Africa needs to invest more in transport, energy infrastructure, and stop fighting
Africa has the worst transport and energy infrastructure in the world. File
IN SUMMARY
- Conflicts cost Africa about $18 billion every year and shrank the economies of warring countries by about 15 per cent.
- The UN Economic Commission for Africa estimates conflict-related losses to agricultural production in sub-Saharan African between 1970 and 1997 at $52 billion, or 30 per cent of the output of the affected countries.
- War is an expensive affair and less of it will bring more development to the continent.
- Africa has the worst transport and energy infrastructure in the world.
A few weeks after the attack on Pearl Harbour that dragged the US into WWII, President Franklin Roosevelt led an effort to mobilise the US army as well as its war industry.
“Powerful enemies must be out-fought and out-produced,” he said. “It is not enough to turn out just a few more planes, a few more tanks, a few more guns, a few more ships than can be turned out by our enemies. We must out-produce them overwhelmingly, so that there can be no question of our ability to provide a crushing superiority of equipment in any theatre of the world war.”
Roosevelt demanded that America’s factories produce 60,000 aircraft in 1942, and 125,000 the following year, on top of 120,000 tanks and 55,000 antiaircraft guns.
Various historians have noted that this demand transformed American industry as production lines, money and labour were turned over to the war effort. Some three million cars were manufactured in the US in 1941.
Over the next four years, only 139 more cars were built. Instead, as US public broadcaster PBS later noted in a documentary, General Motors turned to making aeroplane engines, guns and tanks. Chrysler made fuselages and Ford turned out one B-24 long-range bomber every 63 minutes.
So successful were these efforts that in 1944 alone, the US produced more planes than Japan did throughout WWII. By the end of the war the US accounted for more than half of all industrial production in the world, cementing its economic and military supremacy in the post-war period.
Africa has had its fair share of wars. Between 1979 and 1999 there were 27 major conflicts in Africa in which the death toll was at least 5,000 people, and half the continent’s countries have been involved in some form of conflict since 1990.
Why then has Africa not seen American-type growth?
The most obvious answer is that Africa does not manufacture its own weapons. Devoid of the production lines and industrial base that Germany, Japan, the US, Britain and Russia turned over to the war industry, Africa imports the rifles, bullets, tanks and planes it uses in its conflicts.
So war in Africa is a consumer activity, not a productive one.
Second, Africa fights the wrong wars. Where other countries and continents were able to mobilise men, arms and other resources against external threats or in foreign wars of contest, Africa’s wars are mostly civil, internecine, and destructive.
Cost of war
It is difficult to measure the economic cost of such destruction but several studies give useful estimates.
The first one, Africa’s missing billions released in October 2007 by Oxfam and two other NGOs, found that conflicts since the end of the Cold War had cost the continent $284 billion, or roughly equivalent to the foreign aid it received during that period
The survey tracked conflicts in the countries then at war, including Algeria, Angola, Burundi, Central African Republic, Chad, Democratic Republic of Congo, Republic of Congo, Côte d’Ivoire, Djibouti, Eritrea, Ethiopia, Ghana, Guinea, Guinea-Bissau, Liberia, Niger, Nigeria, Rwanda, Senegal, Sierra Leone, South Africa, Sudan and Uganda.
The study found that conflicts cost Africa about $18 billion every year and shrank the economies of warring countries by about 15 per cent.
“Our calculation has only looked at the period of armed conflict,” the researchers noted. “However, economists find that economies often remain essentially at conflict levels for many years; this ‘war overhang’ is more common than the expected ‘peace dividend.’ If, during peacetime, the average military spending of a developing country amounts to 2.8 per cent of its GDP, this increases to around five per cent during civil war, and remains elevated to 4.5 per cent during the first post-conflict decade.”
In January 2012, Dr Hamid Ali of the American University in Cairo estimated that the conflict in Darfur had cost the Sudan government $35.11 billion between 2003 and 2009 in direct military costs, lost productivity by the dead and internally displaced, damage to infrastructure, and in peacekeeping operations and post-war reconstruction.
