69 Reference List
3. El TGF β es un mediador de las Acciones de las estatinas sobre las CMLV.
Africa’s overall cost to build new infrastruc- ture, refurbish dilapidated assets, and operate and maintain all existing and new installa- tions is estimated at almost $93 billion a year for 2006 through 2015 (15 percent of African GDP; table 1.13 and fi gure 1.5).
Comparison with the Commission for Africa
The $93 billion estimate is more than twice the estimate of the Commission for Africa in 2005, which was based on cross-country econo- metric studies, rather than the more detailed country-level microeconomic modeling of the Africa Infrastructure Country Diagnostic (Estache 2006). A recent update of the cross- country model used for the Commission for Africa report came up with a revised estimate of $80 billion to $90 billion (Yepes 2007).
Some 40 percent of the total is for the power sector, which requires about $41 billion each year (6 percent of African GDP; Rosnes and Vennemo 2008). A signifi cant share of the spending for power is for investment in multipurpose water storage schemes and thus makes an important contribution to water resources management. The second-largest component is the cost of meeting the MDGs for water and sanitation— about $22 billion (3 percent of regional GDP). The third-largest price tag is associated with the transport sector, which comes in at just over $18 billion (3.6 percent of GDP).
Distribution of Spending among Countries
Three groups of countries—the middle- income countries, the resource-rich countries, and the low-income nonfragile states—share roughly equally in the bulk of total spending. Each of these groups needs to spend around
Table 1.13 Overall Infrastructure Spending Needs for Africa, 2006–15 $ billions annually Sector Capital expenditure Operation and maintenance Total needs ICT 7.0 2.0 9.0 Irrigation 2.7 0.6 3.3 Power 26.7 14.1 40.8 Transport 8.8 9.4 18.2 WSS 14.9 7.0 21.9 Total 60.4 33.0 93.3
Sources: Authors’ calculations based on Banerjee and others 2008; Carruthers, Krishnamani, and Murray 2008; Mayer and others 2008; Rosnes and Vennemo 2008.
Note: ICT = information and communication technology; WSS = water supply and sanitation.
Row totals may not add exactly because of rounding errors.
Table 1.12 ICT Spending Needs beyond the Purely Market Driven: Investment Only, 2006–15 $ billions annually Type of investment Universal access to voice signal Universal access to broadband platform Fiber-optic backbone linking capital cities Submarine cables Private 0.58 0.68 — — Public 0.20 0.23 — — Total investment 0.78 0.91 0.03 0.18
Source: Mayer and others 2008.
Note: In contrast to the preceding tables, the expenditure for operation and maintenance is excluded because of the difficulty of apportioning it across the different subcategories presented.
Meeting Africa’s Infrastructure Needs 59
$28 billion to $30 billion to meet its infrastruc- ture needs. The price tag for the fragile states is only about half as much at $13 billion. The largest spending needs for an individual coun- try by far are in South Africa, which requires $27 billion a year.
The burden of spending relative to the countries’ GDPs is very different across groups. For middle-income and resource-rich countries, the burden appears manageable,
amounting to no more than 10 percent to 13 percent of their respective GDPs. For low-income countries, however, as much as 25 percent of GDP would be needed, rising to an implausible 37 percent for the low-income fragile states. Ethiopia, Madagascar, Niger, and above all, the Democratic Republic of Congo face an impossible challenge—their infrastruc- ture needs range from 26 to over 70 percent of GDP (see fi gure 1.5, panel a).
Figure 1.5 Africa’s Aggregate Infrastructure Spending Needs, by Country, 2006–15
Sources: Authors’ calculations based on Banerjee and others 2008; Carruthers, Krishnamani, and Murray 2008; Mayer and others 2008; Rosnes and Vennemo 2008. a. As a percentage of GDP 0 10 20 30 40 50 60 70 Cape Verde Namibia Cameroon South Africa Malawi Nigeria Lesotho Rwanda Côte d´Ivoire Benin Ghana Burkina Faso Zambia Sudan Uganda Kenya Tanzania Chad Mozambique Senegal Niger Madagascar Ethiopia Congo, Dem. Rep. of middle-income countries resource-rich countries nonfragile low-income countries fragile low-income countries Africa
% of GDP
b. In US$ billions annually
0 20 40 60 80 100 Cape Verde Lesotho Rwanda Malawi Burkina Faso Benin Namibia Chad Niger Uganda Zambia Cameroon Ghana Madagascar Mozambique Senegal Côte d´Ivoire Tanzania Kenya Congo, Dem. Rep. of Ethiopia Sudan Nigeria South Africa fragile low-income countries nonfragile low-income countries resource-rich countries middle-income countries Africa
US$ billions/year
60 AFRICA’S INFRASTRUCTURE: A TIME FOR TRANSFORMATION
Distribution of Spending—Investment versus Maintenance
The overall spending requirements break down two to one between investment and operation and maintenance, with the balance between them shifting across country groupings. In the middle-income countries, the spending needs are skewed toward maintenance, which absorbs more than half the total. These countries have already put in place much of the infrastruc- ture they need, and their main challenge is to preserve it in good condition. Across the three other country groupings, almost three-quarters of spending needs are associated with invest- ment and only one-quarter with operation and maintenance. These countries have a vast con- struction (and reconstruction) agenda to com- plete before they will have much to maintain. Will the Price Tag Grow—or Shrink? These estimates of investment are based on costs prevailing in 2006, the base year for all of the African Infrastructure Country Diag- nostic fi gures. It is well known that the unit costs of infrastructure provision have escalated signifi cantly during the last few years (Africon 2008).
