chap9 - ARIV IV

8/9/2019 chap9 - ARIV IV

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295

Infrastructure and Intra-African

Trade

9.1 Introduction

9.1.1 The impact o inrastructure on economicdevelopment

Inrastructure aects economic development in terms o both intermediate and nal

products. With respect to intermediate products or goods, sound inrastructureacilitates the mobility o the means o production (labour, goods and nance), thusimproving productivity and reducing cost, which are key actors in competitiveness.Inrastructure also increases the ow o inormation, opening new opportunities andreducing asymmetries and other market imperections. In terms o nal productsor goods, the consumption o inrastructure services improves easy access to energyor industries and domestic use; sae transportation; reliable communication; cleanwater and sanitation.

A symbiosis exists between inrastructure and economic growth. Good inrastruc-ture spurs growth; conversely, increased growth results in a demand or more inra-structure (Eustace and Fay, 2007). ransportation systems move goods and peopleto acilitate production and trade; communications systems move inormation andnance across borders or production and trade; and energy is required in the pro-duction and transportation o labour and goods to production and trade points.Tese elements o inrastructure are oundational to the cost o trade, the globalcompetitiveness o each country and its development prospects.

Efcient transport, communications, energy inrastructure and related services areimportant or trade and the pursuit o the continents development goals. On theother hand, inadequate inrastructure and services result in increased productionand transaction costs, which reduce competitiveness and make it more difcultto achieve overall development goals. According to some estimates, a 1 per centincrease in inrastructure stock adds 1 per cent to a nations GDP growth. Similarly,doubling the annual growth rate o telephone connections rom 5 per cent to 10per cent (rates that have been observed in East Asia) can translate into an increaseo 0.4 points in the growth rate. Furthermore, increasing the per-capita growth o

9


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296 Assessing Regional Integration in Africa (ARIA IV)

electricity consumption rom 2 per cent (observed in Arica) to 6 per cent (obserin East Asia) would lead to a 0.5-point increase in economic growth (Ndulu, 200Based on data observed between 1960 and 2000, it is estimated that the growth rao various Latin American countries could have been 1.5 (Costa Rica) to 5.8 po(Bolivia) higher, compared with the known rates or these countries, i the latter h

had inrastructure that was comparable, quantitatively and qualitatively, to thaSouth Korea. (Caledron and Sirven).1

Aricas inadequate inrastructure is widely recognized (ADB, ECA, 2006).

Tirty per cent o the population has access to electricity, compared wrates at 70 per cent to 90 per cent in other major geographical zones o developing world (Asia, Central America, the Caribbean, the Middle Eand Latin America). Arica, with 13 per cent o the worlds population, csumes only 3 per cent o the worlds commercial energy, although its sho the worlds energy production is 7 per cent;

Sixty-ve per cent o the population has access to sae water and santion, compared with rates o 80 per cent to 90 per cent in other developcountries;

Arica has a telecommunications penetration rate o about 3 per cent, copared with an average o 40 per cent in other parts o the world, and it a very low penetration rate or broadband services;

Aricas road access rate is 34 per cent compared with 50 per cent in otgeographical zones. Roads are the dominant mode o transportatiaccounting or more than 90 per cent o passenger and reight transpor

Arica, compared with around 50 per cent o reight in Europe;Te continents rail network coverage is sparse, with low interconnectivi

Arican maritime ports and inland waterways are not exploited or traand

Continental transport costs are among the highest in the world, with tho landlocked countries accounting or up to 70 per cent o the valueexports.

Te above are averages with wide variations among regions. A better interconnecArica, internally and with the rest o the world, would create larger markets acilitate the achievement o the millennium development goals (MDGs) and otinternationally agreed upon benchmarks. In this respect, Arican countries aspirhave a well-developed and coordinated, efcient and sae inrastructure. o achithis, its countries have attempted a coherent programme o activities in ener

1 Caldron and Sirvens analysis on the same sample o countries shows that income disparwould also have been reduced i the countries had better inrastructure.


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Inrastructure and Intra-Arican Trade

transport and communications as well as water and sanitation, in accordance withpriorities established in the New Partnership or Aricas Development (NEPAD)and the mandates o the Arican Union (AU) and the Regional Economic Commu-nities (RECs) and their relevant technical sector organizations.

9.1.2 Inrastructure and trade costs

A measure o the efciency and eectiveness o trade is the cost o doing business.rade involves transport and other costs, which may account or a sizable propor-tion o the cost o goods sold. It is not uncommon or transport to account or 20per cent or more o a products total cost. Other expenses, including those coveringbureaucracy and red tape, compound transport costs.

According to some analyses, the relatively low level o Arican trade ows is largelydue to poor inrastructure, with the elasticity o trade ows with respect to trans-

port costs estimated to be minus-three (-3) (Limao and Venables, 2001). Tis issupported by the ndings o Longo and Sekkat (2001) that a 1 per cent increase inthe stock o transportation and telecommunication inrastructure in the exportingcountry boosts its exports to other Arican countries by about 3 per cent.

