The Africa Development Bank estimates that Africa needs as much as 175 billion US dollars a year by 2025, to close the infrastructure gap, which is cited as a significant constraint on its growth.
The notion of the infrastructure gap has driven African governments to borrow and spend billions on roads, railways airports, dams, and other large, ambitious infrastructure projects. However, this binge of infrastructure is starting to be questioned and rightly so. The continent is dotted with shiny infrastructure projects which are struggling to justify themselves as they have not created the growth, employment, revenues and development promised. Many have been vehicles for corruption and have burdened taxpayers with enormous debts which we are struggling to repay.
Much of this large infrastructure is built on the “build it and they will come” principle. That these huge projects will attract investment, industry and generate economic activity that will ensure that they can pay for itself. It is time to rethink this approach. Does Africa need Infrastructure, yes, however we need to rethink our approach to infrastructure. Investing in “small” infrastructure, that provides immediate benefits to citizens and drives quality of lie and economic development. Rural roads, urban roads, last mile internet and electricity connectivity, pedestrian infrastructure, community healthcare infrastructure, warehousing, and cold storage.
Build it for those that are there.
On May 31st, 2017, President Uhuru Kenyatta opened the first phase of the largest infrastructure project in Kenya’s history, christening it the ‘Madaraka Express’. It was the Chinese built Standard Gauge Railway (SGR) which parallels the old colonial line from Mombasa on Kenya’s coast through the capital Nairobi to Lake Victoria and on into Uganda. President Kenyatta hailed the railway as a developmental gamechanger stating that ‘Large and vibrant towns will grow along its length, new factories and hotels, and service businesses will employ hundreds of thousands of young people. Farmers will earn more as their produce makes its way to buyers faster and cheaper’. Not only has none of this come to pass, but the railway has also been losing money and bleeding the country dry with debt payments. In the 2021-22 financial year the railway reported an operating loss of 31 million US dollars while the country made 209 million dollars of debt payments for the railway.
Across the continent this tale is repeated mega infrastructure projects, justified as the foundation upon which Africa’s future development will be based. Mega railways, airports, ports, dams, and power stations, that will kickstart manufacturing industries, transform large scale agriculture and make the continent more attractive to investors. These projects, by and large have not done so, instead becoming a drain on the public purse, threatening critical services and other development projects as we try to pay back loans.
It is clear from the mess that many of us have gotten ourselves into, that Africa needs to rethink the “build it and they will come philosophy” for how it invests in infrastructure, and the type of infrastructure it invests in.
Thinking small: Rural Roads, warehousing, pedestrians, and the last mile.
What small infrastructure should African governments be investing in. It should be small infrastructure that enhances the productivity and growth of the majority of livelihoods in the economy. It should infrastructure that improves the daily lived experience of citizens. It should be infrastructure that drives the growth of local economies and industries. And there are a number of options that would serve one or more of these objectives.
- Rural Roads
Much of the mega-infrastructure investment on the continent has focused on transcontinental highways meant to spur intra-African trade, expressways to beat the traffic menace in cities and superhighways for national prosperity. However, most African countries remain primarily agricultural economies. ‘Agriculture employs approximately 65–70% of the African workforce, supports the livelihoods of 90%of Africa’s population, and accounts for about a quarter of the continent’s GDP’[1]. Enhancing rural transport networks will improve access to markets, particularly for small farmers allowing them to get their produce to market quicker and cheaper. It will reduce the cost of getting goods and services to rural communities and make travel to regional centres easier. All critical to improving opportunities and livelihoods for local communities.
- Warehouses
This is a subject I have written about previously, certified warehouses that can properly store agricultural goods, would reduce post-harvest losses. Africa loses approximately 100 million tonnes or $4 billion worth of food to post harvest losses. If not lost that food would reduce the cost of food, improve availability and boost incomes throughout the value chain from farm to fork. Proper storage would save lot of this food. Beyond just improving food supplies, certified storage would improve farmer access to credit and markets as certified storage is the foundation of commodities exchange systems.
Beyond agriculture, certified warehouses with refrigerated facilities would enable the provision of healthcare by enabling the storage of medicines and vaccines that can then be distributed to local facilities or clinics at short notice.
- Small urban infrastructure
Infrastructure in African cities is a perennial problem, causing epic traffic, hurting businesses, and creating unfortunate living conditions for many. What this requires isn’t investments in superhighways and expansive public transport systems, but people focused infrastructure. As previously written, “78 per cent of Africa’s population commutes by foot and on bicycles every day,[2]”. Investing in sidewalks, footbridges, cycle lanes, road crossings, footpaths etc. will save lives and make the lives of millions of people easier.
Second investing in “aesthetic” infrastructure such as parks, streetlights, signage, and street markings. This may seem frivolous, but it serves a purpose, people need green spaces for their mental and physical well-being, well-lit and marked streets enhance safety, service delivery and facilitate businesses. Improving the liveability of cities by investing in small urban infrastructure will serve to improve quality of life and the business environment boosting urban economies.
- The last mile
The last mile can be broadly defined as the final stage of a network or transportation network before its final destination. It is the fibre cable that brings internet to individual buildings, the electricity line that connects homes to the grid, the telco tower providing cell service and the road leading to your front gate. Investment in the last-mile is about making sure those that would be bypassed by dispassionate cost-benefit analysis. This investment in the last mile does not mean governments must spend billions building power cables and fibre lines. Innovative structures, such as Kenya Universal Service Fund, which uses funds from fees and levies paid by telecommunications companies to fund the building of infrastructure and provision of services in underserved areas. This is why Kenya has 98%[3] of the population covered by a mobile network, which in turn has opened access to mobile money and internet services making Kenya a global digital leader.
Conclusion: building small to enable the big
People often talk about Africa’s fundamentals (large young population that is underserved market), when making the case for large investor attracting infrastructure. However, what they forget, is that those fundamentals will remain theoretical unless those people have livelihoods and growing incomes. Shifting infrastructure investment to serve those people and create those incomes is a much more powerful magnet for investment than any argument based on theoretical potential.
African leaders spend a lot of time talking about the Asian Tigers and the extraordinary economic growth. What they often fail to mention is that those countries, invested in creating domestic demand growth by improving the incomes of their populations. Through land reform, education and strategic investment, they created the domestic demand that provided the base upon which their industries could grow. Investing in people and local economy focused is one of those strategic investments.
For Africa, investing in enabling “small” infrastructure, that improves people’s lives and livelihoods shall do more to boost our economies than massive billion-dollar projects aimed at theoretical investors for potential future growth. Boosting domestic livelihoods, incomes and demands is self-reinforcing, it creates demand which local industries can respond to and that investors want to tap into. Which will, in future, justify infrastructure mega projects that are built to support real economic development.
[1] Africa Development Bank, https://www.afdb.org/fileadmin/uploads/afdb/Documents/Publications/AEB_Volume_8_Issue_3.pdf
[2] UNEP https://www.unep.org/news-and-stories/press-release/better-infrastructure-and-policies-can-protect-billion-african
[3] Kenya National Bureau of Statistics, 2023 Economic Survey, p.303
Also published on Medium.