Infrastructure, Economic Growth and Poverty Reduction in Africa

Abstract

The relationship between infrastructure, economic growth and poverty reduction in Africa is relatively unexplored in the literature. This paper covers this lacuna. It appraises the role of infrastructure in economic growth and poverty alleviation in Africa. The relevance of infrastructure to growth and poverty is empirically robust in the macroeconomic and micro-economic literature as well as in the rapidly evolving randomized field evaluations studies. Despite the perceived role of efficient infrastructure as a critical element for economic growth, poverty reduction and the attainment of the Millennium Development Goals (MDGs), there is abundant evidence that Africa’s infrastructure is still much below international standards in terms of quantity and quality. In addition to overt neglect of the sector by African governments since attaining independence, there has been a policy mistake founded on the dogma of the 1980s/90s that infrastructure would be financed by the private sector. This has not materialized and the results have been rather disappointing, especially in water and transport, two extremely important sectors. Access, affordability and quality of service continue to be key issues in all infrastructure sectors. Poverty was also not carefully addressed as part of the regulatory and other reform packages implemented during the 1990s. Not surprisingly, the infrastructure needs of the poor the majority of who reside in rural and periurban areas has not been met. They continue to rely on unsafe, unreliable and often overpriced alternatives to compensate for the policy failures. There is now a significant base of experience during much of the last 25 years from which useful lessons have been learned. Unlike the reforms of the 1990s which were shaped by ideological cleavages and blame game, a lot of pragmatism is currently being exhibited by key actors and policy makers in the sector. There is gradually a coalescing of opinions on the reform agenda in the 21st century. The choice is no longer between a segregation of public and private provision but mutual collaboration between both actors. The public sector is now expected to play a much more important role in financing infrastructure than previously acknowledged, while the private sector should assist in meeting the significant needs associated with infrastructure construction, operation, and, to some extent, financing in sectors such as telecommunications, energy generation, and transport services in which commercial and political risks are much lower. Small-scale operators, who have played a generally underestimated role in catering to the needs of the populations not met by the higher visibility actors, must also be brought on board.