PORTS-AIRPORTS-ROADS AND RAILWAYS: LINKING UP DIFFERENT STATES
Africa is no longer a chaotic muddle. Its still youthful nation-states have managed to consolidate their identities around national patriotic sentiments. For each head of state, the pressing need was – and still is – to preserve national sovereignty and consolidate the nation-state both politically and economically. Many have succeeded in doing this and certain African countries are enjoying some of the planet’s highest growth rates. Six out of Africa’s Top 10 countries belong to the Southern African Development Community (SADC), the Continent’s fastest-growing region. Aside from rude economic health, these countries also enjoy relative political stability. This same stability is in evidence in Western Africa where all heads of state have been democratically elected since Adama Barrow came to power in Gambia. Economic progress coupled with political stability holds out hope for an Africa with a bigger window onto the world, comprising less isolated countries, all of which have access to the sea. This will be contingent on developing ports and airports and connecting countries by road and rail both from a regional and a continental perspective. Opening up the Continent and connecting its different countries will boost African development and consolidate growth.
Opening up Africa: ports and airports
- Ports: We talk about Africa as though it were an island-continent but, because it is only connected by the Sinai Peninsula, 90% of its international trade is seaborne via the Mediterranean, the Atlantic or the Indian Ocean. Its port sector is growing fast but it remains too small to be able to keep pace with the Continent’s economic growth. Investments are being made (USD 50 billion in Sub-Saharan Africa), maritime traffic is growing by 7% a year and trade has increased four-fold in the past 10 years however, Africa still accounts for only 2% of global containerised traffic.
The big obstacle to modernising African ports and bringing them up to international standards is the cost of the investment necessary and this is where the private sector, public-private partnerships (PPP) and concession arrangements are needed.
- The airports: the example of Abidjan airport. Despite being West Africa’s third-busiest airport with traffic growing by 16% every year, some of its infrastructure is just not big enough to cope. State investment in enlarging the airport (aircraft handling, circulation and parking) and improving facilities (passenger handling capacity) has been insufficient. Instead, the necessary funding has come from the West African Development Bank (BOAD), Banque internationale pour le commerce et l’industrie de la Côte d’Ivoire (BICICI) and AFD’s private sector financing arm, Proparco. Proparco has followed up a first loan granted in 2012, with a second loan of €13 million, repayable over 11 years, to Aeria which holds the concession to operate Abidjan’s FHB Airport.
Connecting different states: road and rail networks
The President of Ghana, Nana Akufo-Addo, considered to be close to Alassane Ouattara, (Ed. President of Côte d’Ivoire) notes that economic integration in Western Africa lags behind that in the southern part of the Continent. Because they have been democratically elected, West African heads of state are now able to avoid political crises, such as the recent border dispute between Ghana and Côte d’Ivoire. So, Nana Akufo-Addo considers that the time is right to begin working on common projects “this political climate is conducive to advancing economic integration in our region. What we are lacking when compared with Southern or Eastern Africa are large-scale joint ventures, especially infrastructure programmes: a unified rail system, a connected road network, etc. It is these types of joint development initiatives that we should now be focusing on. West Africa is lacking big, jointly-developed projects.” (1)
It is this desire for road and rail interconnection that is behind the Treaty of Friendship and Cooperation (Traité d’Amitié et de Coopération [TAC]) signed between Côte d’Ivoire and Burkina Faso, which involves building a motorway between Yamoussoukro and Ouagadougou, and renovating the Abidjan-Ouagadougou-Kaya railway and extending it to Tambao. Presidents Roch Marc Christian Kaboré and Alassane Ouattara (of Burkina Faso and Côte d’Ivoire, respectively) wish to achieve rapid progress in developing their regional economic infrastructure.
In the view of the Algerian businessman, Issad Rebrad, the most urgent priority is opening up African countries. His dream is to create a freight-only rail network reserved for transporting goods that will break down barriers and connect landlocked countries with no access to the sea. Rail considerably reduces freight transport costs. This mammoth project needs to be THE number one priority: building, standardising and linking a new rail network around the old, derelict existing one. If this project is to be deployed at Continental level, the African Union would need to step in as the political consent of all countries would be needed.
