Building a Better Society in Africa through Infrastructure Investment-Lord Aikins Adusei

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Africa is a continent of many potentials which when unlocked could unleash economic and social forces that will reverberate across the globe. However, these potentials including economic growth, development and market are held back by several obstacles including ineffective leadership and corruption. The poor security environment (e. g. civil wars in South Sudan and Libya, and terrorism in Egypt, Mali, Niger, Nigeria, Somalia and Tunisia) all negatively affect Africa. Others are lack of access to markets and financial capital, access to technology, low savings and low quality human capital. Weak institutions, contract enforcement, as well as lousy policies including regulations that are poorly designed and implemented all badly affect the continent and its quest to develop and create a better society for its 1.2 billion citizens. Poverty traps, poor geography and ecology, high costs and extremely low levels of investment in infrastructure all increase the costs of doing business in Africa especially for investors interested to start or expand their businesses. (For in-depth analysis see Daron Acemoglu and James Robinson, 2014; Jeffrey Sachs, 2012).

Take geography and ecology for instance. There are sixteen countries in Africa that are landlocked and are without access to sea. They include Botswana, Burkina Faso, Burundi, Central African Republic, Chad, Ethiopia, Lesotho, Malawi, Mali, Niger, Rwanda, South Sudan, Swaziland, Uganda, Zambia, and Zimbabwe. The lack of access to sea affect their economic development as they have to rely on their internally built airports or the ports in neighbouring countries to import and export which can be costly. Even in countries with access to sea, development is uneven due to geography. Major economic activities often tend to concentrate in coastal areas which attract population from the interior, thereby depriving the non-coastal areas of human talents needed to develop such regions. Besides, the population density in many countries (e.g. Mali, Niger) are so low, they cannot support huge economic activities as well as the formation of large urban towns. The northern part of Africa is cut off almost completely from the rest of the continent by the hostile Sahara Desert. This makes movement of goods, services and people (from North to South and vice versa) extremely difficult and expensive. The desert has made it difficult for the construction of roads and railways linking the North to the rest of the continent, limiting trade and the diffusion of ideas, knowledge and technology. People living along the fringes of the Sahara and other arid parts of the continent face serious environmental security challenges. For instance, inadequate rainfall and inadequate water affect the development of agriculture and animal husbandry. In addition, Africa’s proximity to the equator and tropics means that it is susceptible to several deadly tropical diseases such as malaria which exert enormous pressure on economic growth and development of the continent.

However, while African countries can do very little to change their geography, there is a lot they can do to reduce the negative impact of geography and other obstacles on economic development. In this paper, it is argued that African governments must invest in infrastructure and technologies to spur economic growth and development and create better society for its citizens.

The Case for Infrastructure Investment

Ethiopia is one of the 16 landlocked countries in Africa. The country lost its access to sea after Eritrea became independence in the 1990’s. The lack of access to sea placed enormous challenge on the country’s economic development. As one of the world’s leading coffee producers, Ethiopia struggled to export its coffee products, but no more. The breakthrough came when the country began to invest in key transport infrastructure. In January 2017, Ethiopia opened a new 470 mile (756 km) long railway line from Addis Ababa to Djibouti, a country on the Red Sea. The cost of the project was $4.2 billion and was paid for with funds from China. The massive investment in the Addis Ababa-Djibouti railway infrastructure is increasing trade between Ethiopia and the outside world and is unlocking the economic potentials of the country. According to Harvard Economist Dani Rodrik, Ethiopia has spent between 5% to 19% of its GDP investing in roads, hydroelectricity, dams and other basic infrastructure. The result is that Ethiopia’s economy has been growing at about 10% over the last decade. The investment in public infrastructure has also raised the overall productivity of the economy and is reducing poverty especially in rural communities.

“Ethiopia has experienced GDP growth of more than 10% per annum over last decade, due in large part to the increase in public investment, from 5% to 19% of GDP. The resources spent on investment in basic infrastructure such as roads and hydroelectricity appear to have been well spent; they have raised the overall productivity of the economy and reduced rural poverty” (Rodrik, 2016, P.13).

In May 2017, Ethiopia’s southern neighbour Kenya also cut the ribbon for the opening of a new 298 mile (479 km) long railway line linking Nairobi the country’s capital to the port city of Mombasa. The price of the project was $3.8 billion and was financed and built by China Road and Bridge Corporation. One advantage of the new rail route is that it has cut the travel time by about 67% from 12 hours to 4 hours.  It has also made travel between Nairobi and Mombasa cheaper helping travellers to save a lot of money. Prior to the opening of the new railway line, buses from Mombasa to Nairobi would take 12 hours and passengers would have to pay 1200 Kenya shilling or nearly $11.61. However, Kenyans are now paying 700 shillings or $6.77, about 42% less, a major relief for travellers (Gaffey, 2017).