A recent study by Limao and Venables (2001) nds that the median transport costsor a landlocked country are about 46 per cent higher than the equivalent costs ina median coastal economy, with distance accounting or only 10 per cent o thedierence. Poor road inrastructure is responsible or 40 per cent o the transportcosts in coastal countries and 60 per cent in landlocked countries. For landlocked

countries in particular, transport costs largely accounted or the relatively low aver-age import share in GDP (11 per cent), compared with a 28 per cent average orcoastal economies.

ransport costs in Arica are recorded to be the highest in the world. Te continentsreight costs, as a percentage o the total value o imports, were about 13 per centin 2000, compared with 8.8 per cent or all developing countries and 5.2 per centor developed countries (UNCAD, 2002). Te reight costs dier rom region toregion in Arica, with Eastern and Southern Arica experiencing higher costs com-pared with other regions. Similarly, Ackah and Morrissey (2005) note that transport

costs constitute about 15 per cent (about 20 per cent or landlocked countries) ounit value o Arican exports, which is considerably higher than regions such as Asia(about 8 per cent) and Western Europe (about 5 per cent).

Deciencies in telecommunications servicesanother aspect o trade inrastruc-turealso tend to isolate Arican states rom one another. For example, it is mucheasier or businessmen in Arica to communicate with their counterparts in Europe


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and North America than with their ellow businessmen on the continent (Yebo1993). Tus, intra-Arica trade is urther constrained by the absence o market inmation. While standard trade theory assumes that inormation about the availabio the products in the oreign countries, their characteristics or prices is accurate aree, in Arica, where communication links among countries are ew and indir

relevant market inormation may be expensive to obtain or both importers aexporters (Yeboah, 1993).

Te absence o Inormation and Communication technology (IC) at most Acan borders adds to the high cost o trade. Recent studies reveal the importao modern ICs as determinants o international trade costs. Limao and Venab(2000) examine the impact o ICs on bilateral trade by including a measure o ecommunications development (the number o main lines) in their indices o instructure quality, and nd that the latter has a positive impact on trade. Franand Manchin (2007) nd similar results, except they broaden their measure o instructure quality to include the degree o mobile telephone use. Tese results sport the view that communications costs are important components o trade coTereore improvements to inrastructure, including communications, reduce trcosts and consequently increase trade.

Tese studies also demonstrate that expanded use o the internet lowers the costrading internationally. It is now much easierand cheaperto obtain inormaton oreign market conditions, product standards and consumer preerences throthe internet. Tis should lower the cost o entering oreign markets and promtrade at the margin. Freund and Weinhold (2004) nd that a 10 per cent increin the number o a countrys Web hosts is associated with an export gain o arou0.2 per cent.

Te various regional integration programmes in Arica attempt to increase tramong countries through trade liberalization. However, in many cases, ormal trliberalization has not been successul partly because some undamental aspectstrade logistics, such as inrastructure, have been limited. Te gravity model usedanalyze the constraints to Arican trade (chapter 10) shows that both the qualityroad inrastructure and the availability o telecommunications are statistically sigicant determinants o increased trade. Poor inrastructure, or its complete absenmakes trade physically difcult, i not impossible, independent o the trade regim

In the energy sector, a recent study undertaken as part o the Arica Inrastrture Country Diagnostics2 project demonstrates the potential or increased electity trade and its benets. rade necessitates additional investments in cross-bor

2 Te Arica Inrastructure Country Diagnostic (AICD) is designed to provide baseline datainrastructure services in Arica that orm a more solid empirical oundation or prioritizing invments and designing policy reorms in these sectors. Te World Bank is implementing it on be


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transmission links but allows countries to save by tapping lower cost sources o gen-eration. In this sense it is possible to calculate the gains rom trade as the rate oreturn on the additional cross-border investments.

Te armed conicts and general instability in many parts o Arica, notably theGreat Lakes and Mano River regions, not only destroy existing inrastructure butalso prevent their development, thus adding to the constraints on the aected coun-tries. Te net impact on trade is that the prices o inrastructure services in Arica arehigh by global standards, as table 9.1, below, illustrates.

Table 9.1

Relative prices o inrastructure services

Unit cost (US$) Sub-SaharanArica

Other developingregions

Power tari (kWh) 0.2-0.46 0.05-0.1

Road reight (ton/km) 0.86-6.56 0,03-0.6

Mobile telephone (month) 2.6-21.0 9.9

International telephone (Three-minute call to US) 0.44-12.5 2.0

Internet dial-up service (month) 6.7-148.0 11.0

Source:Arica Inrastructure Diagnostic: Final Synopsis, World Bank, 2008.

As a result, larger Arican countries with poor and expensive logistics services, par-ticularly those in sub-Saharan Arica, are among the least competitive in the world.Inrastructure appears to be a major determinant o their global competitiveness.Te global competitiveness indices (GCIs) or sub-Saharan Arica, as calculated by

the World Economic Forum, are consistently lower than those o other regions othe developing world (table 9.2). Poor inrastructure appears to account or the rela-tively low competitiveness o most Arican countries (table 9.3). Botswana, Egypt,Gambia, Mauritius, Namibia, South Arica and unisia have the top-ranked inra-structures in Arica.

o a steering committee that represents the AU, NEPAD, Aricas RECs, the ADB, and majorinrastructure donors.


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9.1.3 Continental inrastructure development initiatives

Arican governments have acknowledged since early 1970s that accessible and ef-cient inrastructure is essential to achieve regional integration or sustained eco-nomic development. Many initiatives were developed between 1980 and 2000,

including the special programme o the United Nations ransport and Commu-nications Decade in Arica (UNACDA). Tese were supplemented by the sub-Saharan Arica ransport Policy Programme (SSAP) or the development o thekey sectors. Both the Lagos Plan o Action (1980) and the Abuja reaty (1991)emphasized inrastructure development, and NEPAD (2001) maintains this as apriority. A short-term action plan (SAP) was dened and institutional mechanismsput in place to acilitate project implementation o NEPAD projects, including theInrastructure Consortium or Arica (ICA) and the NEPAD Inrastructure ProjectPreparation acility (IPPF).

