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Vivien Foster & Cecilia Briceño-Garmendia,
World Bank
Africa Infrastructure Country Diagnostic:
a multi-stakeholder effort
Key Message #1
Infrastructure critical
to growth, but Africa
hampered by limited
stocks and high costs
Infrastructure critical to Africa’s past
and future growth performance
n Of the increase in SSA’s per capita growth rates
between 1990s vs. 2000s
– Infrastructure contributed 99 basis points
– Structural policies contributed 68 basis points
n Infrastructure effect
– Comes almost entirely from the ICT revolution
– Inadequate power supply is dragging growth
n Raising all countries to level of the best in Africa
could add 2.2 percentage points to per capita
growth
Africa’s infrastructure services several
times more expensive than elsewhere
Sub-Saharan
Africa
Other developing
regions
Power tariffs ($/kWh)
0.02-0.46
0.05-0.10
Water tariffs ($/kWh)
0.86-6.56
0.03-0.60
Road freight tariffs ($/ton-km)
0.04-0.14
0.01-0.04
Mobile telephony ($/mo.)
2.6-21.0
9.9
International telephony ($/min.)
0.44-12.5
2.0
Internet dial-up service ($/mo.)
6.7-148.0
11.0
Africa’s Infrastructure lags other developing
countries
Normalized units*
Paved road density
SubSaharan
Africa
LICs
Other lowincome
countries
SubSaharan
Africa
MICs
Other middle
income
countries
31
134
94
141
137
211
215
343
Mainline density
10
78
106
131
Mobile density
55
76
201
298
Internet density
2
3
5
8
Generation capacity
37
326
256
434
Electricity coverage
16
41
35
80
Improved water
60
72
75
86
Improved sanitation
34
51
48
74
Total road density
Key Message #2
Africa’s Infrastructure gap
widening relative to other
developing countries
Africa expanded its infrastructure stocks slowly
and a gap opened between Africa and Asia
Paved Road Density
Road Density
Power Generation
Power Coverage
Fixed Line Density
Water Coverage
Key Message #3
Spending needs are
US$93 billion a year –
double Commission
for Africa estimates
Some sensible targets for catching-up
Economic target
ICT
Irrigation
Complete network of submarine
cables, and fiber optic backbone
linking capitals
Develop all financially viable
opportunities for large and small
scale irrigation
Social target
Extend GSM voice signal and public
access broadband to 100% of the
rural population
Na.
Power
Attain demand-supply balance in
power production within a
regional framework
Raise household electrification rate
by one percentage point annually
Transport
Attain good quality road networks
supporting regional and national
connectivity goals
Provide 100% rural road access on
high value agricultural land
Place entire urban population within
500 meters of a road supporting
motorized access
Na.
Meet the Millenium Development
Goals for water and sanitation
WSS
Overall price tag of US$93bn: two thirds
for investment one third for maintenance
US$bn. pa
over 10 years
Capital
expenditure
Operating
expenditure
Total
ICT
7.0
2.0
9.0
Irrigation
2.9
0.6
3.4
26.7
14.1
40.8
8.8
9.4
18.2
WSS
14.9
7.0
21.9
Total
60.4
33.0
93.3
Power
Transport
Source: AICD 2009
About 40 percent of spending needs are for
power reflecting continental power crisis
Main cause or trigger of
power crisis in the country
Droughts
Oil price shock
Conflict
High Growth
Source: AICD 2009
Infrastructure needs as percentage of GDP
particularly onerous for fragile states
Key Message #4
Existing spending at
US$45 billion a year
much higher than
previously thought
Existing spending of US$45bn, three
quarters domestically financed
Annualized Overall Spending Flows traced to needs
Capital expenditures
US$bn pa
Public
Sector
O&M
Total
Grand
Total
Public
Sector
ODA
Middle income
10.3
3.1
0.2
0.0
2.3
5.7
16.0
Resource rich
2.5
3.9
0.6
1.7
3.8
10.0
12.5
Low income no fragile
4.4
1.7
2.6
0.6
2.1
7.0
11.4
Low income fragile
0.7
0.3
0.4
0.3
0.5
1.4
2.2
20.4
9.4
3.6
2.5
9.4
24.9
45.3
Non-OECD Private
financiers
sector
Total SSA
Source: AICD 2009
Level and pattern of infrastructure spending
differs hugely across country groupings
Source: AICD 2009
Key Message #5
There is an efficiency
gap worth US$17
billion a year
What do we mean by an efficiency gap?
