News

How can transport infrastructure promote trade and sustainable development on the African continent?

How can transport infrastructure promote trade and sustainable development on the African continent?
Photo credit: AfDB

22 Mar 2017

The role of infrastructure in economic development is widely recognised. How can the development of a more integrated transport infrastructure network support the achievement of the Sustainable development goals in Africa?

Recently, the heads of the Multilateral Development Banks (MDBs) and the IMF jointly stated that “no country has developed without access to well-functioning infrastructure.” More specifically, infrastructural development is essential for competitiveness and trade, which in turn can play a pivotal role in achieving sustainable development. This article looks at choices made in Africa on how to prioritise trade-related infrastructure and transport activities to advance sustainable development goals (SDGs), and also provide a few suggestions on how these efforts could be strengthened.

Overcoming constraints

Africa’s structural transformation and inclusive green growth, which are pre-conditions for reaching most of the SDGs, are hampered by a range of natural and man-made constraints. The latter constitute serious obstacles to deeper regional integration and are linked to the fact that Africa is divided into 54 economic spaces, including many landlocked (16) and least developed countries (34). These countries are further scattered across more than 30 overlapping sub-regional and regional organisations – what some experts have come to call a “spaghetti bowl”.

Because of this complex architecture, there is a wide range of soft infrastructure constraints obstructing the regional integration process, including the lack of harmonisation of policies, regulations, and procedures governing both trade and infrastructure development. In addition, poor hard infrastructure continues to cast a long shadow on Africa’s competitiveness and diversification. Finally, other significant constraints encompass institutional, administrative, and financial capacity, governance, and the coordination of efforts between the African Union Commission (AUC) and the regional economic communities (RECs), as well as among their member states.

Dismantling the barriers to moving goods and services across and between African countries, including by addressing the problems related to overlapping REC memberships, would thus go a long way to address Africa’s complex challenges to regional integration as a stepping stone towards reaching the SDGs. In particular, it is essential to scale-up investment in efficient, seamless, and cost-effective transport, energy, water, and ICT cross-boundary networks, as well as in soft infrastructure reforms such as one-stop border posts. The Programme for Infrastructure Development in Africa (PIDA), whose 51 programme and projects are meant to fully interconnect, integrate, and transform the African continent, is an important step in that direction. Constructing, rehabilitating, and maintaining reliable and efficient regional infrastructure would act as a catalyst for development, by bringing down the time and thereby the costs of cross-border trade and transport, which in turn would foster trade, the creation of decent jobs, inclusive green growth, and lead to an integrated continent as a pathway to sustainable development. In this process, the biggest gains would accrue to the most isolated and resource-deprived regions.

Moreover, regional commitments would also need to be harmonised with AU and REC member states’ external bilateral and multilateral trade and cooperation agreements, although such deals are easier to call for than to negotiate. For example, trade facilitation is a global problem which calls for a multilateral solution. When the WTO’s Trade Facilitation Agreement (TFA) entered into force on 22 February 2017 after two thirds of the organisation’s members ratified it, only 19 African countries had presented their instrument of ratification. This is unfortunate, because African countries in general, and LDCs in particular, are expected to see the biggest average reduction in trade costs resulting from the implementation of the TFA, although most RECs in Africa already have provisions in place addressing trade facilitation issues.[1]

Transport infrastructure as an “enabler” to achieve the SDGs in Africa

The literature has shown that access to transport, in particular through trunk and feeder roads, has a significant impact on inclusive growth, access to social services, and regional integration. In the framework of the SDGs more generally, transport plays a central role, as seven of the seventeen SDGs include specific targets that incorporate both rural and urban transport. Transport is thus recognised as an important tool for reducing emissions, improving equity, and reducing poverty.[2] But the reality is that Africa’s road infrastructure development – perhaps because of the continent’s difficult economic geography – is still very weak in terms of quantity, quality, or access, and is also characterised by missing regional links (see figure 1).[3] As a percentage of all the continent’s roads measured in length, less than 20 percent of roads are paved. On top of that, a substantial share of the road networks built in the 1970s and 1980s are in poor condition due to lack of maintenance.[4] Moreover, Africa’s rail transport system, which is essential for both freight and passenger transport, is even more poorly interconnected than the roads, since different rail gauges do not allow cross-border network connectivity and usage of the same rolling stock between neighbouring countries.[5]

Figure 1. Trans-African highways and major ports

 

Source: AfDB. Development Effectiveness Review 2012. Promoting Regional Integration.

