Africa can only achieve double digit growth by closing its infrastructure gap
“There is no choice, Africa needs 10 percent per year of economic growth in the next 15 years,” says world renowned professor of economics, Jeffrey Sachs at the Third Financing for Development Conference in Addis Ababa, Ethiopia. However, the continent cannot achieve this if it does not find a way to close its infrastructure gap.
Sachs said this as thousands of delegates gathered to set the new financial architecture for a new global partnership as the world strategizes to ensure the post-2015 development agenda can be achieved. He identified the New Partnership for African Development (NEPAD) as the key to implementing cross-boarder infrastructure projects.
NEPAD Agency identified the continent’s most important infrastructure needs within the context of the Programme for Infrastructure Development in Africa (PIDA) which ensures the proposal of structured projects. Africa’s challenge is not a lack of resources, but a lack of bankable projects, notes Dr Ibrahim Mayaki, CEO of the NEPAD Agency. EY’s Bill Banks shares similar sentiments. According to him, addressing the infrastructure deficit in Africa does not only need diverse sources of funding, but it also needs detailed preparation and a strong business case for each proposed project.
Africa’s resilience has shown in its rapid economic growth despite the continent’s significant infrastructure gap. But looking forward, actions must be taken to address this deficit and catapult the continent to the next level of economic growth.
Power and road are two of the major infrastructure problems facing Africa. Several reports have presented the grave situation of Africa’s power sector. Even the relatively stable power sectors like South Africa’s have been struggling lately. Also, only one-third of Africans living in rural areas are within two kilometres of paved roads. To address these and others, Africa will need $90 billion every year for the next decade. If any real achievements will be made in addressing these challenges, infrastructure financing must look beyond governments and aid.
Sachs encourages African economies to partner with East Asia, tap into capital markets, and strengthen continental bodies such as the NEPAD Agency and the African Development Bank (AfDB) as alternative means of funding infrastructure projects. The continent can also tap into foreign exchange reserves, pension funds and sovereign wealth funds.
Addressing its infrastructure challenges will help Africa improve its fortunes, with countries enjoying wider access to their large natural resource deposits, which in turn significantly increases their economic capacities.