The focus of the 13th Annual Meeting of the Infrastructure Consortium for Africa (ICA), which will take place in Rome, Italy on 19 and 20 October 2017, will be “Toward Smart and Integrated Infrastructure for Africa: An agenda for digitalisation, decarbonisation and mobility”.

The meeting will be hosted by the Government of Italy at the Italian Ministry of Foreign Affairs and International Cooperation headquarters, and jointly organised with the African Development Bank and the ICA.

To provide updated technical information, guide participants and provide a focus for discussions, a background paper was commissioned by the ICA and the Italian Ministry of Foreign Affairs and International Cooperation.

The ICA’s annual “Infrastructure Financing Trends in Africa” report will also be analysed and discussed at the meeting.

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Background paper: Executive summary

Africa is ready to jump straight into the revolutionary frontiers which may represent the enabling environment for the transformative change requested by the 2030 Agenda. Africa does not need to replicate misleading trends of development, production and consumption which are now calling for deep remedies. Indeed, strong efforts and Partnership at global level are requested to support the achievement of sustainable development while maintaining global Peace, reduce inequality among People and promote a more equitable Prosperity for all, including the Planet at large.

The potential of the next production revolution in Africa

In this perspective, the Next Production Revolution (NPR) represents a potential opportunity and a big challenge for Africa and its socio-economic development, also due to the traditional leapfrogging attitude that has already characterized the straight and successful diffusion of a number of smart or clean innovations in the continent. Indeed, NPR entails a confluence of technologies ranging from a variety of digital technologies to new materials and processes. Moreover, in the 2030 Agenda of the United Nation, the 5 clusters of emerging technologies (bio-tech, digital-tech, nano-tech, neuro-tech and green-tech) are considered crucial for the achievement of the Sustainable Development Goals (SDGs). Among the five clusters it emerges that Digital and Green Tech appear as the most relevant for the achievement of the SDGs like Health, Water, Energy, Ecosystem, Land, Ocean Management, Climate Change, Sustainable Production and Consumption patterns. Recognizing this relevance, Digital and Green Tech, broken down into digital infrastructure, sustainable energy infrastructure and smart mobility have become the core of ICA 2017.

Physical (e.g., telecommunication, energy, transport, water supply) and social infrastructure (e.g., health, education, banking, commercial services) are crucial for socio-economic development at country level. However, infrastructure development needs to cope with the new global framework. Indeed, only a confluence of technological innovation matching political, institutional and social innovations may have the power to trigger a transforming process that is requested for our society. From a technological standpoint – the OECD has just formalized the concept of Next Production Revolution which will have a very strong impact on productivity, work, skills, markets, poverty and inequality, well-being and environment. From a political and institutional point of view, the Paris Agreement on climate change, the 2030 Agenda for Sustainable Development and the Addis Ababa Action Agenda represent paramount innovative reference assets. However, infrastructure development, within the current production schemes, may represents a big burden for additional green-house gases emissions. Thus, long lasting effects of infrastructure need to be considered in order to avoid the risk of technological lock-in to a set of configurations that are able to meet 2030 or 2050 targets but that inevitably are due to fail in achieving the target beyond 2030.

Quality and reliable infrastructures are preconditions that may trigger access to different services pivotal for fighting poverty and boosting the local economy and entrepreneurship. Africa needs to bridge a large infrastructural gap in the energy, transport and ICT assets mainly due to low population density, high concentration of landlocked countries and high share of rural settlements. In the energy sector, the infrastructure dearth is largely manifest both from a quantitative and qualitative perspective. Access to electricity and modern fuel is still low in the Sub-Saharan region. Per capita electricity consumption, in the whole continent, is very low, less than 600 kWh/per capita per year that represents less than 20% of the world average; energy intensity and CO2 intensity are very high, thus giving evidence of a very low efficient and not clean energy supply chain.

Transport infrastructure, in terms of both roads, rail lines, air transport and port, is another crucial pillar to foster sustainable development in Africa enabling local, regional and international trade. Road transport contributes to 90% of passengers’ mobility and more than 80% of goods’ exchanges. More than 50% of Africa’s road network is unpaved hindering the access to basic social services and burdening local economic activities, especially for rural population. Air transport is still modest compared to other macro regional aggregations. Maritime transport, despite being fundamental for trade, is also weakly developed. Information and communication technologies had a rapid growth in Africa which is now the second largest mobile phone market in the world. But the Africa penetration rate of mobile phones varying from 71% to 111% is still among the lowest compared to other macro-regional aggregations. Moreover, individual Internet access still scores very low, having a range between 20 and 39% of individuals using Internet. Despite the positive trends, African ICT sector is still relatively immature as shown by the low number of fixed broadband subscriptions, and with low impact of Internet on African GDP (1.1% compared to 3.7% of developed economies).

