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Infrastructure is backbone of African trade boost


AFRICA’S natural resources, wildlife and sandy beaches have historically driven foreign investments into the continent. Now, however, a youth “bulge” and the 2021 launch of the African Continental Free Trade Area Agreement (AfCFTA) is adding glitter to Africa’s growth and investment prospects – and governments are taking notice.

While until recently, the continent has not been able to fully tap into a regional and global trade opportunity worth over 3 trillion US dollars, – largely due to poor infrastructure, worsened by funding gaps – that appears to be changing.

The continent is witnessing a rise in mega infrastructure construction activities and funding commitments, as transport networks become Africa’s newest attraction.

African governments have over the last decade increased their spending on roads, railways, internet connectivity, airports and ports expansion to bolster trade through internal and external connectivity.

Two weeks ago, Tanzania’s President Samia Suluhu was named the 2022 winner of the Africa Road Builders–Babacar Ndiaye Trophy. The prize is awarded to leading figures in Africa who have demonstrated their commitment to the development of transport infrastructure on the continent.

“The selection committee for the award commended Hassan for her “personal leadership, huge investments and commitment” to extending roads and the railway network in Tanzania,” Africa Development Bank said in a statement.

Since she took over power in March 2021, Suluhu has mobilized over 500 million dollars from multilateral lenders for the revitalization of road, rail and air transport networks in Tanzania.

Over the period, 290 million dollars provided by the African Development Bank has been directed to support the revitalization of road, rail and air transport in Tanzania. Another 172.2 million dollar contract was signed with the China Corporation Limited to supply the country with 1,430 modern freight wagons to implement the ambitious Tanzania Railways Corporation railway program.

Another project that brought Suluhu continental recognition was the recently-launched construction of a 112.3-kilometer road project- the “outer ring road” – that forms part of the Trans-African Highway Corridor linking Cape Town to Cairo via Dodoma and Dar es Salaam.

The 214.69 million dollar project serves the regional markets in Tanzania, Burundi, Rwanda, Uganda and the Democratic Republic of Congo and is tipped to transform Dodoma, Tanzania’s capital, into a sustainable city.

Tanzania is also constructing a standard gauge railway that will cover 2,561km, from Dar es Salaam to the shores of Lake Victoria and the country announced the start of operations of phase 1 of the project – between Dar es Salaam and Morogoro – by the end of April.

Earlier, Kenya’s government increased its budget allocation for infrastructure projects to KSh 365 billion (3.15 billion US dollars) for the next financial year, compared to the previous Ksh 350 billion (3 billion US dollars) – the bulk of the budget going to roads, bridges and railway construction.

In its latest medium-term plan, Kenya’s National Treasury affirmed it will continue pumping in more funds into infrastructure projects until 2027, with an upgrade of the nation’s rail system, road network and modernization of airports among its key priorities.

“The continued allocation of budget resources to infrastructure is a clear signal that the government understands the importance of infrastructure as an enabler,” said audit firm, PriceWaterhouseCoopers (PWC) in its Kenya Budget analysis bulletin.

Nairobi Expressway, a 27-kilometre elevated road project, is almost complete and is expected to ease up city traffic for local and international travellers using Jomo Kenyatta International Airport.

The project is part of the Nairobi-Mombasa Expressway, a four-lane tolled highway linking Nairobi, the capital and largest city of Kenya to Mombasa, the country’s largest seaport.

Key regional projects undertaken by Kenya include the Lamu Port South Sudan Ethiopia Transport (LAPSSET) Corridor Programme, East Africa’s largest and most ambitious infrastructure project, connecting the three EAC bloc countries.

Earlier in January, Kenya began test trials for cargo trains on the Mombasa to Malaba railway line on the country’s western border with Uganda.

PWC analysts, however, noted that Kenya’s allocation to infrastructure as a percentage of the total budget remains low at 22 percent and the country would need to continuously think ‘outside the box’ on how to fund infrastructure projects.

As part of the measures to manage its public funding, the Kenyan government has sought to do away with the debt ceiling in favour of a debt anchor at 55 percent of GDP as East Africa’s largest economy looks to public-private partnerships to help bridge the infrastructure funding gap.

The AU-Africa Integration Report 2021, shows increased transport infrastructure development projects across the continent, driven by major continental initiatives like the Programme for Infrastructure Development in Africa (PIDA), as well as regional and bilateral initiatives.

“Investment in infrastructure now accounts for over half of the improvements in economic growth in Africa witnessed over the last decade and has the potential to contribute much more, given a conducive environment,” according to the report.

Ongoing projects listed in the report include the ambitious trans-African highway network, with nine highways measuring 56,683 kilometres.

There is also a 4,010km Trans-West African Coastal Highway road project (known as TAH 7) linking 12 West African coastal countries, from Mauritania in the north-west of the region to Nigeria in the east.

In the Northern part of Africa, the Trans-Maghreb Highway running from Western Sahara to Libya is projected to serve among others, 55 towns with a total population of over 60 million and connect people with 22 international airports, the main ports and rail terminals.

The African Union has said that addressing infrastructure gaps in the continent would unlock the full economic potential of AfCFTA, describing poor infrastructure as a key impediment to the opening up of the single market.

“Better transport infrastructure that makes local, national and regional journeys easier is vital for fostering trade across the continent,” the AU said in the report.

Africa’s infrastructure financing needs are estimated to be 170 billion US dollars every year until 2025, with an estimated gap of around 100 billion annually, according to the African Development Bank.

By The African Mirror

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