These two examples from Ethiopia and Kenya illustrate the importance of infrastructure investment and the need for Africa to focus much attention on building its infrastructure as a way of promoting economic development, bringing Africans together, ending its isolation from the rest of the global economy and ending poverty. In short infrastructure building can contribute to creating a better society for all.

The health of every nation’s economy is strongly dependent on a reliable infrastructure system because infrastructure are the bedrock, the life blood and the engines that drive the economy. In fact, the contribution infrastructure investment makes to the economy cannot be overemphasized especially its effect on sustainable development, foreign direct investment flow, GDP growth, inflation reduction, job creation, trade, agriculture, delivery of goods and services, lowering cost of business, improving health and standard of living and poverty reduction. Therefore, efficient and effective provision of infrastructure in a nation underlines all attempts to reduce poverty and create a better society. According to Columbia University Economist Jeffrey D Sachs, China’s 30 years of torrid economic growth, industrialization and improved standard of living are the result of massive investment in infrastructure which has lifted over 800 million people out of poverty. “China has proved itself highly effective at building large and complex infrastructure (such as ports, railways, fibre-optic cables, and highways) that complement industrial capital, and this infrastructure has attracted foreign private-sector capital and technology” (Sachs, 2012, P.144).

About 68% of Africa’s annual total trade (worth $642 billion) occurs between the continent and Europe. Meanwhile trade among African countries is a mere 18% or $170 billion a year (Financial Times, 2018). One of the reasons for the low intra-African trade has to do with inadequate port, harbour, roads and railways connecting African countries which severely hamper the movement of goods and services within the continent. Trade within Africa can potentially improve if the building of infrastructure networks could be sped up to connect the countries from north, south, east and west. Indeed, the recent African Free Trade agreement can only succeed if serious efforts are made to build the needed infrastructure. Without infrastructure such as ports and harbours, roads, railway lines, it will be difficult to embark on any meaningful export and import driven programmes in Africa. Goods cannot be moved from centres of production to centres of consumption if there are no roads, rail lines, ports and inland water infrastructure to deliver them. Food production cannot be increased if dams, irrigation facilities, canals, silos, tractors and other accoutrements are not in place. A country cannot supply its industries with doctors, architects, bankers, lawyers, planners, engineers, computer programmers, teachers, nurses and technicians if there are no education infrastructure and the support system to deliver it. Tourists will not be motivated to come to a country if airports, hotels, roads and other infrastructure that go with it are absent; and a nation cannot run an efficient and vibrant economy if there are inadequate energy and telecommunication infrastructure. Lack of or inadequate infrastructure tend to slow down the growth potentials of the economy and weaken the sectors such as manufacturing, agriculture and service which heavily depend on it.

The difference between the developed economies and the developing world can be explained on the scale, quantity and quality of their social and economic infrastructure. A visit to any of these developed economies (Germany, Japan, France, Britain, Sweden) reveals efficient and well developed networks of surface and underground rail lines, roads, tunnels, trams, power plants, airports, harbours, telecommunication, health, education, housing, shopping malls, canals, inland water system, irrigation facilities, sewerage and sanitation infrastructure which are constantly being upgraded and maintained.

On the other hand, a careful look at the state of infrastructure in several African countries reveals serious discrepancies, deficiencies, decay and neglect. The poor state can be attributed to lack of concrete and coherence infrastructure development policies, lack of political commitment and inadequate funding. Public infrastructure development is often neglected because politicians in their short-sightedness tend to focus on short term policies and programmes that win votes but that also retard development and keep the people in perpetual poverty. Long term policies such as infrastructure building are shunned because it is seen as expensive and takes time for benefits to be realized. This explains why the railway and other major infrastructure system are either none existing or are barely working.

For several years, South Africa, Nigeria, Tanzania, Ghana, Liberia, DRC, Somalia, and Kenya have been experiencing serious disruptions in the energy sector. The problem is that these countries have focused too much on building dams while ignoring other potential energy sources such as solar, wind and even coal. The Finnish president on a visit to Nigeria in March 2009 wondered why Nigeria has done so little to harness solar and wind energy which it has in abundance and added that we do it in Finland for our renewable energy (Source: www.dailytrust.com, 12 March, 2009). The sad story is that Finland is locked up for most of the year by cold winter but take advantage of the short summer to convert the little sunshine they receive into solar energy while African nations have sunshine most of the year but do little to harness it. Dwindling rainfall has limited the ability of these dams to produce the needed energy to support the economy. As a result investors are repelled and factories are folding up as the dams could hardly cope with the demand. Besides power distribution infrastructures such as transformers and power lines are outdated. According to a recent World Bank report, the price of electricity is a leading factor in making Africa un-competitive, relative to emerging economies like India, Brazil, Russia and China.