The most reliable evidence available comes from the road sector, where cost overruns reported on multilateral agency projects in 2007 averaged 60 percent. The higher costs are not just from infl ation in petroleum and asso- ciated input prices, but they also refl ect a lack of competition for civil works contracts and the tight position of the global construction industry, as well as lengthy delays in project implementation. Similar escalations in unit costs have been reported anecdotally in other areas of infrastructure, notably power. Pos- sibly, the recent upward pressure on the costs of infrastructure may be reversed as the cur- rent global downturn takes its toll, but that is hard to predict. Based on the situation in 2006, the preceding estimates likely represent a conservative lower boundary for the cost of developing infrastructure assets at today’s prices.
The global fi nancial crisis of 2008 can be expected to reduce demand for some types of infrastructures, but it would not hugely alter the estimated spending needs. A large share
of the spending needs are driven by targets rather than economic growth; this applies, for example, to the transport spending needs (which are largely based on connectivity objec- tives) and to the water and sanitation spend- ing needs (which are based on the MDGs). The spending needs with the strongest direct link to economic growth are those for the power sector. However, because of the large backlog in that sector, estimated spending needs con- tain a strong component of refurbishment and catch-up. Thus, even halving economic growth estimates for the region would reduce esti- mated power spending needs by only 20 per- cent. The global recession could be expected to affect demand for ICT services and trade- related infrastructure, such as railways and ports. However, the weight of those infrastruc- tures in the total spending needs is not much more than 10 percent.
Notes
The authors of this chapter are Vivien Foster and Cecilia Briceño-Garmendia, who drew on back- ground material and contributions from César Calderón, Alvaro Escribano, J. Luis Guasch, Paul Lombard, Siobhan Murray, Jorge Pena, Justin Pierce, Tito Yepes, and Willem van Zyl.
1. Although the Africa Infrastructure Country Diagnostic project is limited to the study of Sub- Saharan African countries, this book sometimes substitutes Africa for Sub-Saharan Africa. The reader should bear in mind, however, that the information refers only to Sub-Saharan Africa. 2. Road density is measured in kilometers per 100 square kilometers; telephone density in lines per thousand population; electricity generation in megawatts per million population; and electric- ity, water, and sanitation coverage in percentage of population.
3. Monetary fi gures are in U.S. dollars unless oth- erwise noted.
References
Africon. 2008. “Unit Costs of Infrastructure Proj- ects in Sub-Saharan Africa.” Background Paper 11, Africa Infrastructure Sector Diagnostic, World Bank, Washington, DC.
Aker, Jenny. 2008. “Does Digital Divide or Provide? The Impact of Cell Phones on Grain Markets in Niger.” Center for International and Devel- opment Economics Research, University of California, Berkeley.
Meeting Africa’s Infrastructure Needs 61
Ayogu, Melvin. 1999. “Before Prebendalism: A Positive Analysis of Core Infrastructure Invest- ment in a Developing Fiscal Federalism.” African
Development Review 11 (2): 169–98.
Banerjee, Sudeshna, Quentin Wodon, Amadou Diallo, Taras Pushak, Hellal Uddin, Clarence Tsimpo, and Vivien Foster. 2008. “Access, Afford- ability, and Alternatives: Modern Infrastructure Services in Africa.” Background Paper 2, Africa Infrastructure Sector Diagnostic, World Bank, Washington, DC.
Barnes, Douglas F. 1988. Electric Power for Rural
Growth: How Electricity Affects Rural Life in Devel- oping Countries. Boulder, CO: Westview Press.
