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Feedback from the Nepad Transport Summit and Africa Expo 2009There are viewpoints that regional, let alone continental, integration of African economies is merely a pipe dream; that the inaugural Nepad Summit on Transport held in Midrand in November last year was merely another “talk show” – a word used by some of the 400 to 500 delegates who attended. The fact is that much action is taking place all over the continent to turn this dream into reality, as the summit revealed.
Continental or regional integration may not be the priority of the Chinese, as they appear more interested in getting Africa’s mineral resources to Africa’s ports. This by way of billions of dollars in loans for road, rail and terminal infrastructure to move the commodities to their ships, faster (and cheaper) than the horrendous long African transport lead times of today.
Other spin-offs for dollar-flush China – such as a return on those loans, work for a growing Chinese workforce on the continent and a market for Chinese merchandise – have been well documented.
But regional integration? The fact that there were only a few Chinese faces (not speakers) in attendance at the summit explains where their priorities lie.
The United States, Europe and Japan, however, seem to view regional integration – and how to achieve it – very seriously.
Lodewijk Briët, Pretoria-based head of the European Union Commission, said the EU shared the view of regional integration as highlighted in the Cotonou Agreement (2000), which preceded the launch of Nepad (New Partnership for Africa’s Development) in 2001 and the African Union (AU) in 2002.
The AU’s ultimate objective is continental integration. Briët said regional integration was seen as a key instrument to poverty eradication, economic growth and sustainable development in regional economic communities (RECs) such as the Southern African Development Community, the East African Community, and the Economic Community of West African States.
According to Briët, the EU has supported Nepad since its conception and shares the latter’s values and objectives, including the ‘crucial importance’ of regional integration.
This shared vision was enshrined in the 2007 Joint EU-Africa Strategy that saw continental economic integration as the long-term horizon. RECs were the building blocks toward continental integration.
Briët summarised the benefits of regional integration as follows:
• Prosperity – regional integration creates larger and more effective markets, encourages trade and investment, fosters economic growth and facilitates a smooth integration into the world economy;
• Political stability through increased regional interdependence and enhanced trust between neighbouring countries; and
• Tackling cross-border challenges and delivery of regional public goods (e.g. cross-border links for infrastructure, energy provision, Aids and migration).
Briët said regional integration of trade and infrastructure was one of eight EU-Africa Strategic Partnerships within a 2008-2010 action plan for which more than €3.3 billion had been allocated by the European Development Fund and other parties.
Japan is also looking for projects that will promote regional integration. This was highlighted by Yuichiro Motomura, president of Padeco, consultants to Mitsubishi Group. He first sketched how the concept had worked for eight countries in South-East Asia (Greater Mekong sub-region).
A similar study was done in East Africa and another one, which includes the North-South Corridor, is now under way in southern Africa. Results of these studies will be released in March.
Many speakers referred to the need for “bankable” projects and referred to a study, released only a fortnight before the summit, as an important document.
Described as “one of the most detailed ever undertaken on the African continent”, the study was conducted by a partnership of institutions including the World Bank, African Union Commission, African Development Bank, Development Bank of Southern Africa, Infrastructure Consortium for Africa and Nepad. Surveys were conducted in 24 African countries among 16 rail operators, 20 road entities, 30 power utilities, 30 ports, 60 airports, 80 water utilities, and over 100 information and communication technology (ICT) operators, as well as the relevant ministries in 24 countries.
The results were derived from detailed analysis of spending needs (based on country-level micro-economic models), fiscal costs (which involved collecting and analysis of new data) and sector performance benchmarks (covering operational and financial aspects as well as the country’s institutional framework).
It shows that the poor state of infrastructure in sub-Saharan Africa – its electricity, water, roads, and ICT – cuts national economic growth by two percentage points every year and reduces business productivity by as much as 40%.
It further finds that ineffective linkages between different transport modes (air, road and rail), declining air connectivity, poorly equipped ports, ageing rail networks, and inadequate access to all-season roads are key problems facing Africa’s transport system.
Only 40% of rural Africans live within two kilometres of an all-season road, compared to some 65% in other developing regions. Improving road accessibility in rural areas is critical to raising agricultural productivity across Africa.
Limited competition in the trucking industry keeps road freight tariffs unnecessarily high, while red tape along international trade corridors keeps the movement of freight below 12km/hour – as fast as a horse and buggy – even though truck speeds can be 60km/hour.
Generally, it finds that Africa has the weakest infrastructure in the world, but ironically Africans in some countries pay twice as much for basic services as people elsewhere.
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 the lives of Africans.
The report estimates that US$93 billion is required annually over the next decade, more than twice what was previously thought.
Almost half of this amount is required to address the continent’s current power supply crisis that is hindering Africa’s growth.
The study found that existing spending on African infrastructure is much higher than previously known, $45bn a year. Also surprising was the fact that most of this is financed domestically by African taxpayers and consumers.
Furthermore, the study found that there is considerable wastage to address; a number of efficiency improvements could expand the available resources potentially by a further $17bn.
Particularly now with the global financial crisis, investing in African infrastructure is critical for the continent’s future.
“Modern infrastructure is the backbone of an economy, and the lack of it inhibits economic growth,” says Obiageli Ezekwesili, World Bank vice president for the Africa Region.
“This report shows that investing more funds without tackling inefficiencies would be like pouring water into a leaking bucket. Africa can plug those leaks through reforms and policy improvements, which will serve as a signal to investors that Africa is ready for business.
The report, “Africa’s Infrastructure: A Time for Transformation”, takes a holistic look at four crucial sectors – energy, water, transport, and ICT – that underpin national economies and are critical for reducing poverty in Africa.
Prioritising these sectors, increasing investments, and improving efficiency can help African countries avert the worsening impacts of the financial crisis and begin laying the foundations for future growth as the global economy rebounds, the report states.
There have been numerous reports of loan and investment allocations by developed nations in projects in sub-Saharan Africa, many of them in tandem with AU and Nepad objectives.
Throw in the Chinese projects, and it becomes clear that the “talk” stage is over. Africa is on the move!
Udo Rypstra