In Tanzania, Ghana, Nigeria, Guinea, Liberia, Senegal, Mali, Gabon, Congo, DRC, and CAR, comfortable high speed train service is still but a dream due to the poor nature of rail tracks. Years of neglect and lack of investment has brought this vital transport sector to its knees. Whereas an express train in Japan takes about an hour to cover 280 km, it takes an express train in Zambia 7 hours to cover the same distance. Most of the trains are locomotive, some of which are 50 years old, slow moving, worn out and run on single gauge tracks with a maximum speed of 70 km/h. Despite the evidence that rail network development is the quickest, efficient and cheapest way to move people and goods, the sector has received little investment for modernization. This is one major reason why cost of running business in African countries is higher compared to other regions.

The roads in the cities are limited in capacity; are poorly maintained; and are choked with cars, trucks, buses with no provision for bicycles, pedestrians and people with disabilities. Daily traffic jams are a common occurrence in Nairobi, Dar es Salaam, Accra, Lagos, Cape Town, Johannesburg, Cairo, Kampala, Free Town, Yaoundé and Monrovia, as there are few or no parking lanes and ring roads to direct traffic away from the central business district. This makes cost of running business very expensive as passengers and goods spend hours in traffic especially during the rush hours. Besides, inter and intra-city multi-lane freeways and expressways are still in its infancy in many countries and this has adversely affected travel, business and trade.

About 60% of Africa’s total population live in rural areas. However, in these areas, infrastructure of every kind scarcely exist and those that exist barely function. There are few accessible roads in rural Africa and these few are poor, dirt and unpaved. As a result of these, rickety buses, taxis and tractors dominate rural roads and accidents are high. Most rural communities become inaccessible during the rainy season and harvested crops go wasted due to lack of transport. It is estimated that close to 40% of food produced in rural Africa get rotten due to lack of roads and poor bridges. The absence of electricity, water, sanitation, irrigation facilities, silos and other storage infrastructure limit the ability of the people to create wealth and do away with poverty. Currently 250 million Africans mostly in rural areas are cut off from existing power infrastructure and most of them resort to the use of expensive and hazardous fuels such as kerosene and firewood. Increasing access to affordable and clean lighting, water, sanitation, roads, improved seeds and irrigation infrastructure, are essential to Africa’s development; for without them it will be impossible to reduce poverty and improve rural life.

Lack and poor quality of port and harbour infrastructure have poorly positioned the continent to take full advantage of economic globalization. Few ports and harbours are able to handle the big oil tankers, cargo and passenger planes that dominate global shipping and air travel, making the continent one of the few places where cost of shipping and air travel are still provocatively expensive. The ports in Tema, Lagos, Durban, Richards Bay, Cape Town, Saldanha Bay, Port Elizabeth, and East London, Mombasa, Djibouti and Suez still struggle to berth some of the big ships due to weak capacity and lack of appropriate technology.

Lack of infrastructure has also affected the manufacturing and production of goods and services in Africa. The export sector is dominated by the export of crude oil, cocoa, coffee, tobacco, tea which have the disadvantage of not bringing in enough revenue and also creating the needed jobs. The same is true for gold, diamond, which are exported to Switzerland, Belgium, Britain and Dubai before Africans go there to buy the wedding rings and bracelets to sell. The necessary infrastructure and technologies needed are often completely absent. There are no major gold and diamond cutting firms in Africa because the infrastructure do not exist. As a result, the millions of jobs that gold and diamond cutting and polishing create are found in Israel, Belgium, Britain, US, even though they do not mine these minerals. In Nigeria, Gabon, Equatorial Guinea, Angola, Chad, all major oil producing countries, it is sad to note that lack of infrastructure such as refineries and pipelines, has hampered expansion in the oil sector, leading to shortages of petroleum products, higher prices and queue forming seen in Nigeria, Ghana, Togo, Liberia, Tanzania, Zimbabwe, Somalia, Malawi, Zambia. There are few petrochemical industries in the continent due to lack of infrastructure. As a result most oil exports are in the crude form which brings in limited revenues.

The telecommunication including ICT sector is still struggling to catch up with the rest of the world. Internet connection is absent in the rural parts of the continent and connection is very slow in cities where internet is available. In many areas, there are no fixed telephone lines and as a result mobile telephone has become the dominant means by which people communicate. In many countries mobile telephone infrastructure is still at the infancy stage. Making international calls is still outrageously expensive and most calls have to go through Paris. The absence of telecommunication infrastructure is part of the reason why cost of running business is expensive in the continent compared to other regions. Schools, hospitals, fire stations, banking and security operations are hampered by the absence of these vital infrastructure.