Inrastructure development continues to rank high among the AUs priorities,which is currently working on Programme or Inrastructure Development in Arica(PIDA). PIDAs objectives are to help Arican leaders establish a strategic rameworkor creating regional and continental inrastructure based on a development vision,strategic objectives and sector policies; establish the programmes priorities andphases; and prepare an implementation strategy and process including, in particular,a prioritized action plan with short-term, medium-term and long-term goals.

Te Summit o the Arican Heads o State and the AU consequently dedicated itswelth and Fourteenth Sessions in 2009 and 2010 to the themes o inrastructure

development in Arica, ocusing respectively on transport and energy, and inorma-tion and communications technologies (IC). Tis reects their continued concernthat critical physical inrastructure and services remain inadequate and constitutea serious impediment to Aricas development and the achievement o MDGs. Te2009 session adopted a Declaration on ransport and Energy Inrastructure Devel-opment in Arica to guide inrastructure development, while an action plan orimplementation was agreed upon at the 2010 session.

9.1.4 Scope and methodology

Tis chapter assesses the state o transport, communications and energy inrastruc-ture, as well as the regulatory environment, and their impact on intra-Arican trade.Te transport sector covers the status o inrastructure links (roads, railways, inlandwaterways and ports in relation to container trafc and air transport). Te reviewcovers IC services. Te energy sector analysis will address both the supply and trad-ing aspects o electricity, oil, gas, nuclear, new and renewable sources energy. It willalso address regional cooperation in energy pooling or promoting cross-border


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energy trade, including the interconnection o electricity grids and oil and natugas pipelines. Given the theme o intra-Arican trade, the international aspects reerred to only or comparison purposes. Financing inrastructure development also be considered.

Te report is based on the review o existing inormation at the three regional intutions (ADB, AUC and ECA) and on relevant international organizations ainormation rom the RECs. Te impact on trade and relevant recommendatior the development o each sector are presented in last section on conclusions recommendations.

9.2 Transport sector

An eective and efcient transport system possesses physically integrated netwointegrated intermodal operability; a smooth service provider-user interace; joplanning and development o transport acilities and systems; harmonized staards; cross-border investments; and it accedes to relevant international treaties aconventions.

Aside rom some parts o Northern and Southern Arica, transport inrastructon the continent is inadequate and low quality on the one hand, and inefciand expensive on the other. Te missing links in the transport networks have bdestroyed or could not be developed because o armed conicts and political inbility, especially in and around the Great Lakes and Manu River regions.

9.2.1 Roads and road transport

ransportation by road is the most dominant mode, accounting or between 80per cent o all reight and passenger movements among economic production aand internal and international markets. Issues concerning roads sub-sector wcomprehensively considered by the First Conerence o Arican Union MinisResponsible or Road ransport in 2007 under the theme, For a Reliable, Sae aAordable Road ransport or the Economic Development and Physical Integrat

o Arica. Te ministers adopted the Durban Declaration and Plan o Action the development o road transport, which agreed to take specic actions to impraccessibility, quality and saety.


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9.2.1.1 Road networks

Te development o road inrastructure may be measured in terms o total length inkilometres (km), density (km/1,000km), distribution (km/1,000 population) andquality (per cent paved). Te status o road development in Arica is summarized in

table 9.4. Te total length o classied road networks is estimated to be about 2.3million km, o which only 20 per cent are paved; the remainder o the roads aremade o either gravel or earth. Te road density averages about 7.6 km per 100 sq.km, or 2.6 km per 10,000 inhabitants. Tis translates into a road access rate o 34per cent, compared with 50 per cent or other geographical regions. Tese condi-tions are generally judged inadequate or social and economic development (ADB,UNECA, 2006).

Table 9.4

Regional distribution o road networks

Region Length (km)2000 2006

% Change2000-2006

Density 2006(km/100 sq km)

Central 115,667 186,475 61.2 3.5

Eastern 445,018 476,558 7.1 6.5

North 292,790 347,451 18.7 3.0

Southern 801,751 853,676 6.5 13.5

West 409,377 434,910 6.2 8.0

Total 2,064,603 2,299,160 11.4 7.6

Source: World Fact Book 2006; ECA calculations.

9.2.1.2 Trans-Arican highways (TAH)

Te AH network was dened in early 1970s as a network o good all-weather,highways linking Aricas capitals and major economic production areas to promoteintegration o Arican peoples and economies. Nine highways have been designatedin a grid o six mainly east-west routes and three mainly north-south routes. Anadditional east-west corridor is under consideration to link Djibouti to Libreville.Furthermore, the two NorthSouth routes, ripoliWindhoek (AH4) and CairoGaborone (AH5) have both been extended to Cape own in order to reintegrateSouth Arica into the continental system. Te extension raises the total network to

57,300 km rom the initial 54,100 km. According to a study conducted in 2003by UNECA and ADB, up to 25 per cent o the network had still not been built toappropriate standards within and between some countriesthe so-called missinglinks, dened as sections o unpaved, non-all weather roads.


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Table 9.5

Regional distribution o TAH network

Region Total TAH network(km)

Paved sections (km) Per cent o missilinks

Northern Arica

Eastern Arica

Southern AricaCentral Arica

Western Arica

13,292

9,932

7,98811,246

11,662

13,195

8,201

6,8173,891

10,581

1%

17%

15%65%

9%

Total Arica 54,120 42,665 21%

Source: AFDB.

