What’s infrastructure got to do with it?

Yesterday’s side-event at the U.N. summit on the Millennium Development Goals on “Scaling up Africa’s infrastructure to meet the MDGs” was unusual for three reasons. 

First, it was on infrastructure, a topic that is not usually associated with the MDGs, but—as the moderator Jeff Sachs pointed out—is central to meeting all the MDGs, either through its impact on economic growth, or through the effects of electricity, transport, and ICT on maternal and child health, for instance. 

Second, the event brought together African policymakers (including President Wade of Senegal, and Ato Neway, the chief economic adviser to the Prime Minister of Ethiopia), private-sector actors (including the CEO of Ericsson and the head of General Electric Africa), and people from African and international organizations to discuss how to scale up Africa’s infrastructure. 

Third, there was a genuine discussion, with participants asking each other questions—and getting answers!

The discussion pointed out several dilemmas in promoting infrastructure in Africa. 

• Private investors want some assurance of return on their infrastructure investments, which, in turn, means appropriate prices and regulations for electricity, say.  Yet, Africa already has some of the highest electricity tariffs in the world, and it may be difficult to raise them even higher.

• Ato Neway said that, because mobile telephones were so profitable, the Ethiopian government is keeping it in the public sector, plowing back the profits into expanding access; when they have reached universal access, they will sell the company to the private sector.  Jeff countered that Ethiopia has one of the lowest mobile telephone penetration rates in the world, and they could increase access faster by selling licenses to private companies, as other countries have done.  President Wade also pointed out that Senegal’s experience of going from a state-owned economy to a private one was painful, with several firms going bankrupt.  The implicit message was: the sooner they sold the phone companies the better.

• Several speakers, including President Wade and Fu Yang of China Development Bank (who mentioned that China can build 10,000 km of road in one day) pointed to the lack of capacity in African governments to appraise, concession, regulate and manage infrastructure projects.  The Head of GE Africa responded that few companies (including GE) have the capacity to do everything that is needed for an infrastructure operation; they usually contract parts out to specialized firms.  But in many African countries, they run up against local-content requirements.

The candor of the discussion and energy in the room left me optimistic that we can resolve these dilemmas.  As Jeff said in his closing remarks, we may be at an inflection point in African infrastructure.