Barwell, Ian. 1996. “Transport and the Village: Findings from African Village-Level Travel and Transport Surveys and Related Studies.” Discussion Paper 344, World Bank, Washington, DC.
Blackden, Mark, and Quentin Wodon, eds. 2005. “Gender, Time Use and Poverty in Sub-Saharan Africa.” Working Series Paper 73, World Bank, Washington, DC.
Briceño-Garmendia, Cecilia, Karlis Smits, and Vivien Foster. 2008. “Financing Public Infra- structure in Sub-Saharan Africa: Patterns, Issues, and Options.” AICD Background Paper 15, Africa Infrastructure Sector Diagnostic, World Bank, Washington, DC.
Brodman, Janice. 1982. “Rural Electrifi cation and the Commercial Sector in Indonesia.” Discus- sion Paper D-73L, Resources for the Future, Washington, DC.
Calderón, César. 2008. “Infrastructure and Growth in Africa.” Working Paper 3, Africa Infrastruc- ture Country Diagnostic, World Bank, Washington, DC.
Calderón, César, and Luis Servén. 2008. “Infra- structure and Economic Development in Sub- Saharan Africa.” Policy Research Working Paper 4712, World Bank, Washington, DC.
Calvo, Christina Malmberg. 1994. “Case Study on the Role of Women in Rural Transport: Access of Women to Domestic Facilities.” Sub-Saharan Africa Transport Policy Program Working Paper 11, World Bank, Washington, DC.
Calvo, Christina Malmberg, Colin Gannon, Kenneth M. Gwilliam, and Zhi Liu. 2001. “Transport: Infrastructure and Services— Technical Notes.” PRSP Toolkit, World Bank, Washington, DC.
Carruthers, Robin, Ranga R. Krishnamani, and Siobhan Murray. 2008. “Improving Connectiv- ity: Investing in Transport Infrastructure in Sub- Saharan Africa.” Background Paper 7, Africa Infrastructure Country Diagnostic, World Bank, Washington, DC.
Collier, Paul, and Stephen O’Connell. 2006. “Opportunities and Choices.” Draft chapter for the synthesis volume of the Explaining African
Economic Growth PRoject of Oxford University
and Swarthmore College, Centre for Study of African Economies.
Commission for Africa. 2005. Our Common Inter-
est: Report of the Commission for Africa. London:
Commission for Africa.
Croppenstedt, Andre, and Mulat Demeke. 1996. “Determinants of Adoption and Levels of Demand for Fertiliser for Cereal Growing Farmers in Ethiopia.” Working Paper 96-3, Centre for the Study of African Economies, Oxford, U.K.
Davis, Tony, Kimberly Lucas, and Ken Rikard. 1996. Agricultural Transport Assistance Program:
Impact Study. Washington, DC: United States
Agency for International Development. Doumani, Fadi M., and James A. Listorti. 2001.
“Environmental Health: Bridging the Gaps.” World Bank Discussion Paper 422, World Bank, Washington, DC.
Easterly, William, and Ross Levine. 1997. “Africa’s Growth Tragedy: Policies and Ethnic Divisions.”
Quarterly Journal of Economics 112 (4): 1203–50.
http://ssrn.com/abstract=88828.
Eberhard, Anton, Vivien Foster, Cecilia Briceño- Garmendia, Fatimata Ouedraogo, Daniel Camos, and Maria Shkaratan. 2008. “Under- powered: The State of the Power Sector in Sub-Saharan Africa.” Background Paper 6, Africa Infrastructure Sector Diagnostic, World Bank, Washington, DC.
Eberhard, Anton, and Clive Van Horen. 1995. Poverty and Power: Energy and the South African
State. London: UCT and Pluto.
Ellis, Simon, and John Hine. 1998. “The Provi- sion of Rural Transport Services: Approach Paper.” Sub-Saharan Africa Transport Policy Program Working Paper 37, World Bank, Washington, DC.
Escribano, Alvaro, J. Luis Guasch, and Jorge Pena. 2008. “Impact of Infrastructure Constraints on Firm Productivity in Africa.” Working Paper 9, Africa Infrastructure Sector Diagnostic, World Bank, Washington, DC.
Esfahani, Hadi Salehi, and Maria Teresa Ramirez. 2003. “Institutions, Infrastructure, and Economic Growth.” Journal of Develop-
ment Economics 70: 443–77. http://ssrn.com/
abstract=310779.