It was partly on this background that in January 2015, China and the AUC signed a far-reaching agreement within the framework of AU’s Agenda 2063. The pharaonic vision is to link all African capitals by roads, high-speed trains, and air transport services. The implementation of common frameworks for the construction of regional infrastructure networks (such as AU Agenda 2063 and PIDA) is expected to boost intra-African trade, which has been identified as having more (manufacturing) value-added content than Africa’s trade with the rest of the world.[6] This would, in turn, boost job creation (SDG8) on the continent and contribute to advancing many other SDGs through various transmission mechanisms. Positive effects would also be especially important in remote rural areas, particularly in the 34 African LDCs where two thirds of the population live in rural communities. As rural transport networks improve, they provide the rural non-farm (impact-) enterprises and smallholder farmers with new economic opportunities, including through potential economies of scale, by accessing external input and output markets. This, in turn, can enable the implementation of nearly all the SDGs in rural Africa.

Notwithstanding the above-mentioned entry into force of the WTO TFA, given today’s context of increasing scepticism towards the benefits of multilateral trade, the next phase of Africa’s productive and export capacity building will have to come through Africa’s own mega-regional trade agreements, successively the Tripartite Free Trade Area (TFTA) and the Continental Free Trade Area (CFTA). Underlying these significant regional integration opportunities is the transport infrastructure network, which consequently will play a key role as an enabler to achieve the SDGs over the next 13 years. Transport facilitation, defined as the simplification and harmonisation of international transport procedures and the information flows associated with them, means faster, more efficient, and predictable exports and imports. However, as with hard infrastructure development, there is still a lot of ground to be covered in Africa to address the seven SDG transport targets. Africa’s infrastructure services are twice as expensive as elsewhere, reflecting both diseconomies of scale in production and high profit margins caused by lack of competition.

The most prominent step to overcome this challenge has been taken in October 2008, when heads of state and government representing the 26 member states of COMESA, the EAC, and SADC met in Kampala, Uganda, and signed the Tripartite Memorandum of Understanding, with the goal of establishing a single “grand FTA” covering the three RECs. The TFTA adopted a genuine developmental approach to the Tripartite integration process, anchored in three pillars: (1) market integration based on the TFTA (SDG 10.a; SDG 17.12 and 17.13); (2) infrastructure development to enhance connectivity and reduce costs of doing business (SDG 8.a); and (3) industrial development to address the productive capacity constraints (SDG 9). Building on this foundation, the TFTA adopted a Comprehensive Tripartite and Trade Facilitation Programme (CTTFP), which aims to develop transport and infrastructure in a coordinated manner. However, the implementation of CTTFP has faced a number of challenges such as the slow domestication of the protocols, the low level of implementation of the RTAs, and the proliferation of transport related non-tariff barriers (NTBs). These need to be addressed to reduce transport costs, boost trade, and ensure access to sustainable transport for all.

The existing literature does seem to confirm that both transport facilitation and hard infrastructure development indeed are enablers for development and inclusive growth, e.g. through the development of agriculture and rural livelihoods.[7] In particular, transport facilitation and transport infrastructure facilitate the flow of goods, services, and people, and lowers the cost of doing business, which allows economic activity to flourish. Since it is not yet possible to fully monitor the progress towards the SDG targets at the REC level, future research could seek to explore to what extent overcoming these CTTFP challenges are linked to the implementation of SDGs in the TFTA and the CFTA.

What should Africa and the international community focus on?

The sustained growth which African economies have achieved since 2004 needs to be reoriented to provide a stronger basis for the transition to sustainable development. Africa must thus intensify its efforts to foster structural transformation, in particular through regional integration, while keeping poverty reduction and sustainability concerns at the centre of its development aspirations. In order to succeed in such an ambitious programme, one of the keys lies in the development of a single and integrated regional road transport market characterised by harmonised policies.

