On Monday 19 March 2012, The Times contained a series of articles about the economic potential of the African continent. The contributing journalists repeatedly refer to the massive levels of Foreign Direct Investment (FDI) currently flowing into Africa from the BRIC countries. We are told that seven of the ten fastest growing economies in the world are African. Indeed, economic growth rates of 5-6% have been achieved by some countries in recent years.
The primary of drivers of African growth have been natural resources – such as oil, gas, coal, diamonds, copper and aluminum. It is particularly interesting to note that the Chinese are now investing in African communications infrastructure – ports, roads, railways and fibre optics cables. It would appear that the Chinese are mainly interested in primary resources, but they fully recognise the importance of reducing travel costs and improving travel time reliability. They also see Africa as a massive future market for their exports.
The penetration of mobile phones has been remarkable in many African countries. For example, The Times points out that in Sierra Leone less than 1% of people own a motor vehicle, but 34% own a mobile phone. Mobile phones have had a transformative impact on many lives., opening-up new business opportunities.
Demand for air travel has been growing strongly (e.g. at 8% per annum in Sub-Saharan Africa, with business travel being a particularly strong sector). These statistics highlight the rapid changes that are occurring amongst the higher income bands in African societies.
The risks to continued economic expansion are familiar – bad weather (because of the high reliance on agricultural production), inflation, bad government (political, regulatory and institutional problems are highlighted by The Times) and instability.
Africa desperately needs to increase energy production to meet growing demands and support economic growth. The lack of high quality transport links also constrains trade in many parts of the continent. Deputy Business Editor Andrew Clark’s article on transport issues raises some important points.
The condition of roads is often poor. I have read elsewhere that less than 30% of African roads (by length) are paved. In Sub-Saharan Africa the figures is less than 20%. Transport costs are too high and rural populations often have very poor access to the road and rail networks, making it difficult to move foodstuffs to wider markets. Transport problems particularly hamper food producers where highly perishable goods are involved. There are also inefficiencies at border crossings which act as a deterrent to intra-continental trade.
The African rail network includes many inadequate lines connecting ports with inland trading centres or mines. Originally, these lines were constructed as part of mineral concessions. Tracks and structures are often more than 100 years old. Signalling is generally manually controlled and subject to interruptions caused by regular power cuts.
The railways tend to carry freight rather than passengers. The only significant continuous rail network is in South Africa. Elsewhere most peak period commuter services operate at low frequencies ( 1 or 2 trains per hour), and local urban networks have limited coverage. In urban areas rail services struggle to compete with buses and taxis. Cross-border passenger rail flows are usually insignificant.
The World Bank estimates that £11 billion needs to be invested in transport annually to support Africa’s development needs. Given the encouraging signs that are emerging both economically and politically (reduced corruption and greater democracy), it would be tragic indeed if the failure to address transport and energy problems hindered Africa’s emergence.