in planning the transport corridors linking island states to the mainland and trade routes. The specific regional infrastructure needs of fragile countries are acknowledged

and will be continually reflected as PIDA is delivered over the next three decades.

Programme costs: determining financing and investments

While it’s difficult to accurately project the capital cost of PIDA’s long-term implemen-tation through 2040 (currently estimated at more than $360 billion), the overall capi-tal cost of delivering the PAP from 2012 through 2020 is expected to be nearly $68 billion, or about $7.5 billion annually for the next nine years (figure 1, box 3 and annex 5).

Energy and transport projects and pro-grammes represent around 95% of the total cost, demonstrating the critical need for transformative investments in these sectors to support African trade, promote growth and create jobs. Investment needs for ICT and water represent lower percentages. The

PIDA priorities are driven by the programme’s strategic ob-jective and by the African Union’s 2004 vision statement, which called for “an integrated Africa, a prosperous and peaceful Africa, driven by its own citizens and representing a dynamic force in the international arena”. PIDA projects adhere to the overall goals of regional infrastructure develop-ment and are in alignment with the AU vision and the priori-ties of the RECs.

Projects were prioritized based on three criteria categories: (1) eligibility and regional integration, (2) feasibility and readi-ness and (3) development impacts. These detailed criteria were discussed and agreed as part of the extensive PIDA consulta-tion process with stakeholders. Projects selected for the pro-gramme have been assessed, selected and ranked based on subcriteria within each of these three groupings and were vali-dated during the regional consultations, review processes and endorsement from sector ministerial meetings.

Box 2 How were projects chosen?

By sector(US$ billions)

By region(US$ billions)

East Africa$23.3

Energy$40.3

Transport$25.4

Continental $3.0North Africa $1.3

WestAfrica$6.2

Central Africa$21.5

Southern Africa$12.6

ICT $0.5 Water $1.7

Figure 1 Total capital cost of PIDA’s PAP by sector and region: $67.9 billion through 2020


Southern Africa and East African Community (Tripartite) is considering issuing regional infrastructure bonds in 2012.

§ Loan guarantees, which help assure private investors, are crucial to implementing productive PPPs, as shown by the Maputo Development Corridor. When financing one of its toll-road projects, a road between Johannesburg and Maputo, South Africa found equity investors willing to put money in the project, but not without guarantees. Working with the Development Bank of South Africa, the South African government issued subordinated debt to underwrite the risk, giving equity investors the comfort to invest in the first PPP in South Africa.

§ Public Private Partnerships. As mentioned earlier, based on other regions’ experience, PPPs can play a very significant role on financing regional infrastructure investments and should be actively pursued (as well as putting in place an adequate regulatory framework).

§ Private Equity and Investment Banks. Again, the experience of other region shows that private equity and investment banks can be attracted to invest in regional infrastructure.

§ Sovereign Wealth Funds and Emerging Powers represent another potential source of funding. § At the regional level, the RECs can also play an important role in innovative financing. The

Economic Commission for West African States (ECOWAS) has been implementing a 0.25% community levy for decades. Most other RECs just rely on ODA funding or member contributions, neither of which is being constantly replenished like the ECOWAS excise tax, which yields a steady revenue stream deposited into the general fund. Simply put, the scale of the required investments means that all possibilities need to be leveraged, including non–Organization for Economic Co-operation and Development sources such as Arab Funds, Brazil, China and India. Opportunities for financial innovation, such as climate finance, must be recognized and seized.