Enhancing policy coordination

The development of a more competitive, integrated, and liberalised regional transport market on the African continent will be fundamental to achieving the SDGs, implementing the WTO’s TFA, and establishing well-functioning African mega-regional trade agreements such as the TFTA and the CFTA. Ineffective trade, transport, and infrastructure development strategies and low policy coherence are often due to an ad-hoc and fragmented approach to policy making and private sector consultation. Given their inter-sectoral linkages, uncoordinated policies can make it difficult to achieve the SDGs. Therefore, the development of a governance framework for inter-ministerial coordination and stakeholder policy consultation in the area of trade and transport facilitation policy making, both at the national level and at the RECs level, would be an important step in the right direction. It would help bring about coherence and complementarity in the regional integration policy making process, while ensuring alignment with the member states’ sustainable development objectives.

Sustainable transport infrastructure in countries in special situations

The development of reliable, efficient, and sustainable infrastructure systems, and especially transport infrastructure, is of particular importance for countries in special situations such as LDCs and landlocked developing countries (LLDCs). However, the levels of investment required for the development of large-scale regional infrastructure projects are often beyond the individual capacity of LDCs and LLDCs, hence the importance of regional cooperation and international support – including from a financial point of view. This could partly come from the improvement of international support measures to better fit the developmental needs of countries in special situations, as suggested by de Melo and Wagner who recommend allocating a greater share of aid for trade funds to countries with special needs in the area of trade facilitation, e.g. for establishing and strengthening national trade facilitation committees.[8] Such a more focused approach could also be adopted with regards to hard infrastructure.

Financing sustainable transport infrastructure: The role of PPPs

The increase in infrastructure investment needed to successfully implement the SDGs is considerable, with the cost of addressing Africa’s infrastructure needs estimated at around US$100 billion a year.[9] Although the largest share of Africa’s infrastructure is financed domestically, African governments should take advantage of the renewed interest from private investors and operators to improve and maintain the continent’s transport infrastructure network over the next decades. With this aim in mind, African governments, MDBs, and other relevant stakeholders should explore people-first public-private partnerships (PPPs) and innovative financing approaches, such as risk instruments that guarantee a certain volume of transactions, as means to attract private impact investment in support of infrastructural development and the SDGs.

Christian Kingombe is Senior Research Fellow at the Centre for Finance and Development, Graduate Institute, Geneva; Research Associate at the Centre for Socio-Eco-Nomic Development (CSEND); and Co-founding Managing Partner of 4IP LLC.

The views and interpretations expressed in this paper are those of the author and should not be attributed to either the Graduate Institute, Geneva, or CSEND. The author would like to thank Raymond Saner and Thibaut Mourgues for their comments and advice.

This article is published under Bridges Africa, Volume 6 - Number 2, by the ICTSD.


[1] WTO. “How does the TFA cut red tape at the border for easier trade.” 2017.

[2] Institute for Transportation & Development Policy. “The Role of Transport in the Sustainable Development Goals.” 2015.

[3] See Virtual PIDA information Centre (VPiC): http://www.au-pida.org/

[4] Kingombe, Christian. “An Enquiry into the Causes and Nature of the Transmission Mechanisms between Labour-Based Rural Roads, Sustainable Growth, and Agricultural Trade in Zambia’s Eastern Province.” PhD Thesis, University of London, 2011.

[5] African Development Bank Group. Africa in 50 Years’ Time: The Road Towards Inclusive Growth. September 2011.

[6] African Development Bank Group. “Intra-African Trade: An Analysis.” Mimeo, 2012.

[7] See, for example: UNCTAD. Least Developed Countries Report 2015: Transforming Rural Economies. 2015.

[8] De Melo, Jaime, and Laurent Wagner. “How the Trade Facilitation Agreement Can Help Reduce Trade Costs for LDCs.” E15 Initiative, ICTSD and the World Economic Forum, January 2016.

[9] “Africa needs $100 billion annually to close infrastructure financing gap – AfDB.” Premium Times, 13 December 2015.

Author Christian Kingombe
Source Bridges Africa | ICTSD
Website Visit website
Date 22 Mar 2017
Share on