The agricultural sector is no exception. Farmers have no access to credits, improved seeds, tractors, irrigation facilities (e.g. canals and dams), fertilizers and silos and other storage facilities, and receive little to no support from government. Farming in Africa is dominated by the use of cutlasses and machetes, hoes and other rudimentary equipment. Despite the presence of major rivers and lakes, lack of irrigation infrastructure has deadly hampered the agriculture sector. Farmers still rely on nature for rain in order to plant and farming is still at the subsistence level. As a result, the average farmer can only produce to feed himself with little or nothing to sell. The result is the food shortage, high cost of food, hunger and the extreme poverty sometimes seen in Zimbabwe, Ethiopia, Niger and Mali, Burkina Faso, Sierra Leone and Somalia.

In most countries, there are no proper housing infrastructures such as water, electricity and waste management not even in the capital cities. A visit to any village or town gives the same picture of poor and substandard housing and poor quality of public services and mortgage is a dream. They face constant barrage of water and energy disruptions with high utility bills as these sectors struggle to cope due to lack of infrastructure. The dwindling housing stock has forced people to live in slumps and engage in occupy-build-service instead of build-service-occupy. This explains why most residential areas lack running water, schools, electricity, clinics, toilets, playgrounds, car parks and access roads as there are no central planning authority to enforce building and zoning rules.

The education sector, the foundation of the continents development effort has its share of the infrastructure problems. The institutions lack modern facilities such as state of the art libraries, laboratory simulation facilities, studios, computers, books, staff bungalows, classrooms, students’ accommodation and electricity. In most institutions, it is still chalk, paper, and blackboard and there are no internet connections. The infrastructure problem has affected the quality and delivery of education in the continent. Of about 9,760 Accredited Universities in the World that were ranked, only University of Cape Town and University of Witwatersrand managed to place 179 and 319 positions respectively in the top 500 (Source: topuniversities.com/2008). Without the infrastructure the institutions are unable to produce the high quality of architects, engineers, planners, bankers, lawyers, doctors, teachers, nurses, technicians, that Africa desperately need in this increasingly scientific and technological age. This explains why in most countries, major architectural and engineering works are undertaken by foreigners and foreign companies from USA, Japan, China and Europe. The Universities lack well trained lecturers and some of them are amateur in the use of computers, internet and pod-casting all powerful tools essential to delivering quality education. In most universities, students and lecturers have very limited access to electricity which hampers their ability to conduct any meaningful academic work.

Whereas students in advanced countries get their hands on books immediately they are released those in Africa have to wait several years to get the same books due to poor funding. Very few of our universities can boast of a million volumes of books in their libraries. Even the few books that exist are so old that information contained in them are valueless. This explains why there are no breakthroughs in our universities. Our research institutions have achieved very little because they are underfunded and lack the supporting accoutrements to carry out any meaningful research. A case in point is Cocoa Research Institute of Ghana (CRIG) located at New Tafo in the Eastern Region. Despite decades of its existence, Ghanaians still export raw cocoa beans for peanuts. The same can be said about research in coffee, tea, palm fruits, cotton and other cash crops. This is the state of Africa’s premier institutions and the little I say about the Polytechnics and secondary schools the better.

It is obvious that lack of infrastructure is one of the causes of the poor economic performance and poverty seen everywhere in Africa and there is no doubt that without heavy investment in infrastructure it will be very difficult for Africa to make any progress towards economic independence. Increasing access to water, sanitation, roads, electricity, railways, trams, inland water transport system, airports, harbours, telecommunication, canals, and providing improved seeds, credits, subsidies and irrigation infrastructure are essential to Africa’s economic and social development, for without them it will be impossible to reduce poverty and improve both urban and rural lives and create a better society. Infrastructure investment is costly but the price is worth paying.

References

Acemoglu D., Naidu S., Restrepo P., Robinson J. A. (2014). ‘Democracy Does Cause Growth’, Unpublished Paper.

Acemoglu D., Gallego F. A., Robinson J. A. (2014). ‘Institutions, Human Capital, and Development’, Unpublished Paper.

Financial Times (2018). ‘Africa free trade pact raises hopes of prosperity’ 11 April 2018

Gaffey, C. (2017) ‘Kenya just opened a $4 billion Chinese-built railway, its largest infrastructure project in 50 years’ Newsweek, 31 May 2017.

Gelb A., Meyer C. J., Ramachandran V. (2014). ‘Development as Diffusion: Manufacturing Productivity and Africa’s Missing Middle’, Washington, D.C.: Center for Global Development, January.

Rodrik, D. (2016). ‘An African Growth Miracle?’ Journal of African Economies, Volume 27, Issue 1, 2018, Pages 10–27

Sachs, J. (2012). ‘Governments, Geography and Growth: The true drivers of economic development’, Foreign Affairs, Volume 91, Number 5, pp.142-150

By Lord Aikins Adusei, Centre for Better Society Advocacy and Research-Africa (CEBSAR-AFRICA)

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