LAEL BETHLEHEM: Building a boat to rise with the tide
Infrastructure is the platform on which prosperity is built
24 May 2024 - 05:00
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Ports require major expansion to support the expansion of trade. Picture: 123RF/ANDRIY MIGYELYEV
Almost every great economic power from ancient Rome onwards started its leap forward by investing in infrastructure. The US railways in the 19th century, the New Deal, the post-war regeneration of Europe, the transformation of Japan, China and now India. All of these have infrastructure development at their heart.
Infrastructure is the platform on which prosperity is built. No economy can develop its flesh and muscles without the strong skeleton of infrastructure. Water, power, roads, ports, airports, housing, digital connections — these are the basis of economic development and a decent quality of life.
SA is distinguished from our neighbours largely on the basis of our infrastructure. It may be in decline, it may be poorly managed, but it provides the basis for a large and diverse economy. We mess with our infrastructure at our peril.
What is the state of infrastructure in Africa? According to the UN Conference on Trade and Development (UNCTAD), about 55% of people in Sub-Saharan Africa now have access to electricity, up from 30% in 1996. The African population (excluding SA) consumes very little electricity per capita, about 10% of the global average. Even where there is electricity, it is often too limited to be used for cooking, which is why only 20% of Sub-Saharan Africans have regular access to safe cooking fuels.
Rail, ports and paved roads
One third of the African population lacks access to clean water. Only half of the roads on the continent are paved. The railway network is poor, providing 2.5km of roads per 1,000km2 compared with a global average of 23km. Ports require major expansion to support the expansion of trade. Aside from the impressive penetration of mobile phones, ICT infrastructure is limited.
Despite these problems, 15 African countries achieved a growth rate of more than 5% a year in 2023. According to the African Development Bank, nine of the 20 fastest-growing economies in the world in 2024 will be African. Africa’s large economies (SA, Egypt, Algeria and Nigeria) are growing slowly, but a clutch of countries in West and East Africa are really growing fast. In Southern Africa, Namibia is set to become a high-growth economy after the discovery of large gas deposits.
While these growth rates are impressive, many African countries remain dependent on oil, gas and mining. To achieve more broad-based and sustainable growth, countries need to diversify. The African Continental Free Trade Agreement provides a huge opportunity for intra-continental growth, and will be a major factor in Africa’s development over the coming years.
Residents wade through flood waters as they recover their belongings in Nairobi, Kenya, April 24 2024. Picture: Monicah Mwangi/Reuters
Climate change is, however, a huge threat, as evidenced by the recent floods in Kenya and Tanzania. Africa will be disproportionately affected by extreme weather events and needs to develop the resilience to withstand these. The key to such resilience is infrastructure.
The climate transition will have major economic consequences for the continent. Many traditional African exports (coal and oil) will decline, at least in the medium term. But the climate transition will also create opportunities — new battery minerals, renewable energy and perhaps also hydrogen. Infrastructure is key to both growth and resilience.
The African Development Bank has estimated that poor infrastructure reduces African growth rates by 2.5% a year. Investment of $150bn is required every year, or about 5% of GDP. The current rate is just 2%.
There have been several initiatives to promote infrastructure investment, including the AU Programme for Infrastructure Investment in Africa, China’s Belt and Road Initiative, and the EU Global Gateway. Any recent visitor to Maputo can attest to the power of the Chinese-sponsored Maputo-Katembe Bridge and the seamless road to the SA border.
But there is so much more to be done. New financing solutions must be found to sustain infrastructure investment for at least a generation. Private and multilateral funders need to work together with governments to lift the rate and quality of investment. SA capital markets have an important role to play.
As Indian politician Rahul Gandhi has said: “A rising tide doesn’t lift people who don’t have a boat. We have to build the boat. We have to provide the infrastructure to rise with the tide.”