What about Capacity? Does Africa have the Requisite Implementation Capacity? Heads of State and Government will be the deciding factor in the success of regional integration on the African continent. If they exercise their political will, work together, trust each other and look for win-win opportunities, ensure that there is a favorable climate for investment, establish necessary institutions and reforms, streamline their national infrastructure development in order to facilitate regional needs, then there is hope for the continent. There is hope that this will happen, if one looks at the Presidential Infrastructure Champion Initiative which demonstrated that complex regional projects can move forward is leaders remove barriers to progress. The Ruzizi III project highlighted below in Box 7 demonstrates that countries can work together for their common good. With regional projects, there is also a need for financial leadership from IFIs to provide guarantees and investment funding and to encourage countries to work in a unified way. Successful implementation of the PIDA will depend on both political and financial leadership and innovation nationally and regionally, with good governance and full stakeholder engagement as the backbone of the program. Box 7. The Ruzzi III Project A model of successful implementation The Ruzizi III project— a $450 million, 145-megawatt hydro plant located on the Ruzizi River flowing between Lake Kivu and Lake Tanganyika—offers more than much-needed electricity to Rwanda, Burundi and the Democratic Republic of the Congo. It also offers a blueprint for successful infrastructure development through regional integration. The first regional PPP power project in Africa, Ruzizi III is expected to leverage more than 50% commercial financing (debt and equity), with majority private ownership. With a high level of interest from major international investors and financing institutions, the project can boast of a finance plan that is practically complete and of a true regional partnership at its foundation. Overseen by a regional entity formed by the three beneficiary countries to develop projects of common interest, the framework for Ruzizi III has been successfully developed, despite its complex public-private structure, over a period of 18 months for a number of key reasons, perhaps none more important than effective project preparation and management. The project, part of the PIDA PAP, offers many valuable lessons for how sound structuring can attract commercial financing and lead to timely implementation, including: installing a dedicated and experienced predevelopment team, good communication with countries to maintain support, targeted capacity building, rapid execution of preparatory studies and the availability of substantial preparation funds. (Source: PIDA)

Regional Infrastructure and Services – towards 2050 A summary of the current status and opportunities for the next ten years is presented below for each of the infrastructure areas (energy, ICT, transport and water resources) for which regional integration is critical.


Energy - working towards 2050

Africa’s energy infrastructure program formulated by the PIDA study focuses on major hydroelectric projects and interconnects the power pools to meet the forecast increase in demand. Regional petroleum and gas pipelines are also included. Figure 3 on the left, describes the different pipeline and hydropower projects that would make full regional integration a reality on the continent. Current Status. Africa’s largest infrastructure gap is in the power sector. The 48 countries of Sub-Saharan Africa (with a combined population of 800 million) generate roughly the same amount of power as Spain (with a population of 45 million). The cost of electric power remains high relative to other regions of the world and of the infrastructure services this is the most constrained area. Power is an obstacle to development limiting opportunities for businesses and industries to function effectively.

Lack of access to power also limits education opportunities. There are major challenges with many countries regularly facing frequent and extended power shortages. 30 countries currently grapple with this issue. This poor access to modern energy is a bottleneck for economic and social development across the continent. Also, the service is inefficient and high cost. The average annual investment needs for the power sector are estimated at $42.2 billion, with $33.1 billion for generation, $5.4 billion in interconnections, and $3.7billion in access. Natural gas services have potential for growth across the continent as does its production. The continent has 8,2% of the world’s known reserves similar to the Asian Pacific region, but is not yet producing natural gas at an efficient rate18. Taking up opportunities to build synergies in the regional and continental markets is slow and service opportunities are fragmented. Generation capacity is also stagnant. Only 5 percent of the hydropower potential of Africa has been developed when compared to 70% in Europe and the opportunities to develop and extend regional connectivity in electricity are not being used, because of the high-related costs (PIDA). There are underexploited energy sources and a demand for services which is not being met. Despite these current challenges, there are models and examples both private and public sector, like the one in Box 8 below that demonstrate a way forward. Box 8. Botswana State-Owned Power Utility The Botswana Power Corporation (BPC) is a government-owned monopoly that produces, transmits, and distributes electrical power in Botswana. It was formed by government decree in 1970 with the objective of expanding and developing electric power potential in the country. From its small beginnings one power station in Gaborone and a network that extended some 45 kilometers outside the city, the power utility’s responsibilities, along with the national network, have expanded enormously. The government has a regulatory role through the Energy Affairs Division of the Ministry of Minerals, Energy, and Water Affairs. BPC increased access to power to 22 percent in 2006 and is set to reach 70 percent in 2009 and 100 percent by 2016. Through government funding, BPC is extending the electricity grid to rural areas and developing the reach of the national transmission grid. Overall, the power system operates efficiently, with system losses of no more than 10 percent and a decent return on assts. BPC constantly weighs its options of importing against expanding its own generation facilities, taking into account both economic and strategic factors. The national system provided 132 megawatts, with the remaining 266 megawatts supplied by neighboring countries

