Infrastructure

Weak infrastructure remains major constraint to growth and achieving the MDGs. Need to improve public-private partnerships and implement PIDA Priority Plan.

Key commitments

Africa: African governments have emphasised the importance of infrastructure and have made broadly similar commitments spanning four subsectors – energy, transport, water and ICT – to strengthen national planning frameworks, reform and harmonise the regulatory environment, mobilise increased private and public resources and develop regional and continental programmes. In January 2012, African leaders agreed to prioritise the programmes contained in the Priority Action Plan (PAP) of the Programme for Infrastructure Development in Africa (PIDA) and to promote regional projects (see Box 3). Targets include: (a) 35% of the population have access to electricity by 2020; (b) the proportion of people living beyond 2 km from an all-season road halved by 2015; (c) reducing the proportion of people without access to safe water and sanitation reduced by 75% by 2015, and (d) all African capitals and major cities’ information networks interconnected by 2012.

Development partners: Development partners have undertaken to increase financial support and help mobilise private sector participation (see also Topic 4). They have made specific commitments to promote clean energy and energy efficiency. The Seoul Multi-Year Action Plan, reiterated in 2011 in Cannes, committed the G20 to overcome obstacles to investment, develop project pipelines, improve capacity and facilitate increased finance The G-20 has called on the Multilateral Development Banks (MDBs) to prioritise implementation of the 5 projects in Africa identified by the High Level Panel on Infrastructure (HLP). The UN General Assembly declared 2012 the International Year of Sustainable Energy for All.

What has been done to deliver on these commitments?

Africa:

National planning: most countries lack planning frameworks or long-term strategies, though the situation is significantly better for road transport and ICT. There are improvements in energy and in water and sanitation under the leadership of the African Ministers’ Council on Water.
Regulatory reform: Regulatory agencies have been established but capacity remains weak. Most progress has been in telecommunications. Reforms are underway in the power sector to address electricity shortages and to promote renewable energy. In transport there are efforts to improve logistics competence and trade facilitation with a focus on land-locked countries.
Private sector: Participation varies enormously across sub-sectors: it is highest in mobile telephony, followed by transport, with the contracting of road maintenance and concessions in container terminals and railroads. In energy, state-owned utilities remain prevalent although the development of Public-Private Partnerships (PPPs) is increasing private participation in power generation and distribution. In water, management or lease contracts of national systems have been problematic but PPPs have become more common for small-piped schemes. Although improving, PPPs in Africa still account for a very small share of global public-private investment (PPI): in 2010, new PPP commitments in sub-Saharan Africa, mostly in telecommunications, accounted for less than 2% of the developing country total.
Regional initiatives: Cross-border initiatives have been launched in the energy sector through the creation of power pools in all sub-regions; in transport with transit corridors; in water with the sharing of transboundary resources; and in ICT with the development of broadband connectivity including through the PIDA (see Box in appendices).

Development partners:

Development partners have significantly increased support for infrastructure, including through the Infrastructure Consortium for Africa (ICA). Cumulative funding commitments from all sources rose in 2010 to US$56 billion with ICA members, China and the private sector contributing 52%, 16% and 25% respectively. Disbursements by ICA members are also growing, amounting to US$9.7 billion in 2010, versus US$9.4 in 2009. Only 8% of total commitments, however, were directed to support soft infrastructure (policy and administrative management, education and training, and research).

G-20 members are also supporting a number of MDB HLP recommendations, including the need to:  (a) develop local and public-private capacities to improve supply and quality of infrastructure projects; (b) increase the quality of information available to investors; and (c) contribute to improve the access to funding. 

What results have been achieved?

Despite increased investment, progress has been slow (apart from ICT), and weak infrastructure remains a major constraint to growth and to achieving the MDGs. On several basic infrastructure indicators African countries trail their developing country peers, with the gap particularly noticeable in the density of paved roads, power generation capacity and coverage of the fund and lines. Access to energy, transport, water and ICT in rural areas is even lower.

Energy: In North Africa access to electricity is almost universal; in sub-Saharan Africa only 31% of the population had access in 2010, the lowest level in the world. The small-scale nature of most national power systems and extensive reliance on expensive oil-based generation makes the average cost of generating power in Africa exceptionally high (3.5 times that of South Asia). Thirty countries in sub-Saharan Africa have experienced energy crises in recent years.
Transport: The paved road access rate in sub-Saharan Africa amounts to only 19%, substantially lower than other regions. Only one-third of the rural population is within 2 km of an all-season road, compared with two thirds in other developing regions. Transport costs are also much higher, compounded by high profit margins for trucking companies.
Water and sanitation: Half the African continent faces some sort of water stress or scarcity. Access to improved water in sub-Saharan Africa rose by less than 1% a year over 2000-08 to reach 60%. Progress on sanitation has been even slower, with only 31% of the population having access to improved sanitation facilities by 2008 (see also Topic 8). The absence of water storage and irrigation infrastructure has led to severe under-utilisation of the continent’s resources. Similarly, only 7% of sub-Saharan Africa’s hydropower potential has been tapped.
ICT: Mobile telephony has been a success and has adapted to local needs (e.g. supporting mobile money transfers). Subscribers have grown from 16 million in 2000 to 390 million in 2009. Internet penetration lags behind, despite considerable progress: the number of internet users is estimated to have grown from 3.6 to 9.6 per hundred from 2007 to 2010 and represented 6.2% of global users at the end of 2011.

What are the future priority actions?

Africa

• Move rapidly to implement PIDA Priority Action Plan (PAP);
•Continue efforts to improve efficiency of existing infrastructure, reduce costs, and promote private sector participation;
• Accelerate implementation of regional initiatives, and harmonisation of regulatory frameworks.

Development partners
• Maintain increased financial support, including through the ICA platform;
• Implement the recommendations of the G-20 HLP and the MDB action plan in line with PIDA;
• Use aid to leverage increased private investment, by supporting the enabling environment for investment and developing non-ODA instruments, such as export credits and investment funds.