Table 9.6

Status o TAH

Route Length (km) Current Status

TAH1: CairoDakar 8,636 Substantially complete. Major sections in Tunisia, Algeria and

Morocco under development into motorways. Missing link is a

short desert track around Morocco-Mauritania border.

TAH2: AlgiersLa-

gos (Trans-Sahara

Highway)

4,504 Substantially complete; 200 km desert track in Niger. Usage

restricted by border and security controls.

TAH3: Tripoli

WindhoekCape

Town

10,808 Alignment to be extended to Cape Town. Paved national road

in Libya, Cameroon, Angola, Namibia and South Arica constit

part o the TAH3. Missing links in Chad, CAR, Congo Republic

and DRC, including the missing bridge over Congo River be-

tween Congo Republic and DRC.

TAH4: CairoGa-

boroneCape Town

10,228 Alignment to be extended to Cape Town. The Southern portio

complete: rom Cape Town to Kenya. The missing link in Tanza

through Dodoma in central Tanzania is gravel standard, but the

paved TanZam Highway rom Dar es Salaam provides an alter

tive route. The earth road in Kenya to Ethiopian border is undeconstruction. Crossing Egypt-Sudan border by road has been

prohibited or a number o years; a vehicle erry on lake Nasse

used instead.

TAH5: DakarNdja-

mena (Trans-Sahel

Highway)

4,496 100 per cent complete in West Arica rom Dakar to Fotokol

(4,460 km). An alternative shorter route between Senegal and

under construction.

TAH6: Ndjamena

Djibouti

4,219 Contiguous with TAH5. Mostly earth road between Chad and

Sudan.

TAH7: Dakar

Lagos (Trans-West

Arica Coastal

Highway)

4,560 About 80 per cent complete (100 per cent paved in Nigeria, B

nin, Togo, Ghana, Cte dIvoire, Senegal). Missing links (765 k

in Liberia, Sierra Leone, Guinea, Guinea Bissau. Conditions o

highway vary: 9 per cent good; 59 per cent air; 32 per cent p

TAH8: LagosMombasa

6,259 Eastern hal (Kenya-Uganda), locally known as TAH is completalternative route through Kigali and Bukavu provides link to

Kisangani; western portion in CAR, Cameroon and Nigeria mo

complete. Missing link in DRC and parts o CAR mostly due to

insecurity and confict.

TAH9: BeiraLobito

Highway

3,523 Substantially complete. Western portions through Angola and

DRC require reconstruction ollowing damage during the war.

Alternative east-west links already exist rom Maputo to Walvis

Bay (Trans-Kalahari Highway).


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9.2.1.3 Institutional ramework

Te RECs are responsible or developing and maintaining the major roads in theirrespective regions, including the relevant AH sections. Te status in each o theregions is as ollows:

ECOWAS drives the development o and maintenance o AH5 andAH7;

AH3, AH6, AH8 and AH9 are the main corridors o the Consensualransport Master Plan o Central Arica, and ECCAS has initiated actionsto construct cross-border missing links along AH3 and AH5, particularlythe railroad bridge between Brazzaville and Kinshasa;

SADC has an extensive network o road projects and trade corridors inSouthern Arica. AH9 and the southern ends o AH3 and AH4 useregional highways developed in SADC; and

COMESA covers the north and middle o AH4 and the eastern part o AH8.

Figure 9.1

Trans-Arican Highway network

Source: Rexparry sydney


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9.2.2 Rail transport

9.2.2.1 Railway systems in Arica

Aricas railway network comprises about 89,000 km or an area o about 29.6 mlion sq km, representing a density o about 2.5 km/1,000 sq km. Tis compawith 40km/1,000 sq km in Europe. In Arica the network consists mostly o sinlines penetrating inland rom the coastal seaports with ew interconnections excin South Arica. Te average technical speeds o Arican railways are about 30 tokm/hr; commercial speeds are even lower.

Table 9.7

Railway network and comparative densities

Region Total network (route km) Density (km/1000 km2

North AricaEastern Arica

Southern Arica

Central Arica

Western Arica

16,0129,341

33,291

6,414

9,715

2.32.2

5.6

1.2

1.9

Arica Total 74,773 2.5

AICD low-income countries (20) 2.3

All AICD countries (24) 3.4

South Asia

World average

High-income countries

-

-

-

18.8

23.1

46.2

Source: 2005 World Development Indicators (2006) and World Bank Research Paper No. 3643 (2005);

Improving Connectivity: Investing in Transport Inrastructure in sub-Saharan Arica (2008).

Up to 14 mainland countries do not have railway lines or parts o international linTe national rail networks in sub-Saharan Arica are predominantly independeneach other, except the Eastern and Southern Arican rail systems, which are inconnected. Other Arican interconnected systems are those o Burkina Faso CdIvoire, Senegal Mali and Ethiopia Djibouti.

Most countries operate their own networks, but 74 per cent o Ugandas networout o operation, as is 69 per cent o Angolas and 23 per cent o Benins. Poor trconditions limit speed and thus rolling stock productivity. Most bridges are in p

condition, and rail network telecommunication and signaling equipment is largobsolete.

Te rans-Maghreb Railway systems in North Arica are relatively advancMorocco is upgrading its angier Rabat Agadir Laayoune network to a hispeed electric system (GV). Algeria and unisia are upgrading their railwaystandard-gauge electric systems and also considering introducing GVs. Te Lib


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Arab Jamahiriya is undertaking an ambitious programme to construct a moderncoastal rail line rom its border with unisia up to its border with Egypt. Te raillines also extend to the interior o each country. Light metro trains operate in unis,while constructions are under way or similar urban light rail systems in Rabat andAlgiers. Cairo operates an underground metro system.