• Bethlehem is an economic development specialist.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
LAEL BETHLEHEM: Building a boat to rise with the tide
Infrastructure is the platform on which prosperity is built
Almost every great economic power from ancient Rome onwards started its leap forward by investing in infrastructure. The US railways in the 19th century, the New Deal, the post-war regeneration of Europe, the transformation of Japan, China and now India. All of these have infrastructure development at their heart.
Infrastructure is the platform on which prosperity is built. No economy can develop its flesh and muscles without the strong skeleton of infrastructure. Water, power, roads, ports, airports, housing, digital connections — these are the basis of economic development and a decent quality of life.
SA is distinguished from our neighbours largely on the basis of our infrastructure. It may be in decline, it may be poorly managed, but it provides the basis for a large and diverse economy. We mess with our infrastructure at our peril.
What is the state of infrastructure in Africa? According to the UN Conference on Trade and Development (UNCTAD), about 55% of people in Sub-Saharan Africa now have access to electricity, up from 30% in 1996. The African population (excluding SA) consumes very little electricity per capita, about 10% of the global average. Even where there is electricity, it is often too limited to be used for cooking, which is why only 20% of Sub-Saharan Africans have regular access to safe cooking fuels.
Rail, ports and paved roads
One third of the African population lacks access to clean water. Only half of the roads on the continent are paved. The railway network is poor, providing 2.5km of roads per 1,000km2 compared with a global average of 23km. Ports require major expansion to support the expansion of trade. Aside from the impressive penetration of mobile phones, ICT infrastructure is limited.
Despite these problems, 15 African countries achieved a growth rate of more than 5% a year in 2023. According to the African Development Bank, nine of the 20 fastest-growing economies in the world in 2024 will be African. Africa’s large economies (SA, Egypt, Algeria and Nigeria) are growing slowly, but a clutch of countries in West and East Africa are really growing fast. In Southern Africa, Namibia is set to become a high-growth economy after the discovery of large gas deposits.
While these growth rates are impressive, many African countries remain dependent on oil, gas and mining. To achieve more broad-based and sustainable growth, countries need to diversify. The African Continental Free Trade Agreement provides a huge opportunity for intra-continental growth, and will be a major factor in Africa’s development over the coming years.
Climate change is, however, a huge threat, as evidenced by the recent floods in Kenya and Tanzania. Africa will be disproportionately affected by extreme weather events and needs to develop the resilience to withstand these. The key to such resilience is infrastructure.
The climate transition will have major economic consequences for the continent. Many traditional African exports (coal and oil) will decline, at least in the medium term. But the climate transition will also create opportunities — new battery minerals, renewable energy and perhaps also hydrogen. Infrastructure is key to both growth and resilience.
The African Development Bank has estimated that poor infrastructure reduces African growth rates by 2.5% a year. Investment of $150bn is required every year, or about 5% of GDP. The current rate is just 2%.
There have been several initiatives to promote infrastructure investment, including the AU Programme for Infrastructure Investment in Africa, China’s Belt and Road Initiative, and the EU Global Gateway. Any recent visitor to Maputo can attest to the power of the Chinese-sponsored Maputo-Katembe Bridge and the seamless road to the SA border.
But there is so much more to be done. New financing solutions must be found to sustain infrastructure investment for at least a generation. Private and multilateral funders need to work together with governments to lift the rate and quality of investment. SA capital markets have an important role to play.
As Indian politician Rahul Gandhi has said: “A rising tide doesn’t lift people who don’t have a boat. We have to build the boat. We have to provide the infrastructure to rise with the tide.”
• Bethlehem is an economic development specialist.
READ MORE BY LAEL BETHLEHEM
LAEL BETHLEHEM: Which of Joburg’s dangerous buildings will burn down this winter?
LAEL BETHLEHEM: Joburg has hit rock bottom — we need a new plan
LAEL BETHLEHEM AND GROVÉ STEYN: Eskom tariff restructuring could undermine plans to resolve load-shedding
LAEL BETHLEHEM: Why the sun has not set on the mining sector
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