Experts agree that Africa can accelerate its development by investing in an infrastructure that stimulates trade and economic growth. Thirteen years after PIDA – the infrastructure development program in Africa – however, the search for the African Economic Commission (ECA) shows that the Africa infrastructure deficit reduces economic growth up to 40% per year.
In order to catch up, there is now an impressive list of 69 PIDA projects, which was taken up by the African Union in 2021, with an estimated cost of $ 160.8 billion. The projects cover transport, energy, water and digital connectivity. If this consolidated infrastructure program for the continent – PIDA – is fully implemented, trade, variation in connectivity and the growth of support would favor. “These projects aim to empower people, by connecting farmers to markets, entrepreneurs to customers and students to educational opportunities,” said Claver Gatete, Executive Secretary of the Economic Commission for Africa (ECA), at the 8th PIDA Week held in Addis Ababa, Ethiopia, in November 2024.
The path to the 69 PIDA projects has taken decades to build, according to infrastructure expert Robert Lisinge, Director of the Technology, Innovation, Connectivity and Infrastructure Development Division at the ECA. “Convinced of the need for a continent-wide transport network, the Trans-African Highway (TAH) network was conceived in the 1970s and the African Transport Policy Programme in the 1980s. The TAH became part of the Short-Term Infrastructure Action Plan of the New Partnership for Africa’s Development (NEPAD) after African leaders realised that an infrastructure programme was needed to accelerate Africa’s development. PIDA was developed in 2011 as a Marshall Plan for Africa to consolidate the infrastructure programme for the continent,” he explains. ECA played a key role in the development of the second PIDA Priority Action Plan (2021-2030). A task force mandated by the PIDA Steering Committee was appointed to select projects for implementation. ECA, as the secretariat of the task force, together with other members of the task force, developed the criteria for the selection of the projects that were presented to African Heads of State.
Linking major infrastructure projects to development outcomes
The challenge of physical assets – roads, railways, etc. that are either incomplete or not linked together in ways that contribute to real development outcomes, such as the opportunities identified in the AfCFTA, is a concern for ECA Executive Secretary, Mr. Gatete, and his team of infrastructure experts. For this reason, “creating robust and integrated infrastructure is critical to realizing the transformative potential of the AfCFTA,” he says, explaining that the Lamu Port, the South Sudan-Ethiopia Transport Corridor (LAPSSET), which links Kenya, Ethiopia and South Sudan. is an example of the kind of connection that improves connectivity, reduces trade costs and catalyzes regional economic integration. It is about turning big visions into concrete results.
According to Gatete, the AfCFTA represents a market of 1.3 billion people and a combined GDP of over $3.4 trillion, but intra-African trade accounts for only 15% of the continent’s total trade. ECA studies also predict that adequate infrastructure and implementation of the AfCFTA could increase this figure to 33%.
“Infrastructure is the critical factor. It’s the glue that can make a real difference to our economies – moving from potential to connecting dreams and transforming lives – he says and adds that the AfCFTA is an opportunity to develop road and railway networks to increase intra-Africa freight demand by 28%. Estimates by the ECA also show that Africa will need to upgrade over 60,000 kilometers of regional roads and complete the missing links in the Trans-African Highways to meet the increased volume of trade.
Lisinge, for his part, sees a two-way relationship between transport and trade and states, “good transport will facilitate trade, and if the quality of the infrastructure is good, it means the cost of transport is lower and that increases trade and boosts intra-African trade.”
Lisinge, who has led the research on this two-way relationship says that by 2030, 1,844,000 trucks for bulk cargo and 248,000 trucks for containers would be needed under the AfCFTA. While 97,614 wagons for bulk cargo and 20,668 wagons for container cargo would also be required by 2030. This increases to 132,857 and 36,482 wagons respectively if planned infrastructure projects are implemented. Furthermore, 126 vessels would be required for bulk cargo and 15 vessels for container cargo by 2030 while 254 cargo airplanes would be required.
Wherewith the financing?
The financing, while daunting can be achieved by attracting private sector participation through innovative de-risking mechanisms. The success of PIDA lies in our collective resolve to act decisively, mobilize the necessary resources, and align our efforts with the broader aspirations of the AfCFTA,” says Gatete.
ECA has developed a partnership strategy for the implementation of PIDA. This comes on the back of the realisation that development partners have their own projects that should not disrupt the implementation of PIDA. For example, the Chinese have the Belt and Road Initiative and the Europeans have the Global Gateway.
“PIDA should be the building block for infrastructure partnerships with non-African countries and organisations,” says Lisinge, noting that international partners are keen to connect with the rest of the world, including Africa. Therefore, it would be strategic for them to invest in PIDA projects.
The Global Gateway, a European strategy to boost smart, clean and secure connections in the digital, energy and transport sectors and to strengthen health, education and research systems around the world, has already prioritised support for some projects that are part of PIDA, such as the Lagos-Abidjan highway in West Africa. The US and EU are supporting the development of the Lobito Corridor, which connects Angola, Zambia and the Democratic Republic of Congo.
He adds: “PIDA is a unique platform for engagement. The infrastructure challenge in Africa is much bigger than its 69 projects and there is a need to set priorities, with countries having the scope to implement their own projects.”
Closing the gap
The African Development Bank (AfDB) points out that between $130 and $170 billion per year is needed to finance infrastructure development. In other words, we have a financing gap of up to $108 billion per year due to poor regulatory frameworks and bureaucracy. The AfDB has developed a financing strategy that outlines various options for financing PIDA projects. Member countries can raise domestic funds from national budgets or borrow money on the market.
But Mr Lisinge warns that financing is a key challenge for infrastructure development in Africa and many countries are in a financial dilemma. They cannot use domestic funds for infrastructure development and international loans are expensive. In addition, many countries have poor credit ratings, which means that the cost of borrowing for them on the financial markets is much higher. “Countries can use the NEPAD service mechanism, which helps them develop and translate ideas into concrete projects. The mechanism helps with project preparation and feasibility studies to improve economic and financial viability and attract investors,” he says.
“In addition, countries can also use green funds to support green projects, in addition to development finance institutions, and public-private partnerships are also an option to finance infrastructure development in Africa, bringing together the government and the private sector, which can share risks and pool resources to implement commercially viable projects,” he adds.
Source: ECA