9.2.2.2 Technical characteristics

Te rail inrastructure in Sub-Saharan Arica is old and technically outdated:

Nine dierent gauges are used, out o which three are most commonly used:1.067m gauge (61.3 per cent), 1.000m gauge (19.2 per cent), and 1.435m(Standard/European) gauge (14.5 per cent);

wo brake systems are predominant vacuum and compressed air systems,with the vacuum brake system in West, Central and Eastern Arica; and the

compressed-air brake system in the electried networks in Northern andsome Southern Arican railways;

Only about 6,500 km o Arican rail systems are electried (Egypt, Alge-ria and Morocco in North Arica, and South Arica and Zimbabwe in thesouth); the rest use diesel-electric traction;

Most railways are old and light, with axle-load capacity between 25-36kg/m, and generally laid unwelded; and

Te signaling and telecommunications equipment is obsolete and unreliable.

Tese inrastructure characteristics constitute major constraints to the perormanceand reliability o the rail networks. Tey also delay the introduction and use omodern and high-perormance equipment in the rail systems. Te act that the net-works are not interconnected urther compounds the problem.

Freight accounts or about 75 per cent o rail trafc in Arica. Outbound trafc ismostly to the coast and carries high-volume, low-unit-value commodities: crops,logs and mineral products. Inbound trafc is usually lighter and more diverse. ra-c densities are low and have declined over time, with the exception o the SouthArican, Gabonese and Mauritanian mineral export lines. Strong competition exists

between road and rail, with parallel rail and road routes, and many railways have lostmuch o their general reight trafc and bulk trafc to road haulage in all countries.Tis shit to road has been accentuated by ailures to enorce road vehicle loadingrestrictions and the limited track-cost recovery rom trucking.

Te cost o upgrading Arican rail systems to international standards would be veryhigh (World Bank, AICD, 2008). For instance, the sum o the ve-year investment


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programmes in the rst nine concessions awarded amounted to more than $7million, about 50 per cent o which was or track rehabilitation. While some o texpenditure has occurred, most remains to be nanced.

It is thereore encouraging to note recent signs o Aricas realization that rail traport is important. Arican ministers responsible or the rail system held a conerein 2006 in Brazzaville, Republic o the Congo to address the theme o improvrail transport to support Arican integration. Te conerence adopted the Brazville Declaration and Plan o Action on Arican Railways. Tis was endorsed by welth Session o the AU Summit in Addis Ababa, which specied several nprojects or interconnecting Arican railways networks as ollows (AUC, 2009):

Djibouti Libreville Corridor (rail and road). AUC initiative. Feasibistudy supported by ADB;

Dar es Salaam Isaka Kigali Bujumbura Extension. An initiativeanzania, Rwanda and Burundi, it extends 691 km and is estimated to cUS$ 4 billion. Supported by ADB;

Uganda Rwanda DRC Sudan interconnection;

Aricarail project in West Arica linking Benin, ogo, Burkina Faso, Niger and Chad. ECOWAS-supported project ormulated under PPP wAricarail (1,070 km.);

Libya: Construction o 2,000-km lines parallel to the Mediterranbetween Ras Ejder andthe unisian border; rom Sirte to Messap towathe Egyptian border (1,000 km); and Sirte to Sebha and branching ouarot (170 km). Te project includes an extension to Chad through

Niger to develop a north-south transit corridor connecting Sebha (LibyaNdjamena (Chad);

In Southern Arica, rehabilitating existing lines and completing missing links as lows:

CFM-South Rehabilitation o the Maputo Resano Garcia Railwwhich is part o the Maputo Development Corridor; Goba Swaziland; aLimpopo Line to Zimbabwe;

rans-Kalahari Railway: Feasibility study to be carried out to link Goba

to Lobatse to extend and connect the Walvis Bay Gobabis line in Namto Lobatse, Botswana and onward links to Spoornet, South Arica;

rans-Namibian Railway between Walvis Bay and sumeb in the raCaprivi Corridor. Linked by road to Zambia Railway System in Livistone. Programme to upgrade track rom 30 kg to 48 kg;


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Namibian Railway: Between Walvis Bay to Oshikango in northern Namibianear Angola (300 km). Angola will extend its railways rom Lubango southto Namibia border; and

AZARA Railway linking Dar es Salaam and Kapiri Mposhi in Zambia.Te rolling stock needs modernization.

9.2.3 Maritime ports

Maritime ports play a vital role in developing world trade and commerce, sincemore than 90 per cent o the worlds and about 95 per cent o Aricas internationaltrade passes through ports. Tere are approximately 80 ports on the continent, themajority o which are small by world standards, and ew are capable o handling thelargest ships.

In terms o regional integration, the ports in sub-Saharan Arica anchor the trans-

port corridors, which radiate to the interior and the 15 landlocked countries, whilethe ports in North Arica serve their specic countries. o better analyze port trafc,the reight may be classied in two categories, according to the technology o pack-aging: container and general cargo.

9.2.3.1. Container trafc

Container trafc has increased signicantly in Arica since 1995, reecting trendsaround the world. According to the AICD study o Arican ports in 2008, container

trafc increased twoold, between 1995 and 2005 (Ocean Shipping Consultants,2008). Te strongest growth was in Central and West Arica ports, ollowed by EastArica and Southern Arica. Tis conrms data in an earlier study on Gaps Analysis(ADB, 2007). Te modern liner system o shipping is increasingly designed orcontainer cargo as part o modern logistics management methods, which promiseefcient commodity import and export. Tis orm o shipping holds great poten-tial or improving both interregional trade and Aricas connection to the globaleconomy. Te main container ports are as shown in annex 9.1.

