19 Mar 2018 / Article

Closing Africa’s infrastructure gap

By Aboubaker Hadi, chairman, Great Horn Investment Holding SAS. Aboubaker Hadi studied transport and logistics in Le Havre, France and at the World Maritime University in Sweden before becoming director of operations at the port of Djibouti in 1992. He was director of the container terminal and, from 1997 to 2008, sales director. He also contributed to the conception and implementation of the port of Doraleh (up to 1.5 million containers a year). He headed Ports & Cargo activity at Tin Can Island Port, near Lagos, Nigeria, for three years before becoming president of the Djibouti Ports & Free Zones Authority (DPFZA) in 2011.

At places like the Africa CEO Forum, we often hear about leapfrogging technology in Africa and its power to transform the continent. There can be no doubt that leapfrogging technologies offer us promise. But we cannot achieve Africa’s economic transformation with leapfrogging alone. Infrastructure is the essential base for the innovation and technology that follows.

For example, without building mobile masts, our smartphones will not function properly. Without electricity from the grid, factories cannot efficiently produce goods and create jobs.

Quality infrastructure drives growth

Quality infrastructure drives growth. It enables trade, connects people with ideas and technology, and builds social cohesion. It is also instrumental in fostering regional integration: which is the key to making our markets attractive here in Africa, and supporting growth across the continent.

Ultimately, I believe infrastructure will be the most transformative force on the African continent. But today, we are falling short. Poor infrastructure cuts Africa’s GDP by two percent each year. Moreover, it reduces productivity by 40 percent. For example, as many as seven in ten Africans can’t depend on reliable power. And millions of people know that being connected to the grid is no guarantee of supply. Blackouts have become part of our everyday lives. This cannot be allowed to continue.

Africa’s population is projected to reach 2.4 billion by the middle of this century. The continent will soon make up nearly a quarter of the global workforce. It’s clear that we must move quickly to tackle the mismatch between infrastructure and demand. If we are to achieve this, we will need three things: strong political will, deeper regional integration, and skilled human capital.

Strong political will

Political will is having the courage to take the bold steps needed to close infrastructure gaps. Take African trade. There are fewer than fifty landlocked countries in the world. Yet ten of these form an interconnected chain across sub-Saharan Africa. In a world where we ship 80 percent of all trade by sea, lack of access to the coast can be a major obstacle to these countries’ prosperity and development. 

This is why in Djibouti we are investing $15 billion in infrastructure that connects the region to global trade routes. This programme includes the expansion of our ports, improved road and rail links, and new airports.

Deepen regional integration

These links deepen regional integration, by increasing trade and face-to-face interactions. This convergence creates a virtuous circle that helps us to think bigger and become more ambitious. In Djibouti for example, our partnership with Ethiopia allows us to examine our infrastructure together as one coherent project. Today, poor transport links within and across borders help explain why African intra-regional trade is at just 12 percent. By contrast, in Europe, this figure is 60 percent.

poor transport links within and across borders help explain why African intra-regional trade is at just 12 percen

The new Addis Ababa-Djibouti railway is an example of how we are changing this. The new service cuts the journey time down from three days by road to about 12 hours. We are already seeing its positive impact, with jobs and opportunities being created along the line. Such developments help open the door for Africans to come into the formal economy. We are the only continent without a trans-continental railway. For us the new line is the starting point of a much greater project that connects us to the shores of West Africa, and everyone in between.

Human capital

Finally, when talking about closing the infrastructure gap, we should not forget the people the infrastructure will serve. Indeed, our people are our strongest asset. The next decade will see record numbers of young people entering the labour market. But our continent will only gain from this demographic dividend if we give the next generation the right skills.

We need people who are properly trained to work in areas such as transportation, logistics, and other sectors if we are take full advantage of our new infrastructure. Skills transfer is not just a ‘nice to have’. It is a necessity if we want growth to be inclusive and sustainable. It is also the best way to ensure human capital remains on our continent.

If we can meet these challenges, Africa can look forward to a new and bright chapter. If we want to seize the opportunities our fast-growing populations will create, the answer is known: we must close the infrastructure gap.

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