n Public sector budget execution ratios only 65%
n Widespread inefficiency of operations
n
n
n
n
Utilities recover only 70-90% of billings
Utilities lose 20-35% of production in distribution
Utilities over-manned by 50% or more
About one third of infrastructure assets are in need of
rehabilitation due to lack of preventive maintenance
n User charges fail to fully recover costs
n Utilities recover only 60-70% of costs
n Fuel levies often set too low to fund road maintenance
n Public funds are not always well allocated
n Apparent “over-spending” in some areas
The cost of these inefficiencies adds up
to US$17bn a year that is being lost today
Energy
ICT
Irrigation Transport
WSS
Total
Raising capital budget
execution
0.2
0.0
0.1
1.3
0.2
1.9
Eliminating operational
inefficiencies
3.4
1.2
0.0
2.4
1.0
8.0
Improving cost
recovery via tariffs
2.3
0.0
0.0
0.1
1.8
4.2
Reallocating funds
across sectors
-
-
-
-
-
3.3
Total efficiency
gap
6.0
1.3
0.1
3.8
2.9
17.4
US$bn pa
Key Message #6
Strong institutions are the
key to tackle inefficiencies
About 3-4% of GDP is public investment
primarily executed by central government
Source: Preliminary results AICD 2008
Around a third of budgeted capital
allocation for infrastructure goes unspent
n Potential gain of US$3.3 bn
pa from raising capital budget
execution ratios
Madagascar
Ethiopia
Cameroon
Uganda
Malawi
n Key problems are poor
planning, project selection,
tardy project preparation,
inefficient procurement,
annual budgeting
Average
Kenya
Niger
Chad
Ghana
Benin
0
20
40
60
80
Share on Budget Estimates
Source: Preliminary results AICD 2008
100
Source: Preliminary results AICD 2008
Rural Roads
Railways
Rural average
Rural Water
Urban Water
Irrigation
Average
Main Roads
Non-rural
average
Generation
Average rehabilitation index
Large rehabilitation needs are testimony to
problem of under-maintenance
50%
40%
30%
20%
10%
0%
Countries with road funds and high fuel
levies do better at funding road maintenance
Percentage of road maintenance requirements met
Macro
Geography
Institutions
Financing
Source: Preliminary results AICD 2008
Good institutional frameworks pay-off in
terms of lower levels of inefficiency
Water Utilities
Source: AICD 2009
Good institutional frameworks pay-off
in terms of lower levels of inefficiency
Power Utilities
Source: AICD 2009
But there is still a long way to go on
institutional reform
1
1
0.9
0.9
Reforms RegulationGovernance
0.8
0.8
0.7
0.7
0.6
0.6
0.5
0.5
0.4
0.4
0.3
0.3
0.2
0.2
0.1
0.1
0
0
TELECOM
ELECTRICITY
WATER
Reforms
PORTS
Regulation
RAILWAYS
Key Message #7
Cost recovery is challenged
by users’ affordability
Under-pricing represents 0.3% of GDP on
average for power and for water
Power
Water
Source: Preliminary results AICD 2008
Percentage of households
Around 90% of those with access to piped
water or electricity belong to richest 60%
100%
80%
60%
40%
20%
0%
Q1
Q2
Q3
Q4
Piped Water
Total monthly
household budget
(2002 US$)
Q5
Electricity
National
Rural
Urban
Q1
Q2
Q3
Q4
Q5
177
130
241
59
97
128
169
340
Source: Preliminary results AICD 2008
Key Message #8
After taking care of
inefficiencies, a funding
gap of US$31 billion a
year remains
Overall funding gap of US$31bn per year
concentrated largely in power
Irrigation Transport WSS
ICT
10.7
(0.9)
0.1
(0.3)
0.0
(4.1)
5.5
4.5
0.5
1.8
(1.4)
3.7
(0.8)
8.2
4.7
(0.2)
0.7
(0.5)
5.2
(0.4)
9.5
2.7
0.7
0.0
2.0
3.9
0.0
9.4
23.2
(1.3)
2.4
(1.9)
11.4
(3.3)
30.6
US$bn pa
MIC
Resource-Rich
LIC-NonFragile
LIC-Fragile
Africa
Reallocation
Total
potential
Energy
Fragile states face largest gaps relative to
GDP, particularly in transport and energy
Key Message #9
Role of external financiers
is very relevant but is not
the silver bullet
External Finance for African
Infrastructure Grows from $5b to $20b
Source: Building Bridges, 2008
Non-OECD funding peaks at $8billion in 2006
9
8
Arab
Financiers
US$ billions
7
6
5
Indian
Financiers
4
3
2
Chinese
financiers
1
0
2001
2002
2003
Source: Building Bridges, 2008
2004
2005
2006
2007
Chinese funding specializes sectorally and
geographically
Sectoral breakdown
Source: Building Bridges, 2008
Geographical breakdown
Evident patterns of concentration
according to source of investment finance
Source: AICD 2009
Wide variation in cost of capital from
different external financiers
Cost of Capital relative to the Marginal Cost of Public Funds
1.2
Public
1.1
Private
0.9
India
0.9
China
0.6
Arabs
0.5
ODA
0.3
IDA
Grants 0.0
0.0
0.2
0.4
0.6
0.8
Source: AICD 2009
1.0
1.2
Key Message #10
For some countries,
the only way to close
the circle is by
rethinking the targets
Taking more time
n For some countries and sectors the 10 year time
horizon may not be realistic
n If inefficiencies could be fully captured, targets
could be met with existing spending levels within
n 13 years for middle income countries
n 20 years for resource rich and low income nonfragile states
n 30 years for low income fragile states
n Without capturing efficiency gains, it would not be
possible to reach targets with existing spending
levels even after 30 years in all cases
Adopting lower cost technologies
n Policy-makers face a tough trade-off between giving a high
level of service to a few or a lower level to the many
n In some sectors, significant cost savings can be achieved
from adopting lower cost technologies
n Water and sanitation – the cost of reaching the MDGs can be
reduced by 30% by providing stand posts and improved latrines as
opposed to piped water connections and septic tanks
n Roads – the costs of reaching adequate regional and national
connectivity can be reduced by 30% if single surface treatment roads
are provided in place of asphalt roads
Final Message
Both increased funding and
improved efficiency are
needed to redress Africa’s
infrastructure deficit