Africa’s future: a Continental vision
Both the work and recommendations of the African Union show that forward-thinking heads of state know that Africa needs big infrastructure projects to develop and to consolidate growth. National projects are not enough – markets are too small and the related investment is too great. The Sustainable Development Goals adopted by the international community in 2015 cannot be achieved by state intervention alone, private partners and local financial institutions also need to get on board. The latter could work with Proparco, AFD’s private sector financing arm, whose role is to support and strengthen the role of private stakeholders in African economic development. In Côte d’Ivoire, FHB Airport and the Port of Abidjan are perfect illustrations of the key role that a structure like Proparco can play in opening up Africa to economic development.
Because they make it easier to transport people, goods and investments, economic infrastructure – ports and airports, roads and rail networks – lie at the heart of all African national or international development imperatives.
(1) Interview given on 21 April 2017 to Jeune Afrique magazine
CEO, Institut Choiseul (Paris, Abidjan)
Managing Editor, Afriki Presse magazine
Director of L’Afrique en marche collection
Columnist, political scientist
FINANCING ECONOMIC INFRASTRUCTURE: TRANSPORT
Economic infrastructure concerns the provision of water and electricity, information and communication technology (ICT) and transport. According to the African Development Bank (ADB), the deficiencies of existing African infrastructure knock two points off growth every year and reduce productivity by 40%. It also reckons that infrastructure investment requirements in Sub-Saharan Africa will top USD 93 billion a year over the next 10 years. However, only half of this amount will actually be forthcoming, resulting in a shortfall of USD 50 billion that will need to be found somewhere.
Massive investment needed to modernise transport
How can transport infrastructure be funded in the face of the inability of states to raise the required resources and the feeble investment clout of local private businesses and financial institutions. The answer: use partners like BOAD, BICICI, AFD and AFD’s subsidiary Proparco. Financing transport infrastructure is one of Proparco’s key focuses. For Iskander Ezzerelli, a Consultant with Proparco, “transport really is one of the pre-conditions for development. Without an efficient transport network, goods cannot be traded and people cannot move around.” And we could add, there would be no investment either! Transport is bound up with opening up a country, either the hinterland or interior, or the foreland, i.e., the catchment area around a port or an airport. If we take Côte d’Ivoire as an example, this means the entire hinterland located behind the coastal strip. Africa has the highest proportion of land-locked countries (32%) and the states in question need to invest huge amounts if they want to be able to participate properly in trade.
African Development Bank (ADB)
One of the teams in the ADB’s transport division is dedicated entirely to financing infrastructure projects. It puts together financing arrangements and structures and completes operations to invest in all types of road, port and airport projects. According to information provided by ADB, “the Bank has helped put together major projects in the transport sector, such as the Lomé port container terminal (Togo) and the Lekki and Dakar toll roads in Nigeria and Senegal, respectively. Much of the Continent’s heavy infrastructure dates from the Colonial period and has fallen into disrepair. Over the coming decades, the Bank also plans to upgrade most of the ports and airports inherited from the colonial period.”
AFD and PROPARCO
In addition to financial backers and private investors, AFD is also present via Proparco, its private sector financing arm. For nearly 40 years, Proparco has been partnering projects to finance and support businesses and financial institutions in Africa. In Côte d’Ivoire for example, Proparco is providing funding and support to Aeria, the Ivorian company that holds the concession to operate Abidjan’s Felix Houphouët-Boigny Airport. In partnership with Aeria, Proparco is preparing FHB Airport to deal with the challenges of the future.
Public-private partnerships (PPP)
Public-private partnerships (PPP) began appearing in Africa around 15 years ago to invest where central governments were unable to. They have also been used to improve poor private and public services. There are still not enough PPPs in Africa for a number of reasons: political instability, a fraught business environment alongside a weak legal and regulatory framework for PPPs, investor fears over “country risk, Africa’s limited importance in global trade and investment, or the smaller size of markets and financial markets.
ADB encourages countries to introduce legal and regulatory frameworks conducive to PPPs and many states have done so.