18 Raf Custers and Ken Matthysen, Africa’s Natural Resources in a global context (2009) page 23

12 PROGRAMME FOR INFRASTRUCTURE DEVELOPMENT IN AFRICA

PIDA’s energy impactAN

NEX1

The energy infrastructure programme focuses on major hydroelectric projects and interconnects the power pools to meet the forecast increase in demand. Regional petro-leum and gas pipelines are also included.

Rusumo Falls[61 MW]Ruzizi IV Dam[210 MW]

Cahora Bassa Dam[1,245 MW]

Stiegler's Gorge Dam[2,100 MW]

North Africa Transmission

Nigeria–AlgeriaGas Pipeline

North–SouthTransmissionCorridor

West Africa PowerTransmission Corridor

Fomi[88 MW]

Soubré[300 MW]

Bumbuna 3 Dam[350 MW]

Memve Ele Dam[200 MW]

Lom Pangar Dam[120 MW]

Batoka Gorge[1,600 MW]South Africa–

Mozambique Pipeline

Tanzania–KenyaPipeline

Mphamda-Nkuwa[1,500 MW]

Millennium Dam[5,250 MW] Gibe III Dam

[1,870 MW]Gibe IV Dam[1,479 MW]

Sudan–Ethiopia Pipeline

Optimal Development of INGA[43,200 MW]

Lesotho HWP Phase IIHydropower Component

[1,200 MW]

Sambagalou[64 MW]

Gourbassi

Central AfricaTransmission

Corridor

Kaleta II [117 MW]

PIDA PAP 2020PIDA 2040

Ruzizi III Dam[145 MW]


through the Southern African Power Pool. Since the pool’s inception in 1995, Botswana has been a major beneficiary and its active trading position promoted multilateral agreements among pool members, generally enhancing regional power cooperation. Part of BPC’s strong performance is thanks to cheap imported power from South Africa (now severely threatened by the power crisis). But analysts give institutional factors equal weight: a strong, stable economy, cost-reflective tariffs, lack of government interference in managerial decisions; good internal governance; and competent, well-motivated staff and management. (For more detailed discussion of institutional reforms, see chapter 4 in this volume). (Sources: Molefhi and Grobler 2006; PPA 2005)

Key Steps Towards Realization of Energy Vision- next decade • It will be important to work towards meeting the growing demand for continental petroleum products from

local resources through the development of refineries supplied by African crude. It will also be important to build pipelines to transport the increasing volumes of petroleum products. An estimated $1.3 billion per year will be needed for gas and petroleum product pipelines (PIDA)

• It is estimated that 43.6 billion USD a year will be needed to meet forecast energy demand for Africa going forward. Interconnection investment is urgent and needed up front to meet the forecast.

• In the energy sector, for instance, more than 20 countries have national power systems below the minimum efficient scale of a single plant. The creation of power pools recognizes that regional cooperation, by sharing large-scale, cost-effective energy resources across countries, will reduce the cost of electricity. The consumer gains from full integration of power systems are about 150% of the investment cost.

• In developing energy services, it will be important to develop strategies for management and reuse of wastewater produced.

Information and Communication Technology (ICT) - working towards 2050

Africa’s ICT program formulated by PIDA will establish an enabling environment for completing the land fiber-optic infrastructure and installing internet exchange points in countries without them. It will connect each country to two different submarine cables to take advantage of the expanded capacity. Current Status The uptake of the mobile phone in Africa has been unprecedented with the percentage of Africans living within range a mobile signal increasing from 5% in 1999 to 57% in 2006. More than a hundred million Africans have become subscribers. This is excellent progress. The increase in ability to communicate across the Region, paves the path to real increased productivity. While mobile telephony uptake has increased and continues to do so, broadband connectivity has not kept pace. This is restricting opportunities for high