The economist Paul Collier estimates that the average civil war slashes 2.2 per cent off a country’s GDP annually.
In 2002, when fighting in Côte d’Ivoire made access to the Abidjan seaport virtually impossible, foreign trade in the region was disrupted with cattle exports from Mali collapsing, and falling by 65 per cent in Burkina Faso.
Even low-intensity conflict carries a high price tag. In 2005, the head of the South African tourism office reported that gun crime in the country had kept away a potential 22 million tourists over a five-year period.
Conflicts come with hidden costs. For instance, the ensuing uncertainty and fear of a relapse into violence changes economic behaviour towards activities with short-term results. It is safer to invest in diamond smuggling in eastern DR Congo than in mortgage financing.
In addition, conflict pushes people from rural areas to the relative safety of urban areas but few return home at the end of the fighting, as has been witnessed in Sierra Leone, Monrovia and Gulu in northern Uganda.
This has its positives, such as making it easier to provide services in urban areas and boosting economies there, but it could also lead to labour shortages in the surrounding rural areas, harming agricultural production and leading to higher food prices.
The UN Economic Commission for Africa estimates conflict-related losses to agricultural production in sub-Saharan African between 1970 and 1997 at $52 billion, or 30 per cent of the output of the affected countries.
In Angola, studies found that agricultural output at the end of the 1990s was well below half what it would have been in the absence of war. Similar effects were documented in Ethiopia, Mozambique and Sudan.
War is an expensive affair and less of it will bring more development to the continent. Many African countries spend large sums of money on military budgets, often only to turn the guns against one another.
South Sudan, which marked its third Independence anniversary last week amid a civil war, spends 35 per cent of its budget on security. That is three times what it spends on health, infrastructure and education combined!
If the reality is to match the “Africa Rising” narrative, countries on the continent need to fight less and instead invest more money in transport and energy infrastructure.
Africa has the worst transport and energy infrastructure in the world. As noted in the second part of this series, much of the transport infrastructure was laid out to connect Africa to external markets, where low-value raw materials were to be exported and high-value manufactured goods were to be imported.
Decades of underinvestment have left this colonial trading infrastructure in a crumbling state. The poor state of transport infrastructure adds between 63 and 75 per cent to the total cost of goods and services in Africa.
Between 2005 and 2012, China and India invested 32 and 42 per cent of their GDP in their transport infrastructure respectively, according to figures from the African Development Bank. In the same period, African countries invested only 15 to 25 per cent.
Despite most of Africa’s produce being bulky raw materials, rail transport is largely underdeveloped with 80 per cent of all goods and 90 per cent of all passenger traffic conveyed by road.
Some 13 countries in Sub-Saharan Africa do not have working railways, and some, like Rwanda and Burundi, have never had any. The standard gauge railway planned to run from Mombasa to Kigali, with a spur to Juba, is the biggest railway transport infrastructure project since the advent of colonialism in East Africa.
Most roads on the continent are unpaved, even within major capitals. A 2012 survey found that Abidjan and Dakar had 346 and 467 metres of paved roads per 1,000 residents respectively, against an average of 1,000 metres for developing countries. Kinshasa, the capital of DR Congo, had only 63 metres.
Africa’s air transport infrastructure suffers from similar underinvestment. This hinders trade in perishable produce like fruit and flowers, but it also has far more tragic consequences. The continent has the worst air safety record in the world, with one accident for every 270,000 flights in 2012, compared with a global average of one accident for every 5,000,000 flights.
Hydro, but no power
None of the projections under the “Africa Rising” narrative will come to light unless significant investments are made in the generation of more electricity and distributing it smartly across the continent.
Here, there are three problems. The first is that Africa does not produce enough electricity. Some 600 million Africans are without electricity including, ironically, 120 million in Nigeria, the continent’s largest economy and oil and gas producer.
