African countries will have to continue pursuing regional integration if they are to cut costs across all aspects of infrastructure, the World Bank said in a latest report on Africa’s Infrastructure.
The bank says that through regional collaboration African states can minimize costs of putting up ICT, power, ports and airport projects leading to economies of scale as a result of a reduction in the cost of service.
The report dubbed “Africa’s Infrastructure: A Time for Transformation” from a study conducted in 24 African economies including Rwanda, indicates that the high cost of infrastructure services in the region is partly attributable to disconnected national boundaries.
“Most African countries are simply too small to develop infrastructure cost-effectively on their own. In ICTs, regional collaboration in continental fiber-optic submarine cables can reduce Internet and international call charges by half, relative to national reliance on satellite communications,” the report to be launched today in Johannesburg, South Africa reads in part.
It also states that 21 countries have national power systems below the minimum efficient scale of a single plant.
“By sharing large-scale, cost-effective energy resources across countries, regional trade can reduce electricity costs by $2b (Rwf1.1trillion) a year,” the report says, adding that traffic flows to most of Africa’s national ports and airports are too low to provide the scale economies needed to attract services from major international shipping companies and airlines.
It is estimated that the poor state of infrastructure in Sub-Saharan Africa cuts national economic growth by 2 percentage points every year and reduces business productivity by as much as 40 percent.
According to the World Bank, road and rail corridors need to be managed collaboratively to smooth transport and trade services to Africa’s 15 landlocked countries, avoiding the extensive border delays that slow international road freight to 10 kilometers an hour.
The report argues that well functioning infrastructure is essential to Africa’s economic performance and that improving inefficiencies and reducing waste could result in major improvements in African’s lives.
The bank estimates that over the next decade Africa will need some $93billion (Rwf53trillion) annually to finance its infrastructure. This is more than two folds increase on the previous estimates.
Almost half of this amount is needed to address the continent’s current power supply crisis that is hindering Africa’s growth.