speed internet connections that would open farmers to markets, students to learning opportunities, consultants to business opportunities, SMEs to potential contracts, etc. The figures below show that there are already access points for all coastal countries and hubs for all sub-regions (except perhaps Central Africa. Furthermore, fiber optic cables link most of the continent’s capitals with a few gaps that need to be addressed. Unfortunately, however access to the internet is way behind mobile access, restricting the opportunities for innovation, increased global communication, learning, trade etc. There is a need for major reform addressing issues such as cross-country competition and licensing as well as new infrastructure including for high bandwidth provision. Figure 4 describes the current status of fiber optic infrastructure in Africa. Completion of the process of linking all African capitals, together with the submarine cable landing stations, will result in the continent having the kind broadband connectivity it needs for tomorrow’s world.


PIDA’s ICT impactAN

NEX4

The ICT programme will establish an enabling environment for completing the land fibre-optic infrastructure and installing internet exchange points in countries with-out them. It will connect each country to two different submarine cables to take advantage of the expanded capacity.

Terrestrial connectivity

Priority IXP


Figure 4. Current Status of Fiber Optic Infrastructure in Africa (PIDA)

Key Steps Towards Realization of ICT Vision- next decade • In order to have the type of expansion envisioned for internet service, it will be important for there to be

reliable and ample intercontinental bandwidth at a competitive and reasonable cost. The continent can learn the lessons from other regions and skip ahead to the next generation of technologies, saving valuable time and resources.

• The intermediate goal would initially be to work on completing the provision of adequate fiber optic and submarine cable landing sites to ensure that there is access to broadband and connecting countries. This is particularly important for landlocked countries. Subsequently the goal would be to go after ensuring very high-speed access. Entrepreneurs like O3bNetworks (Box 9) keep pushing the envelope.

• It would also be important to ensure that all countries had both national internet exchange points and access to regional exchange points.

• With respect to mobile telephony, the intermediate goal would be to improve licensing and competition for service providers, making the service more efficient and thus allowing easy access to all those living in both rural and urban space. With this approach, less than 5% of population would need subsidy for mobile telephony if markets were more efficient. (AICD).

Box 9. ICT Opportunity “O3b Networks” is a continent-wide communications infrastructure venture that has financed and is currently deploying a $1bn next-generation satellite network that combines the reach of satellite with the speed of fiber – providing an internet backbone for Africans and those in other developing countries with limited access to broadband. (drawn from KPMG text) (Inside Business in Africa19)

19Claude Harding Six Remarkable African Infrastructure Projects How we made it in Africa http://www.howwemadeitinafrica.com/six-remarkable-african-infrastructure-projects/19630/ August 2012.


Transport - working towards 2050

Africa’s transport program formulated by PIDA links the major production and consumption centers provides connectivity among the major cities defines the best hub ports and railway routes and opens the land-locked countries to improved regional and continental trade. Current Status Only one in three rural Africans has access to an all-season road; more than 20 percent of the population in Cameroon, Ghana, Mauritania, Niger, and Tanzania must travel more than two kilometers to their primary water supply; African consumers pay twice as much for basic services as people elsewhere in the world; and a monthly basket of prepaid mobile telephone services costs $12 in Africa but only $2 in South Asia (source). Transport services allow for the establishment and extension of networks across the continent and beyond, providing also important access to the continents landlocked countries. There are several types of transport