Only 9 per cent of Congolese have access to electricity despite DRC having the Inga Dam, which can potentially supply the current electricity needs for the whole of sub-Saharan Africa.
Although the continent has about 14 per cent of the world’s population, it only produces three per cent of the electricity. In fact, sub-Saharan Africa, with a population of over one billion people, generates as much electricity as Spain, a country with a population of only 45 million.
Africans who have access to electricity pay a high price for it, on average about three times what it costs in Europe.
The second problem is that energy resources are spread irregularly across the continent. North Africa is rich in wind and solar energy resources. East Africa has geothermal and hydropower potential as well as new oil and gas discoveries. West Africa is rich in oil and gas. Central Africa has the greatest hydropower potential, while most of the coal is located in Southern Africa.
This is compounded by the third problem — the lack of shared generating, distribution and financing infrastructure to increase the continent’s electricity output. It will require pooling of money to jointly develop the energy resources and build the inter-connected grids to move electricity from the areas where it is produced to the areas where it is needed.
There have been some promising steps in this direction with the development, in 1995, of the Southern Africa Power Pool, as well as inter-connection and power purchase agreements between Ethiopia, Kenya and Tanzania.
Current projections show a steady rise in electrification across Africa over the next three decades, to reach around 70 per cent in 2040, which represents connecting 800 million more people to the grid. For this to happen, countries must find ways to harness the various resources, from solar energy in the Sahara to uranium in South Africa, to jointly power up Africa.
Plans by the East African Community member states to jointly invest in oil refineries, pipelines and sea ports are one example of how African countries can replace the emotions of resource nationalism with the rationality of shared prosperity.
Opportunities remain
Over the past three weeks this series has sought to offer a quick glimpse of the challenges and opportunities that Africa faces. Part I looked at the silliness of protectionism in the telecommunications, labour and air transport sectors and how innovation, competition, and regulation could reduce costs and increase labour mobility.
Part II examined the barriers to intra-African trade and manufacturing and argued for more emphasis on value-addition as well as the development of regional and continental markets.
Part III has made the case for less investment in destructive war and more investment in productive transport and energy infrastructure.
There is no doubt that Africa is rising as we are constantly reminded. Africa’s GDP of $1.7 trillion puts it at par with Russia and Brazil. In 2020, the spending in just five of the continent’s biggest consumer markets — Cairo, Cape Town, Alexandria, Lagos and Johannesburg — will reach $25 billion.
In education, enrolment rates have risen from 58 to 76 per cent in a decade, and almost seven out of 10 children now complete primary school. Everywhere you look, from the number of Africans with mobile phones or bank accounts, the numbers are looking up.
However, as this series has attempted to show, there is a lot of work required to accelerate this growth and make it more sustainable. Fundamentally, Africa must improve its governance.
Countries fighting one another or among themselves are unlikely to be able to develop the infrastructure or the policy reforms that are required to make the continent more competitive.
Bad governance, which has become synonymous with Africa, leads to conflict and inequality and undermines development.
Many of the protracted conflicts in Africa over the past two decades in countries like DR Congo, Mozambique, Angola, Uganda, and elsewhere have either died down or ended. More African countries are holding regular elections today and human rights have improved or are improving.
Yet renewed conflict in South Sudan, Mali, Central African Republic and elsewhere, the threat of terrorism in Nigeria, Kenya, Uganda and Rwanda, the fragility of Egypt, Libya and Tunisia, and the intractability of conflicts in Somalia are a reminder of the continent’s fragility.
Africa is rising from centuries of colonialism, slave trade, war, disease, corruption and poverty. It is no longer the “Hopeless Continent” but it must hurry up and get out of bed. If they are to catch up with the Asian Tigers, Africa’s Lions must start running.
Daniel Kalinaki is the managing editor for regional content at Nation Media Group. dkalinaki@ke.nationmedia.com @kalinaki