In sub-Saharan Arica, with the exception o South Arica, a signicant level o con-tainer loading and unloading (stripping) takes place in areas close to the port. Tis isbecause the road and rail systems to the interior are generally in poor condition anddo not eectively support container transport, so, the volume o container trafcmoving to the interior is less than it should be. Moreover, container stripping at theport generates its own problems. It reduces port capacity and contributes to conges-tion. ransport corridors should be designed to acilitate container transportation.


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Te imbalance in international trade also has a signicant eect on the developmo container transit trafc. Most global container trade is imbalanced, but Arica sers rom this problem more than most regions. Specically, the 2005 split betwempty and loaded exported EU was 80 to 20 or sub-Saharan Arica, compawith ratios o 40 to 60 or Asia (AICD, World Bank, 2008).

Te regional characteristics o Aricas major ports can be summarized as ollows

North African ports, the Mediterranean coast, with each country operatseveral ports. Tese are generally more modern and larger than ports in SSaharan Arica but do not serve the landlocked Arican countries. Damiein Egypt, is the largest container terminal in the region. New contaiterminals are under development at DjenDjen (Algeria), Endah (uniand angier (Morocco);

In Eastern Africa, Mombasa and Dar es Salaam are natural transshment points and, while both ports have pursued transshipment, both severe capacity constraints in the short term, which is likely to curtail thtransshipment activities. Djibouti, on the other hand, may soon prova solution to transshipment along the East Arican coast, with DP Woscheduled to introduce a new container terminal acility there intendedincrease capacity or East Arica and the Indian Ocean;

In Southern Africa, Durban is the major container transshipment cenbut it, too, is struggling to keep pace with demand. Tere are plans to brin major new elements to increase capacity; or example, the new Pier Oand

On the

West African coast, Abidjan was successul as a major contaitransshipment centre, but it has declined in recent years due to domeinstability. Te major carriers engaged in West Arican container trade, Maersk Line and its afliate Samarine, now use the port o Malaga, Spas their hub.

9.2.3.2 General cargo trafc

Te corresponding general cargo trafc growth between 1995 and 2005 has pceeded at a healthy rate as well. Te pace o growth in general cargo trafc

Arica is higher than in other regions o the world. Te container system has yet ully penetrated all Arican general cargo sectors due to insufcient inrastrture and acilities. Doubtless there are large volumes o general cargo that are msuited or transport by container, but it is difcult to access these in an econocally efcient way.


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9.2.3.3 Port inrastructure development

Te global standard is that optimal port operating capacity is 80 per cent, beyondwhich additional capacity is required. Te ports o Dar es Salaam, Douala, Luanda,Mombasa and Port Sudan ace capacity constraints or general cargo trafc. Simi-

larly, the ports o Cotonou, Dar es Salaam, Durban, Luanda, Mombasa and emaappear to ace capacity constraints or container trafc. Pressure on capacity or con-tainer cargo is higher, with demand substantially exceeding 100 per cent o capacityin a number o cases. Consequently, many ports around the continent are alreadyundertaking expansion programmes.

9.2.3.4 Perormance

In addition to the number o containers moved per hour, port perormance can also

be measured by the vehicle dwell time at the ports. In general, the port dwell timein Arica is high, and hourly perormance o containers is also relatively high. Teaccepted international target dwell time is seven days or less. Te latest availabledata rom recent NEPAD-AU studies show an average dwell time in Arican portsis about 11 days.

Te use o specialized equipment improves container handling perormance. Forinstance, ports with crane equipment achieve 14 moves per hour, compared with onlyeight moves per hour in ports that continue to rely on ships gear. Recent UNCADstudies on port perormance indicate that some Arican ports have improved theirproductivity to about 15 moves per hour over a period o two to three years.

9.2.3.5 Institutional ramework

Te major ports operate on several management models, including managementconcession, service port, landlord port or intermediate model. Te three regionalports associations in Arica4 have cooperated among themselves on common issueso interest or years. Tis has recently culminated in the ormation o the Pan-AricanAssociation or Port Cooperation (PAPC), established in June 2001 in Alexandria,Egypt to help harmonize the activities o existing port management associations in

Arica.

Note: *NB: Handling rates reported are per hour, per item o equipment or con-tainer gantries and mobile cranes and overall or per hour or ships crane

4 Te three subregional Port associations are: Port Management Association o Eastern and South-ern Arica (PMAESA); Port Management Association o West and Central Arica (PMAWACA);and Port Management Association o North Arica (PMANA).


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9.2.4 Inland waterways transport

Rivers and lakes can provide an inexpensive, energy-efcient and environmentriendly orm o transport. But these inland waterways remain the weakest linkthe transport system, despite their excellent possibilities or penetrating the con

nents landlocked countries. Te chie waterways are limited to ve rivers, namthe Nile, Congo, Niger, Senegal and Zambezi; and three lakes: Victoria, anganyand Malawi. wenty-nine Arican countries, more than 50 per cent o the connents States, contain one orm o navigable waterway or another. But Aricas accto its waterways has been hampered by political and social upheaval.