services that need to be taken into consideration at the regional level: roads, rail, water, ports, air and urban mobility. Missing or deteriorated road and rail networks, ports unable to handle modern vessels or inefficient in handling incoming vessels, inadequate rolling stock; incomplete rail and road networks, inefficient airports are some of the practical issues to be addressed. Connectivity between ports, roads and rail for moving goods across the continent including to and from land locked countries is poor. Roads. The road access rate is only 34% compared to 50% in other parts of the developing world and transport costs are almost double (PIDA). Only one third of Africans living in rural areas are within two kilometers of an all season road, compared to two thirds of the population in other developing regions (PIDA.) There is already an existing road network plan designed to link the capital and major cities of the continent. It is made up of 9 Trans-African Highways, and is 75% complete (ARTIN). However, there are big inefficiencies in the network -- work will be needed to modernize many of these road corridors. Rail. Cross-border railway lines need to be expanded, together with operations and equipment to meet increasing demand. In addition, there is scope for building new rail networks and introducing more modern rolling stock. Box 10 provides examples of countries which are already taking action. Box 10. Transport – Opportunities Ethiopia Djibouti Railway This railway is part of Ethiopia’s ambitious plans to develop national railway infrastructure and is notable for its sheer scale and for the significant positive impact that it could have on economic growth in the Horn of Africa. The 656 km line will connect Ethiopia’s capital Addis Ababa with the tiny Red Sea state of Djibouti. According to KPMG, the $1.2bn project would have enormous economic significance for landlocked Ethiopia as Djibouti represents the country’s only seaport access and would considerably reduce goods transportation costs. (Inside Business in Africa20) Lagos Metro Blue Line With an estimated 18 million residents, Lagos is one of the world’s fastest growing cities. The infrastructure of Nigeria’s commercial hub has, however, not kept up with its population growth. KPMG describes the Blue Line of the Lagos Rail network as a groundbreaking public-private partnership (PPP) that not only fills a serious gap in transportation infrastructure in the city, but also displays innovation in its financing structure. Track and station infrastructure is being constructed under design-build contracts funded by the Lagos State government, while Eko Rail will provide trains, control systems and fare collection under a 25-year equip-operate-maintain concession. (Inside Business in Africa21)

20Claude Harding Six Remarkable African Infrastructure Projects How we made it in Africa http://www.howwemadeitinafrica.com/six-remarkable-african-infrastructure-projects/19630/ August 2012. 21Claude Harding Six Remarkable African Infrastructure Projects How we made it in Africa http://www.howwemadeitinafrica.com/six-remarkable-african-infrastructure-projects/19630/ August 2012.


The transport programme links the major production and consumption centres, pro-vides connectivity among the major cit-ies, defines the best hub ports and railway routes and opens the land-locked countries to improved regional and continental trade.

PIDA’s transport impactAN

NEX2

CD3

CD4

CD5

CD13 / Cicos

CD13

TAH 2020TAH 2040

ECCAS Connectivity

Corridor 2020

Hub Port Programmes

Corridor 2040


Ports. Current delivery times for containers have been challenging as compared to other regions of the world. In 2005, a World Bank22 report listed the average delivery time for containers from vessel to consignee from Dar Es Salaam, Tanzania to Bujumbura Burundi, a distance of 1800 km as 21 days. As a comparison, transfer of containers from Doula, Cameroon to Ndjamena, Chad a distance of 1,900 km took 38 days and from Tianjin, China to Ulaanbaatar, Mongolia, a distance of 1,700km, took 8 days. There is an increased demand for freight transport, by road or navigable waterways for intercontinental trade, and by sea for ports. Future port tonnage is expected to grow together with the need for container capacity with growth in container traffic, which is expected to increase 14 fold by 2040 (PIDA). Air. Air passenger demand is on the increase and is expected to grow by several factors in the coming three decades. In particular, there will be differentiation in the demand for different Regions of the world. Demand from passengers in Cairo and Johannesburg may exceed 10 million a year and 17 other airports are expected to have their capacity exceeded. Urban Mobility. With the increasing congestion in major urban centers, it is getting increasingly difficult to move people to work and school. Public transport vehicles are aged and road safety systems are not as effective as they could be. Box 9 also summarizes action on urban metro transport. Water. There are several major rivers (Nile, Congo, Niger, Senegal, and Zambezi Rivers) and Lakes (Victoria, Tanganyika, Malawi) that are used for water transport, serving mainly those along their shores. Key Steps Towards Realization of Transport Vision- next decade • Complete the ARTIN network; in particular ensure access of land locked countries • Begin to address the potential over capacity of 17 major airports • Rehabilitate/expand ports that may become bottlenecks to transport and trade. Make use of

opportunities for public private partnerships to help reduce inefficiencies. Provide more concessions for containers at ports.