Esrey, S. A., J. B. Potash, L. Roberts, and C. Shiff. 1991. “Effects of Improved Water Supply and Sanitation on Ascariasis, Diarrhea, Dracunculia- sis, Hookworm Infection, Schistosomiasis and
62 AFRICA’S INFRASTRUCTURE: A TIME FOR TRANSFORMATION
Trachoma.” Bulletin of the World Health Organi-
zation 89 (5): 609–21.
Estache, Antonio. 2006. “Africa’s Infrastructure: Challenges and Opportunities.” Paper pre- sented at “Realizing the Potential for Profi table Investment in Africa” seminar, IMF Institute and Joint Africa Institute, Tunis, February 28–March 1.
Estache, Antonio, Biagio Speciale, and David Vere- das. 2005. “How Much Does Infrastructure Mat- ter for Growth in Sub-Saharan Africa?” World Bank, Washington, DC.
Fay, Marianne, Danny Leipziger, Quentin Wodon, and Tito Yepes. 2005. “Achieving Child-Health- Related Millennium Development Goals: The Role of Infrastructure.” World Development 33 (8): 1267–84.
Fedderke, Johannes W., and Zeljko Bogetic. 2006. “Infrastructure and Growth in South Africa: Direct and Indirect Productivity Impacts of 19 Infrastructure Measures.” Policy Research Work- ing Paper 3989, World Bank, Washington, DC. Foley, Gerald. 1990. Electricity for Rural People.
London: Panos Institute.
Grey, David, and Claudia Sadoff. 2006 “Water for Growth and Development: A Framework for Analysis.” Theme Document of the 4th World Water Forum, Mexico City, March.
Hutton, Guy. 2000. Considerations in Evaluating the
Cost-Effectiveness of Environmental Health Inter- ventions. Geneva: World Health Organization.
Hutton, Guy, and Laurence Haller. 2004. Evalu-
ation of the Costs and Benefi ts of Water and Sanitation Improvements at the Global Level: Water, Sanitation and Health Protection of the Human Environment. Geneva: World Health
Organization.
IMF (International Monetary Fund). 2007.
Regional Economic Outlook: Sub-Saharan Africa.
Washington, DC: IMF.
Jimenez, Antonio, and Ken Olson. 1998. Renew-
able Energy for Rural Health Clinics. Golden, CO:
National Renewable Energy Laboratory. http:// www.nrel.gov/docs/legosti/fy98/25233.pdf. Kamara, Samura. 2008. “Restoring Economic Growth and Stability in Fragile and Post- Confl ict Low Income States: Views from the Trench.” Paper presented at World Bank Poverty Reduction and Economic Management confer- ence, Washington, DC, April 15–16.
Kenny, Charles. 2002. “The Costs and Benefi ts of ICTs for Direct Poverty Alleviation.” Develop-
ment Policy Review 20: 141–57.
Kerf, Michel. 2003a. “Linkages between Energy and Poverty Alleviation.” World Bank, Washington, DC.
———. 2003b. “Linkages between ICT and Pov- erty Alleviation.” World Bank, Washington, DC.
———. 2003c. “Linkages between Transport and Poverty Alleviation.” World Bank, Washington, DC.
———. 2003d. “Linkages between Water and Sani- tation and Poverty Alleviation.” World Bank, Washington, DC.
Lall, Rajiv, Ritu Anand, and Anupam Rastogi. 2008. “Developing Physical Infrastructure: A Com- parative Perspective on the Experience of the People’s Republic of China and India.” Asian Development Bank, Manila.
Lanjouw, Peter, Jamie Quizon, and Robert Spar- row. 2001. “Non-Agricultural Earnings in Peri-Urban Areas of Tanzania: Evidence from Household Survey Data.” Food Policy 26: 385–403.
Limão, Nuno, and Anthony Venables. 1999. “Infra- structure, Geographical Disadvantage and Transportation Costs.” Policy Research Working Paper 2257, World Bank, Washington, DC. Mayer, Rebecca, Ken Figueredo, Mike Jensen, Tim
Kelly, Richard Green, and Alvaro Federico Barra. 2008. “Costing the Needs for Investment in ICT Infrastructure in Africa.” Background Paper 3, Africa Infrastructure Sector Diagnostic, World Bank, Washington, DC.
McCarthy, F. Desmond, and Holger Wolf. 2001. “Comparative Life Expectancy in Africa.” Policy Research Working Paper 2668, World Bank, Washington, DC.
Minges, Michael, Cecila Briceño-Garmendia, Mark Williams, Mavis Ampah, Daniel Camos, and Maria Shkratan. 2008. “Information and Com- munications Technology in Sub-Saharan Africa: A Sector Review.” Background Paper 10, Africa Infrastructure Sector Diagnostic, World Bank, Washington, DC.
