Africa’s infrastructure deficit is no secret. Several recent studies by the World Bank and others have confirmed that across the continent, roads are inadequate, railways in poor condition and waterways limited. While the problems are most obvious at the national level, they are more acute along routes connecting countries. Lack of resources contributes to the patchy state of infrastructure connectivity between African countries. But it is not the only hurdle. A key question is: given limited resources, how should infrastructure be planned, prioritized and financed?
Sixteen countries in Sub-Saharan Africa are landlocked. To trade goods in overseas markets, they must cooperate with their coastal neighbors, working together to plan roads, transport goods to port and keep borders open. This is harder than it sounds. While numerous regional organizations exist to coordinate infrastructure planning in Africa, in practice they are made up of representatives with interests rooted in their own countries. Decisions by these bodies are often political and driven by members’ desire to see projects in their home territories.
The result can be duplicative, competing or redundant infrastructure plans. In some cases, one country’s priorities do not match its neighbor’s, and the road stops at the border. The Mulanje – Mocuba road, for example, is intended to link landlocked Malawi to the Mozambican seaport of Nacala. The stretch of road in Malawi was completed in the late 1990s, but the connecting link in Mozambique remained unimproved for more than a decade. In other situations, many countries want access to natural resources, so they propose several competing projects. For example, planned roads and railways fan out from the copper fields of DRC through a host of countries: Angola, Zambia, Namibia, South Africa and Tanzania. If all were built, none would be used enough to justify the cost of construction. Finally, in some cases, a regional body designs a road network without fully understanding private sector demand, and the infrastructure is underused. This mismatch of priorities between countries – or between government officials and the market – inhibits regional integration and leads to inefficient use of limited resources.
The challenge of fixing this problem is twofold. First, for countries to build connective infrastructure that supports commerce, they need to rely less on national politics and more on impartial assessments of existing and future transport needs. Second, building roads is expensive; an equitable system needs to guide how countries allocate the costs of regionally valued infrastructure. For instance, should Tanzania be required to pay all the maintenance costs of a road primarily used to carry Rwanda’s goods to market?
The problem of financing is sticky when it concerns landlocked countries.A particular section of road or rail could be important to a landlocked country but may have low priority in the transit country. How should it be paid for? Can private sector financing be used with cost recovery mechanisms? This is a problem faced in other regions including South Asia (India/Nepal) and East Africa (Tanzania/Zambia). Toll roads or other user-pay approaches are an option. But if traffic is not high enough, that might not work, and the country hosting the infrastructure would typically have to subsidize construction and maintenance.
International development banks, with a bird’s-eye view and a mandate to build consensus, are in a good position to tackle the first challenge: impartial transport assessments. In fact, the World Bank’s Africa Transport Unit, with PPIAF funding, has made an attempt to address the issue in East and Southern Africa by examining the existing and future demand for transportation infrastructure. In a study that included consultations with other donors and area Regional Economic Communities (RECs), the Bank found that the basic road infrastructure across East and Southern Africa is in place. That is, trade flows are following paths already established by the market. The main problems are maintaining that network – not investing in new routes – and making sure it has improved access to ports, which are increasingly surrounded by growing urban centers and suffering from congestion.
With this data in hand, countries could work together toward fact-based investments in regional transportation infrastructure. The second problem quickly becomes clear, however: how to pay for this? One option is the private sector. An advantage of taking a coordinated, fact-based approach to infrastructure is that a region could benefit from economies of scale and private sector investors would see less risky opportunities. Some projects, such as toll roads, that would not work in one country could become feasible on a regional level because they bring higher returns. A coordinated approach would also reduce the private sector’s uncertainty about projected demand and how trade would flow across the network.
The Bank’s prevailing approach to infrastructure investments is to be more selective than in the past, an appropriate tack. But the choice to invest needs to be based on stronger assessments of likely impact. The present practice of investing in projects with the most vocal proponents will likely endow Africa and other developing regions with sub-optimal network configurations. Favoring outward-looking infrastructure at the neglect of investments that promote intra-regional trade will perpetuate the inherent disadvantage that landlocked countries face in accessing overseas trade markets. Proper coordination, in contrast, will help attract more private-sector financing to infrastructure investments.Mechanisms and legal frameworks for cross-border investment in infrastructure would make even greater private sector involvement possible. Centering this coordination around objective assessments could help Africa – and its population – realize the benefits of true regional integration.
Regional development banks could also play a central role in regional infrastructure financing. They could establish criteria – based on demand studies – for financing a road. They could divide financing costs between the countries that would use a particular road.Or alternatively, they could provide grant resources for projects intended to benefit landlocked countries.What is clear is that the regional and international development agencies need to design more innovative approaches to financing cross-border transport infrastructure.