Te status o transportation activities and navigability o these main inland waways is as ollows:

Nile: It is the longest river in Arica and the second-longest in the wo(6,695 km), but its navigability has been limited to the lower Nile siancient times;

Congo: It is the second-longest river in Arica (4,375 km). With its tritary, the Oubangui, the Congo River system orms 1,200 km o navible waterway between Bangui and Brazzaville/Kinshasa. Te transport serving the CongoOubanguiSangha river systems (CICOS) is estimaat 10,000 units. Te boats transport merchandise such as logs, petroleucontainers and other agricultural products. Most o the river boats owned by the private sector. ransport in the upper reaches is oten rupted by the prevailing regional instability. Te International Commiss

o the CongoOubanguiSangha Basin (CICOS) was established in 20to improve the physical and regulatory services or navigation in the bas

Niger: Te third-longest river in Arica (4,183 km), it runs in a crescthrough Guinea, Mali, the Niger to the border with Benin, and then throNigeria, owing in a wide arc and discharging into the Atlantic Oceanthe Gul o Guinea. Several projects are currently under way to imprnavigation, including port construction and dredging;

Senegal: Te river is 1,790 km long with important tributaries o Faleme, Karakor and the Gorgol rivers. It is navigable year-round rom Atlantic Ocean to Podor, Senegal, and to Kayes, Mali, during rainy seaso

In 1972 Mali, Mauritania and Senegal ounded the Organization or Development o Senegal River (OMVS) to manage the river basin, whGuinea joined in 2005;

Zambezi: ransportation on the 2,600-km Zambezihas been taking plor centuries, by erries on the rivers tributaries and on lakes Kariba aCahora Bassa, which eed into the river. Te lower Zambezi is navigable


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570 km and is an important artery or the transportation o coal and molas-ses on barges. Navigation studies are being considered or the Shire River,which joins the Zambezi as it ows out o Lake Malawi;

Lake Victoria: Tis is Aricas largest lake, with an area o 69,000 km2. It is ullynavigable and oers passenger and erry services between the riparian states

o Uganda, Kenya and the United Republic o anzania. Tere are about tenerries and a number o open-decked cargo boats and passenger ships. Ugandarailways used to operate two big erries, which transport about 400,000 tonso imports annually through the Port Bell, Uganda and Kisumu, Kenya route,and 250,000 tons through Port Bell to Mwanza, the United Republic o an-zania route. Passenger ships transport about 6,000 passengers daily betweenthe lakeshore ports. Navigational aids have been nonunctional or a long timeand this has led to an increase in atal accidents on the lake; and

Lake anganyika: Tis is the second-largest lake in Arica, with an area o36,000 km2. It is available or services connecting the Democratic Republic

o the Congo, the United Republic o anzania, Burundi and Zambia.Lake Malawi: Te third-largest lake in Arica is navigable between Malawi,Mozambique and the United Republic o anzania. Lake operations areakin to those ound on lakes Victoria and anganyika.

Te major constraints to transport on these waterways include insufcient com-munications and SAR systems, which result in poor saety and security; inadequateinrastructure at terminals including access roads and storage acilities; seasonalblockages caused by water weeds that clog inland waterway routes and terminals;and the absence o a modern eet to provide reliable transport services.

9.2.5 Air transport

9.2.5.1 Air trafc and major carriers

Aricas share in global air transport remains modest at about 5.2 per cent o thepassenger trafc and approximately 3.6 per cent o reight trafc in 2004. Duringthe same year, the sector generated 470,000 employment opportunities on the con-tinent, resulting in an income estimated at US$ 11.3 billion (1.7 per cent share othe Arican GDP).

Following a signicant global decline in 2001, Aricas air transport industry grew atabout 6 per cent per year between 2001 and 2007 to roughly 123 million seats. Teaggregated gures show growth in all types o scheduled air travel, including inter-continental trafc, international trafc within Arica and domestic travel (Bonger,2008).


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Intercontinental trafc in sub-Saharan Arica depends on the three major hubJohannesburg, Nairobi and Addis Ababa. It has grown at an annual average rate6.2 per cent between 2001 and 2007. North Arican intercontinental trafc gat 8.3 per cent during the same period, with the most dominant hubs being Cablanca, unis and Cairo.

Table 9.8

Air trafc

North East West Centre South Arica GlobalAricshar

Passengers

(1000)44,442 10,655 12,046 4,178 33,746

105,067 1,988,328 5.3%Percentage

by region42.3% 10.1% 11.5% 4.0% 32.1%

Freight

(tonage)323,922 357,898 143,969 214,438 352,471

1,392,698 38,926,634 3.6%Percentage

by region 23.3% 25.7% 10.3% 15.4% 25.3%

Departures 533,192 359,219 273,589 167,769 801,638

2,135,407 24,995,883 8.5%Percentage

by region25.0% 16.8% 12.8% 7.9% 37.5%

Source:ACI & ICAO, 2004.

International trafc in sub-Saharan Arica grew slightly more rapidly, at an averrate o 6.5 per cent between 2001 and 2007, with trafc between the region aNorth Arica growing at 25 per cent per year. Te national airlines operatingthe three major hubs in sub-Saharan Arica, namely South Arican Airways, Ke

Airways and Ethiopian Airlines, provide 33 per cent, 70 per cent and 83 per cerespectively, o the international trafc through their hubs. Both Kenya Airways Ethiopian Airlines are active in developing new routes on which they are the scarrier, while most o the South Arican Airways international routes have more thone carrier in competition.

North Arican international travel showed some o the most signicant gainsmore than 9.5 per cent per annum between 2001 and 2007. Te major carrierthe region are Egypt Air, Ariqiyah Airways, unis Air and Royal Air Maroc. Tweekly requency o ights o the major carriers by country destinationsin 2008summarized in table 9.9 below.


