It is no secret that African countries suffer from an infrastructure deficit. So far, Africa’s potential in infrastructure has not been met and the Programme for Infrastructure Development in Africa (PIDA) has not done enough to address all infrastructure difficulties that Africa faces. This article looks at whether there is a need to convert PIDA into an African Infrastructure Bank in order to help Africa achieve its infrastructure and developmental goals rapidly. The African Union Commission in partnership with the United Nations Economic Commission for Africa, African Development Bank and the New Partnership for Africa’s (NEPAD) Development’s Planning and Coordinating Agency created PIDA to assist in addressing the infrastructure deficit that hinders Africa’s development and its ability to compete in the world market.1 PIDA focuses on four sectors which are; transport, energy, water and information and communications technology, and various regional projects have been undertaken on all four sectors across Africa. Some of the regional projects include the Great Millennium Renaissance Dam in Ethiopia, Inga III Hydro in the Democratic Republic of Congo and Kaleta in Guinea.
However, if Africa is to achieve its infrastructure and developmental goals, an initiative that promotes infrastructure development cannot only focus on PIDA’s four sectors; there are more sectors that need to be considered.
Furthermore, projects discovered through the NEPAD Short-Term Action Plan (STAP) and undertaken by PIDA take too long to be finished. The slow pace of progress is concerning. There has also been doubt about the projects taken on board by PIDA, whether PIDA has effectively prioritised the projects, and if it has adequately looked into issues such as challenges and externalities that are discovered through other exercises.2 Another weakness is that projects are carried out by countries on whose territory they are situated. This is problematic in that some countries do not have adequate project management skills, capacity, and financial resources to carry out these projects. They need assistance.
According to various indices, the cost of inadequate infrastructure is that African countries continue to record the lowest levels of productivity and are among the least competitive economies in the world. For example, the low levels of agricultural productivity in many African countries have resulted in an extreme scarcity of food. The continent struggles to feed its people and to increase rural development due to poor infrastructure that facilitates rural businesses such as energy, irrigation, telecommunication and transportation. It has been estimated that insufficient infrastructure has decreased Africa’s annual growth by two percent, while conversely sufficient infrastructure could achieve productivity gains which could reach 40 percent.3
The benefits that come with investing in high-quality infrastructure are very high. Infrastructure development is important for economic development and poverty reduction as it creates job opportunities in the long-term. Adequate infrastructure also plays an important role in improving competitiveness, facilitating domestic and international trade in order to integrate Africa into the global economy.4 The slow rate of infrastructure development in Africa points to the fact that there is something missing which could be achieved through an African Infrastructure Bank (AIB).
The proposal for an AIB emanates from the fact that there are some sectors that PIDA does not make provision for. The AIB, if it is to be established, should study the initiative of the Asian Infrastructure Investment Bank (AIIB) model and attempt to modify it to suit Africa’s unique needs. The AIIB is a multilateral development bank that focuses on developing infrastructure and other productive sectors in Asia, such as transportation and telecommunications, water supply and sanitation, energy and power, urban development and logistics and environmental protection. Although it is not yet operational, the AIIB model is the perfect drafted example of a model that could be applied in Africa. Therefore, it would be beneficial for Africa to study the AIIB model, and to focus on these key sector needs in order to achieve its goals.
The AIB should seek to incorporate aspects of both the AIIB and PIDA as Africa seeks to address its infrastructure and developmental goals faster. Additionally, the AIB, just like PIDA would also draw on lessons from continents such as South America, Europe and Asia. The AIB would therefore potentially focus on infrastructure related to transport, information and communications technology, water and sanitation, rural infrastructure and agriculture development, science, energy and power, urban development and logistics and environmental protection.5 It would also be in partnership with the private and public sector just like PIDA. The AIB would be a significant institution as it would incorporate aspects of the AIIB and PIDA, while also aiming to speed up the pace of progression by learning from other institutions.
It would be a good idea for South Africa and Nigeria to champion such an initiative, just like China with the AIIB. Nigeria has the largest economy in Africa so it would be useful for it to champion the initiative with South Africa. Besides the fact that South Africa’s foreign policy has an African Agenda as a strategic objective, it is a powerhouse on the African continent and is a part of BRICS. Furthermore, South Africa plays an important role with the African Development Bank and that experience would come in handy with facilitating and coordinating engagement with different banks and executing the bank’s objectives. Following the founding of the BRICS New Development Bank, which will focus on financing infrastructure among developing countries, assist in the restoration of the global economy and enhance global governance, the AIB would thus be in a position to work hand in hand with the BRICS New Development Bank.
Consequently, as Africa’s infrastructural needs continue, PIDA either needs to incorporate more sectors to its initiative or be converted to an AIB that will cater for African infrastructure needs. PIDA would not have to be replaced by the AIB but would instead be converted to an African Infrastructure Bank, thus paying attention to more sectors.
1 Programme for Infrastructure Development in Africa: Interconnecting, Integrating and Transforming a Continent
2 Challenges to Regional Infrastructure Development, Ellen Hagerman http://www.tips.org.za/files/report_on_regional_infrastructure_development_in_africa_tips_-_ellen_hagerman.pdf
3 Developing Africa’s Infrastructure for Enhanced Competitiveness, The Africa Competitiveness Report 2013
4 Infrastructure Deficit and Opportunities in Africa, Albert Mafusire, The African Development Bank Group Chief Economics Complex http://www.afdb.org/fileadmin/uploads/afdb/Documents/Publications/ECON%20Brief_Infrastructure%20Deficit%20and%20Opportunities%20in%20Africa_Vol%201%20Issue%202.pdf Volume 1, September 2010
- Lona Gqiza is a National Research Foundation – Department of Science and Technology research intern based at the Institute for Global Dialogue associated with the University of South Africa. This article first appeared on the IGD website.