This is an excerpt of the press release.
"Africa's Infrastructure: A Time for Transformation", a study recently conducted in 24 African countries, shows that the poor state of infrastructure in Sub Saharan Africa – its electricity, water, roads, and information and communications technology (ICT) – cuts national economic growth by 2 percentage points every year and reduces business productivity by as much as 40 percent. This study argues that well functioning infrastructure is essential to Africa’s economic performance and that improving inefficiencies and reducing waste could result in major improvements in African’s lives.
The report estimates that US$93 billion are needed annually over the next decade, more than twice what was previously thought. Almost half of this amount is needed to address the continent’s current power supply crisis that is hindering Africa’s growth. The new estimate amounts to roughly 15 percent of the continent’s gross domestic product (GDP), comparable to what China invested in infrastructure over the last decade.
The study found that most of spending on Africa’s infrastructure is domestically financed by African tax payers and consumers. The study also found that there is also considerable wastage to address; a number of efficiency improvements could potentially expand the available resources by a further $17 billion. However, even if major efficiencies are gained there is still a funding gap of $31 billion every year, much of it for power and water infrastructure in fragile states. Relative to the size of their economies, the funding gap is daunting for the region’s low-income countries (who would need to spend an additional 9 percent of their GDP) and particularly for the region’s fragile states (who would need to spend an additional 25 percent of their GDP).
Closing the efficiency gap requires improving management of utilities, ensuring adequate maintenance, promoting regional integration, recovering costs while recasting subsidies to enable broader access, and improving allocation and spending of public resources. To close the funding gap a wide range of sources will need, including public budgets, resource rents, local capital markets, private sector and non-OECD finance, as well as traditional donor assistance.
The report is a reult of a partnership between several institutions: the African Union, the African Development Bank, the Development Bank of Southern Africa, the Infrastructure Consortium for Africa, NEPAD and the World Bank.
For more information and for access to the full report, please go to: http://www.infrastructureafrica.org/aicd.
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