Reinikka, Ritva, and Jakob Svensson. 1999a. “Confronting Competition: Firms’ Investment Response and Constraints in Uganda.” In
Assessing an African Success: Farms, Firms, and Government in Uganda’s Recovery, ed. Paul Col-
lier and Ritva Reinikka. Washington, DC: World Bank.
——. 1999b. “How Inadequate Provision of Pub- lic Infrastructure and Services Affects Private Investment.” Policy Research Working Paper 2262, World Bank, Washington, DC. Rosnes, Orvika, and Haakon Vennemo. 2008.
“Powering Up: Costing Power Infrastructure Investment Needs in Southern and Eastern Africa.” Background Paper 5, Africa Infra- structure Sector Diagnostic, World Bank, Washington, DC.
Meeting Africa’s Infrastructure Needs 63
Saunders, Robert J., Jeremy Warford, and Bjorn Wellenius. 1994. Telecommunications and
Economic Development. 2nd ed. Baltimore:
Johns Hopkins University Press for the World Bank.
Telecommunication Development Bureau. 1999.
Telemedicine and Developing Countries—Lessons Learned. Geneva: International Telecommunica-
tion Union.
Teravaninthorn, Supee, and Gaël Raballand. 2008. “Transport Prices and Costs in Africa: A Review of the Main International Corri- dors.” Working Paper 14, Africa Infrastructure Sector Diagnostic, World Bank,
Washington, DC.
Venkataraman, K. 1990. “Rural Electrifi cation in the Asian and Pacifi c Region.” In Power Systems
in Asia and the Pacifi c, with Emphasis on Rural Electrifi cation, ed. Economic and Social Com-
mission for Asia and the Pacifi c, 310–32. New York: United Nations.
Vennemo, Haakon, and Ornica Rosnes. 2008. “Powering-Up: Costing Power Infrastructure Investment Needs in Africa.” Background Paper 5, Africa Infrastructure Country Diagnostic, World Bank, Washington, DC.
Wodon, Quentin, ed. 2008. “Electricity Tariffs and the Poor: Case Studies from Sub-Saharan Africa.” Working Paper 11, Africa Infrastruc- ture Country Diagnostic, World Bank, Washington, DC.
World Bank. 1996. “Socio-Economic Impact of Rural Roads: Impact Evaluation Report for the Fourth Highway Project in Morocco.” OED Report 15808-MOR, World Bank, Washington, DC.
———. 2000. “Ghana: Building a Stronger Transportation System.” Precis 189, Washington, DC.
———. 2001. Cities on the Move: A World Bank
Urban Transport Strategy Review. Washington,
DC: World Bank.
———. 2005. Global Monitoring Report 2005. Washington, DC: World Bank.
———. 2007. DEPweb glossary. Development Education Program, World Bank. http://www .worldbank.org/depweb/english/modules/ glossary.html#middle-income.
Yepes, Tito. 2007. “New Estimates of Infrastructure Expenditure Requirements.” World Bank, Washington, DC.
Yepes, Tito, Justin Pierce, and Vivien Foster. 2008. “Making Sense of Sub-Saharan Africa’s Infrastructure Endowment: A Benchmarking Approach.” Working Paper 1, Africa Infra- structure Country Diagnostic, World Bank, Washington, DC.
You, Liang Zhi. 2008. “Irrigation Investment Needs in Sub-Saharan Africa.” Background Paper 9, Africa Infrastructure Country Diagnostic, World Bank, Washington, DC.
Chapter2
65
Closing Africa’s Funding Gap
T
he cost of addressing Africa’s infrastruc- ture needs is estimated at $93 billion, some 15 percent of Africa’s GDP—about two-thirds for investment and one-third for maintenance. The burden varies greatly by country type. About half of the capital invest- ment needs are for power, refl ecting the par- ticularly large physical defi cits in that area.Existing spending is higher than previously thought. African governments, infrastructure users, the private sector, and external sources together already contribute about $45 billion to directly address the infrastructure needs previously identifi ed. About one-third of this amount is spent by middle-income countries, whereas fragile states barely account for 5 per- cent of it (about $2 billion in total), mirroring the weakness of their economies and the enormous disparity in terms of fi nancing and institutional capabilities across Sub-Saharan African countries. About two-thirds of the existing spending is domestically sourced, from taxes or user charges, and channeled through public institutions, making the public sector—governments and nonfi nancial pub- lic enterprises together—the most important fi nancier of capital investment, funding more than half of total investment.