World Bank urges sub-Saharan Africa to invest in infrastructure to spur growth

Sub-Saharan Africa should implement right policies that make investment in infrastructure more efficient to help spur economic growth in the region, the World Bank said on Wednesday.

According to the new Africa's Pulse, a biannual analysis of African economies conducted by the World Bank, if inefficiencies are addressed, public and private investment in infrastructure could be a strategic tool for poverty reduction and economic development.

Punam Chuhan-Pole, Lead Economist in the Africa Region at the World Bank and author of the report, said public-private partnerships in Sub-Saharan Africa remain a very small market, with projects concentrated in only a few countries, namely, South Africa, Nigeria, Kenya and Uganda.

"The analysis shows that the impact of public investment on economic growth can be improved if countries implement policies that make public investment more efficient," Chuhan-Pole said during the launch of the report in Nairobi.

"There is evidence that countries with sound public investment management systems tend to have even more private investment," she added.

The report says improving the institutions and procedures governing project appraisal, selection, and monitoring are among the policies countries should implement to ensure they have a sound public investment system.

The World Bank said sub-Saharan Africa experienced a slowdown in investment growth from nearly 8 percent in 2014 to 0.6 percent in 2015, adding that this sluggish investment has coincided with a sharp deceleration in economic growth in Africa.

It says infrastructure is particularly important since the continent ranks at the bottom of all developing regions in nearly all dimensions of performance.

The report analyzes trends in infrastructure quantity, quality and access; explores the relationship between infrastructure growth and economic growth in the region; documents stylized facts on public investment in the region; and examines the quality of infrastructure spending.

The World Bank said Sub-Saharan Africa has made great progress in telecommunications coverage in the past 25 years, expanding at a fast pace across both low- and middle-income countries in the continent. Access to safe water has also increased, from 51 percent of the population in 1990 to 77 percent in 2015.

"But the challenges that remain are vast and deeply ingrained. For example, little progress has been made in per capita electricity-generating capacity in over two decades," the Pulse says.

Only 35 percent of the population has access to electricity, with rural access rates less than one-third urban ones.

Transport infrastructure is likewise lagging with Sub-Saharan Africa being the only region in the world where road density has declined over the past 20 years.

The growth effects of narrowing Sub-Saharan Africa's infrastructure quantity and quality gap are potentially large.

For instance, growth of GDP per capita for the region would increase by an estimated 1.7 percent percentage points per year if it were to close the gap with the median of the rest of the developing world.

"Closing the infrastructure quantity and quality gap relative to the best performers in the world could increase growth of GDP per capita by 2.6 percent per year," the report says.

It reveals that the largest potential growth benefits would come from closing the gap in electricity-generating capacity.

According to granular budget data collected by the BOOST initiative for 24 countries in Sub-Saharan Africa, annual public spending on infrastructure was 2 percent of GDP in 2009-15.

Roads accounted for two-thirds of overall infrastructure investments in the region. Capital spending on electricity and water supply and sanitation each accounted for 15 percent of total capital expenditures. Endit