Filling the infrastructural gap of Africa is urgent and in this perspective, additional resources are needed, but further value could be brought by cooping wise investments on quantitative capacity with a set of other strategies to improve productivity of current infrastructural asset use. At global, level ensuring a value of infrastructure stock at around 70% of GDP, a rise of annual baseline infrastructure investment from $2.6 trillion in 2013 up to $4.5 trillion in 2030 would be required. Such an investment would not be enough to fill the existing gaps between developing countries and developed regions, to address universal access to roads, clean water, sanitation, and electricity and to consider extra investments required to tackle environmental stresses from climate change mitigation and adaptation. The additional amount to meet the need of Sustainable Development for developing countries is between $3.3 trillion and $45 trillion per year to be mainly allocated in the sector of basic infrastructure (roads, rail and ports; power stations; water and sanitation), food security (agriculture and rural development), climate change mitigation and adaptation, health, and education. Within this total amount, physical infrastructures would require from around $1.6 trillion to $2.5 trillion per year. This brings to evidence an estimated gap close to $1-1.5 trillion per year when compared to current investments.

As a global picture, investments in infrastructure in developing countries are estimated to be at 1.8% of global Gross Domestic Product (GDP) while the investment gap should be between 2.4% and 4.2% of global GDP. In 2015, investments for Africa’s infrastructures amounted to $83.4 billion showing a 12% increase with respect to the previous year. African national governments committed 34.1% of total investments while the private sector shared only 8.9%. Energy and transport sector collected more than 80% roughly equally distributed among the two for a total investments sharing of $69.4 billion. At regional scale, investments were mostly allocated in Eastern Africa (23.1%). Investments from private sector were almost entirely focused in the energy sector and were mostly concentrated in South Africa (51.2%) followed by West Africa (17.2%) and North Africa (16.5%). In the whole Sub-Saharan Africa private sector investments were around $6.3 billion with the power sector sharing more than 95% of it and the remaining allocated in road construction and water infrastructure. In the period from 2010 to 2015 most of private investments in Sub-Saharan Africa were allocated in ICT infrastructure with few but big projects. However, in the last three years a shift of private investments from ICT to energy infrastructure has been observed. Private investments in transport sector are still very small mainly concentrated in ports.

The share of middle- and low-income countries in global GDP (on purchasing parity terms) has increased from less than 40% to more than 50% since year 2000 and is expected to increase to two-thirds by 2030; these countries are coming to be the major drivers of investment and growth. This unique transformation calls for rapid technical progresses in digitalization, energy, transport and other spheres. At the same time, this progress needs to be carried out in compliance with the urgency of controlling impact on resources, environmental quality and on climate. The Next Production Revolution offers to developing countries and therefore to Africa the opportunity to achieve sustainable development goals provided the setting of an enabling infrastructure and a new generation of leaders able to manage such innovation. The early path towards low-carbon and quality infrastructure has already led to a ‘leapfrogging’ change of infrastructure system, which needs to be more focused on a comprehensive smart and integrated approach including functional, data integration and governance; a decentralized paradigm, a life cycle perspective and a new and pro-active role of users.

Smart and integrated infrastructure in Africa

Smart refers to a massive penetration of digital technologies in the infrastructure sector to control, manage and optimize uses. Integration refers to the coping of functionality, data integration and sharing across sectors between physical infrastructure like energy, transport, telecommunication and digital technology including the use of Internet of Things, Artificial Intelligence, Big Data. Integrated infrastructures can therefore promote a new infrastructure governance able to foster an overarching approach to planning, delivery and management of infrastructure assets. In addition, integration leads to the promotion of new technological nexus, overlapping different sectors, such as waste, energy, transport, ICT, banking, financing. This implies that the development of, e.g., transport, energy and ICT, infrastructures should be seen as intertwined and synergic.

Decentralization is a crucial element in the transformative path for infrastructure: from the physical perspective, we assist to a capillary distribution of technologies more massively available to citizens; digital technologies (e.g. smart-phone) have increased the chance for everyone to get access to digital services, energy and also transportation services. Additionally, technological advances have allowed the deployment of “local” digital services, which may stand regardless the availability of connectivity with centralized infrastructures. From the financial perspective, we are assisting to a parallel shift of capitals and infrastructure owners, from large creditworthy entities (e.g., large corporations and central governments) to smaller one (e.g., households, smallholders, emerging economy cities without good credit ratings, new project developers). In the same perspective, investments in infrastructure need to be more directed to solutions that aim at optimizing resource use in a life cycle and system perspective enabling the transition that is requested from now to 2030 but also casting the right seeds for the more challenging shift needed to 2050. Lastly, a new people-centered perspective is envisaged, where households and communities are engaged in new or adapted forms of distributed control, with demand-response approach.

Smart and Integrated Infrastructures (SMART-I Infrastructure) need to become the driving element for the next investment generation in Africa and they are the essence of the taxonomy proposed for ICA 2017. They represent the natural evolution of the list of attributes for infrastructure development and complement the previous definition of sustainable and quality infrastructure.