• Complete and rehabilitate rail networks that connect regions. Table 4 shows the potential growth in transport volume across the continent. Table 4. Trade forecasts by Sub-Region – in Million Metric Tons Region 2009 2020 2030 2040

Volume

Avg. Growth (%)

Volume Avg. Growth (%)

Volume Avg. Growth (%)

North Africa 20 235 6.3 410 6.3 760 6.4 West Africa 7 176 6.7 300 6.0 556 6.3 Central Africa 21 43 6.8 77 6.4 145 6.5 Eastern Africa 45 96 7.1 181 7.1 360 7.1 Southern Africa 240 408 4.9 617 4.7 1,001 5.0 Total Africa Base 513 958 5.8 1,585 5.7 2,823 5.9 With suppressed demand 513 1,056 6.3 1,822 6.1 3,397 6.4 With new minerals 513 1,175 7.8 1,998 5.5 3,630 6.2 Source: PIDA Africa Transport Outlook 2040, Annex 3.2, excluding crude oil

22 World Bank report, UN Report, Arvis 2005, quoting an international logistics company


Water Resources Services - working towards 2050 Africa’s transboundary water program formulated by PIDA targets the development of multipurpose dams and builds the capacity of Africa’s lake and river basin organizations so that they can plan and develop hydraulic infrastructure. It would also help address the looming food deficit. The Figure on the left describes the transboundary projects which have been identified by the PIDA program. Current Status The Renewable Water Resources of the African continent represents only 9 % of the world’s water resources compared to 28% in Asia and these resources are very unevenly distributed. There is a heavy reliance on groundwater which is being depleted faster than it is being recharged in many countries, with implications for neighboring countries. There is also a reliance on rain-fed agriculture with irrigation services still with huge room to grow. Currently, only 20% of the potential irrigation area

in Africa is exploited. Over 93% of the surface water on the continent is from transboundary rivers. About half the African continent faces some sort of water stress or water scarcity and several countries that were in a situation of vulnerability in 2005 will become water stressed or water scarce in the next thirty years. Given this, it is all the more important for countries to work towards better managing water resources for development purposes (domestic, irrigation, industrial, and energy) and towards achieving water security. Fortunately, this is actually beginning to happen as demonstrated by the 2012 UN Water Status Report on the Application of Integrated Approaches to Water Resources Management to which 70 percent of UN member states responded including 40 from Africa. This report shows that 80% of countries have embarked on the necessary reforms and have made progress on applying integrated approaches to water resource management. Furthermore, where countries have adopted integrated approaches, infrastructure development is more advanced. The continent has more than 80 major lakes/river basins and a quarter of the world’s major international rivers and 10 of these major basins are shared by more than 5 countries and 4 basins are shared by between 9 and 11 countries. This provides a real opportunity for management that will result in substantive win-win gains for all transboundary stakeholders as demonstrated by the example of the Senegal River by OMVS (Box 11). Hydropower benefits groups of countries which are too small to be able to generate their own power in an efficient way. Box 11. The Senegal River Basin Management Organization (OMVS) The four riparian countries of the Senegal River are Guinea, Mali, Mauritania and Senegal. They have established a solid and working institutional framework for integrated river basin management. The river is a source of hydropower, water supply, irrigation, multi-purpose storage, navigation, ecosystems regeneration and fisheries, providing opportunities for growth and poverty reduction for the people of the basin. Together, the four countries can benefit from the hydropower potential of the river, which was out of reach to them individually. In addition, the trust and confidence that is built working together can facilitate new ventures and joint socio-economic growth. Source: World Bank Due to lack of water, food self-sufficiency continues to be a challenge for many African countries. Food security will strongly depend on intra-African food trade and "virtual water "strategies. Due to population growth, the demand for food is expected to double in the next 30 years. As the main water demand driver is food production, a water crisis is basically a food crisis, just as the so-called land grabbing is really water grabbing for food production. Box 12 provides an example of the tenacity of the continent, where a struggling Office du Niger, is turned around after many years and is now successful.

14 PROGRAMME FOR INFRASTRUCTURE DEVELOPMENT IN AFRICA

PIDA’s transboundary water impactAN

NEX3

The transboundary water programme targets the development of multipurpose dams and builds the capacity of Africa’s lake and river basin organizations so that they can plan and develop hydraulic infrastructure. It would also help address the looming food deficit.

