Infrastructure Deficit Stagnates Africa’s Businesses


The World Bank Group has declared in its latest report, the Africa’s Pulse, that Africa’s infrastructure deficit is and has been serving as an impediment to the growth and development of the continent, especially its business and trade sectors.

The report says that roads, ports, power and other infrastructures that are to contribute to the development of the continent through trade and commerce are inadequate or lacking. The Africa’s Pulse is a twice-yearly analysis of the issues shaping Africa’s economic prospects.

The new World Bank  Group’s Africa Pulse report also says that the region’s infrastructure deficit is most acute in energy and roads and that across Africa, unreliable and expensive electricity supply and poor road conditions across the continent continue to impose high costs on business and intra-regional trade.

World Bank Group’s chief economist for the African region, Francisco Ferreira, while providing analytical views on the report at a discussion on “Africa’s recent economic progress and future challenges in sustaining the continent’s economic growth in a changing global environment,” in Washington D.C, yesterday said though economic growth continues to rise, risks to fast growth remain major challenges.

The discussion was a webcast live at the World Bank Group’s Country office in Monrovia. It was also viewed in several other African countries including Nigeria, Ghana, Sierra Leone, Ethiopia, amongst others. Journalists from these African countries had the opportunity to interact with the two discussants, Mr. Ferreira and World Bank Lead Economist in the African region, Ms. Punam Chuhan-Pole.

The global economic expansion is set to accelerate, but downside risks persist. Economic activity was robust in much of Sub-Sahara Africa in 2013, supported by strong investment demand and robust private consumption.

Mr. Ferreira said while Gross Domestic Product (GDP) growth in the region is expected to remain stronger than in many other developing countries worldwide, a number of important risks remain. He named some of the risks as:  unpredictable commodity prices, locally volatile food prices and political uncertainty.

The Africa’s Pulse reports indicates that weaker demand for metals and other key commodities, combined with increased supply, could lead to a sharper decline in commodity prices. In particular, if Chinese demand, which accounts for about 45 percent of total copper demand and a large share of global iron ore demand remains weaker than in recent years and supply continues to grow robustly, copper and iron ore prices could decline more sharply, with significant negative consequences for the metal-producing countries.

“Within Sub-Sahara Africa, strong local prices pressure have emerged in a number of countries driven in part by large currency depreciations, as in Ghana and Zambia and also by unfavorable weather conditions,” the report said.

It indicates that domestic risks associated with social and political unrest, and emerging security problems, remain a major threat to the economic prospects of a number of countries in the region.

World Bank Lead Economist in the African region, Ms. Punam Chuhan-Pole also said the region growth prospects remain favorable despite emerging challenges, such as weaker commodity prices and tighter global financial conditions. During the period from 1995 to 2013, the region performed strongly with an average annual GDP growth rate of 4.5 percent.

She said that growth was broad base, but the drivers of growth varied across countries. “Different growth patterns will determine the resilience of growth prospect to changing global conditions,” she said.

However, it adds, economic growth in Sub-Sahara Africa continues to rise from 4.7 percent in 2013 to a forecast 5.2 percent in 2014. This performance, according to Africa’s Pulse, is boosted by rising investment in natural resources and infrastructure, and strong household spending.

The report notes that growth was notably buoyant in resource-rich countries, including Sierra Leone and the Democratic Republic of Congo (DR. Congo). It remained steady in Cote D’Ivoire, while rebounding in Mali supported by improved political stability and security. Non-resource rich country, particularly Ethiopia and Rwanda also experienced solid economic growth in 2013.

Capital flows continues to rise, reaching an estimated 5.3 percent of regional GDP in 2013 significantly above the developing countries average of 3.9 percent. Net Foreign Direct Investment (FDI) inflows to the region grew by 16 percent to a near record US$43 billion last year, boosted by new oil and gas discoveries in many countries including Angola, Mozambique and Tanzania.

Leave a Reply