Infrastructure development

A legacy of underinvestment and regional fragmentation

Infrastructure is a critical enabler of economic growth. At the same time, lack of infrastructure undermines productivity, raises production and transaction costs, and hinders growth by reducing the competitiveness of businesses as well as the ability of governments to pursue economic and social development policies. A substantial percentage of CEOs in our Africa survey say that inadequate infrastructure is a threat to growth. In the Congo-Brazzaville, the Democratic Republic of the Congo, Ghana, Mozambique, Tanzania and Zimbabwe, 80% or more of CEOs say that inadequate infrastructure is a threat to growth.

The far-reaching effects of Africa’s infrastructure backlogs include:

  • Constrained headline growth – at least 2-3% per annum;
  • Inter-regional trade and consumer market fragmentation – inter- Africa trade is 6-8% compared to Asia and Europe at 28% and 60% respectively;
  • Impeded diversification of economies – extractive and natural resource industries remain the primary economic drivers, which limits growth, job creation and the multiplier effects on infrastructure investments, sustainability and country competitiveness;
  • Inflated costs – costs of logistics, power and bureaucratic red tape increase the cost of African products and the cost of doing business in Africa;
  • Political risk – ultimately, the lack of infrastructure affects the quality of life of citizens – and as we’ve learned from the Arab Spring, the threat of social unrest linked to this is real.

These factors contribute to African countries being among the least competitive in the world. This is a problem that requires continental and regional collaboration, planning, solutions, funding, partnerships and implementation.