Fomi Dam

SENEGAL NIGER

VOLTA

LAKE CHADNILE

CONGO

ZAMBEZI

OKAVANGO

ORANGE-SENQU

North-West Sahara Aquifer System

Strategy for Nubian Sandstone Aquifer System

Palombo Dam

Multisectoral Investment OpportunityStudies of the Okavango Basin

Lesotho Highlands Water ProjectPhase II Water Transfer Component

Gourbassy DamFeasibility Study for Better Usage of

the Lullemeden Transboundary Aquifer

Basin boundariesStudiesMultipurpose dam

Noumbiel Dam


Box 12. Office du Niger An Enabling Environment for Reform: Office du Niger Initiated by the French in 1932, the Office du Niger is one of the oldest and largest irrigation schemes in Sub-Saharan Africa. Located in Mali, the scheme was originally developed to supply the French textile industry with cotton and to increase food security for the Sahel region. Despite a disappointing performance in the first several decades, including limited area development, poor infrastructure maintenance, and low yield, the project was rehabilitated in the early 1980s with assistance from the European Union, the World Bank, and the governments of France, Germany, the Netherlands, and the United States. Comprehensive reforms and rehabilitation tripled average paddy yields to 5 tons per hectare, increased the area under cultivation to about 80,000 hectares, boosted settler population by over 220 percent, and increased paddy production per capita from 0.9ton to 1.6 tons, reducing poverty and increasing food security. The project’s success is attributed to technical, institutional, and economic factors. Technical factors include water management through physical rehabilitation of irrigation and drainage networks, a comprehensive package of improved technologies, and appropriate agricultural mechanization. Institutional and economic factors include liberalized paddy marketing and processing, land-tenure security, infrastructure improvements, institutional reforms, and stronger partnerships with farmers. Also important were donor coordination, government commitment, and the right macroeconomic and policy environment. Source: Based on interviews with World Bank staff from the Africa Water Resources Department, 2008 The annual investment needs in the overall water sector are expected to be around US$ 49 billion per year. It is estimated that by 2040, the gross water requirement - the volume of water that must be withdrawn from the river system for domestic, industrial and agricultural uses – for domestic uses will range between 135-161 km3 per year, depending of the population growth rate scenario. In other words, the impact of the future population growth rate on the gross water requirements can be as high as 20%. Given the large number of shared river and lake basins, there is a huge opportunity for both large and small storage. Although, as shown in the figure below, there are quite a few dams on these transboundary waters, the existing potential for storage is far from being met.

Key Steps Towards Realization of Water Vision- next decade • Challenges to be overcome include: finding the right balance between rain fed and irrigated agriculture.

There are opportunities for benefit sharing, coordinated planning. Improving governance, improving efficiency and productivity of existing systems, increase multipurpose use of water storage; reducing water losses, pollution, balance irrigation expansion with other demands on water resource services; inter-basin water exchanges23. (

• Strengthen institutional basis for transboundary cooperation and strengthen transboundary water management frameworks. Strengthen the financial base for transboundary water resource development and management. Address transboundary aquifer management.

• Develop key water resources infrastructure and services for hydropower and multipurpose use. • For countries that do not yet have them, develop Integrated Water Resource Management Plans and

begin implementation. Plan for management of water resources for their different development uses, taking into account social, economic and equity considerations. The table below highlights the challenges that higher population levels will bring to meeting the requirements for water for development for its different uses.

• Mainstream water availability issues into national and regional economic planning. For each of the different uses of water resource services, there has to be a clear interregional plan whilst balancing the demands for other uses.

• Water resource management costing and financing as a viable use of resources will be needed. • Avert a food crisis if by making significant investments in increasing the productivity of rain fed

agriculture, increasing irrigation efficiency and intra–African food trade. • Improve water conservation, and wastewater management to reduce pollution and improve the quality of

the resource.

23 Jakkie Cilliers, Barry Hughes, Jonathan Moyer, African Futures 2050 (2011) page xix

regional infrastructure in sub-saharan africa: challenges and

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