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Table 9.9

Seven major Arican airline destinations, 2008

Airline Operating hub Country destinations Weekly departures

Ethiopian Airlines Addis Ababa 26 183

Royal Air Maroc Casablanca 20 85

Kenya Airways Nairobi 17 99

South Arican Airways Johannesburg 14 86

Ariqiyah Airways Tripoli 13 35

Egypt Air Cairo 12 68

Tunis Air Tunis 8 36

Source: ECA 2008.

Domestic sub-Saharan Arican trafc grew at the astest rate o all sub-Saharan Ari-can trafc, by more than 12 per cent per year between 2001 and 2007. Domestic airtransport varies rom country to country and depends on actors including topology,income per capita and the types o services available. For example, Ethiopia, home

to one o the most important airlines in Arica, has little domestic air transport. Onthe other hand, Nigeria has experienced nearly 67 per cent annual growth in domes-tic trafc. North Arican domestic trafc declined by nearly 4 per cent during thisperiod. With some notable exceptions, domestic travel in most countries is servicedby the countrys ag carrier and eatures high market concentration.

9.2.5.2 Air transport inrastructure

Inrastructure is not the most critical actor. At present, 280 airports receive regularlyscheduled services, and this number is stable, with enough runways to handle trafcin the near uture, better scheduling, and modest investment in parallel taxiways andsome terminal acilities. Te saety problem has more to do with pilot capability andsaety administration than with unsae aircrat, although air-trafc-control acilitiesare poor.

Similarly, runway capacity in Arica is not a limiting actor. Medium-size turbo-propaircrat such as the AR72, used to serve small cities, require runways o at least1,500 metres, while larger aircrat, such as the Boeing 737 or Airbus 320 that servelarger cities, need runways o at least 3,000 metres. Te table below summarizes thesupply and quality o runways in selected Arican countries.


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Table 9.10

Runway quality in selected Arican countries

Rating North Arica Sub-Saharan Arica

Airports % Airports %

Excellent 28 60% 31 18%

Very Good 17 36% 50 29%

Fair 2 4% 46 27%

Marginal 10 6%

Poor 36 21%

Totals 47 100% 173 100%

Source: AICD 2007.

Air navigation services and air-trafc control throughout sub-Saharan Arica spotty and concentrated in a ew centres. South Arica and Kenya have several rainstallations and are able to monitor trafc. Ethiopia, with the third-most importairport in sub-Saharan Arica, has no air-trafc surveillance acility. Te most imp

tant airports eature instrument landing systems and basic traditional navigatioaids. Away rom these centres, navigational aids and communication stations rare to nonexistent. Arican airspace and airports may not need radio-based nagation and surveillance inrastructure such as VOR or radar technology, but th will require investments in less costly, satellite-based replacements such as GNapproaches and ADS-B surveillance technologies.

9.2.5.3 Institutional aspects

A number o countries have structured airport inrastructure development, mana

ment and operations into separate entities or parastatals with autonomous manament structures. Tis approach has been productive and efcient where the pracis ully implemented as in Kenya, where the Kenya Airport Authorities has bestablished to manage the countrys public airports.

Private-sector participation in airports is limited, though some interesting exampsuch as the airports company in South Arica, do exist. In most cases, private-secinvolvement has been limited to some concessions and management contracts, ually involving small investments.

9.2.5.4 Implementation o the Yamoussoukro Decision

Trough the combined eorts o the ECA, AU, Arican Civil Aviation Commiss(AFCAC), the Arican Airlines Association (AFRAA) and the RECs, Arican cotries are implementing appropriate air transport liberalization policies since adoing, in 1999, the Yamoussoukro Declaration or the liberalization o access to


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transport markets in Arica. Te subsequent Yamoussoukro Decision provided theramework or its implementation. Te decision takes precedence over all bilateraland multilateral air-transport agreements, which were inconsistent with it. It seeksto gradually eliminate non-physical barriers to intra-Arican air transport and restric-tions linked to granting trafc rights, particularly the th-reedom trafc right;

aircrat capacity o Arican airlines; tari regulations; the designation o operatinginstruments; and the operation o cargo ights. Its ull implementation, however,still remains a challenge to most countries.

Te decisions impact is best measured in the amount o high-level trafc betweencountries (reedom level 5 or above in the plan) as table 9.11 illustrates. Te percentageo international ights conducted by carriers that are not part o either country beingserved is highest in countries in which the implementation score is highest. Exceptor the Arab Maghreb Union, which is not a party to the decision, all countries haveshown an increased market proportion o these airlines between 2004 and 2007.

Table 9.11

Percentage o ights between country pairs by airlines that are not based ineither country o the pair

AMU BAG CEMAC COMESA EAC SADC WAEMU

Seats 2001 7.6% 45.3% 38.0% 25.4% 33.0% 18.7% 47.7%

Seats 2004 8.3% 36.3% 11.8% 9.9% 12.2% 2.3% 43.7%

Seats 2007 4.1% 43.3% 28.5% 14.1% 16.4% 5.7% 43.8%

YD Score 1 4 5 3 3 2 5

Note: YD = Yamoussoukro Decision o 1999. AMU = Arab Maghreb Union; BAG = Banjul Accord Group; CEMAC

= Economic and Monetary Community o Central Arica; COMESA = Common Market o Eastern and Southern

Arica; EAC = East Arican Community; SADC = Southern Arica Development Community; WAEMU = West Arican

Economic and Monetary Union.

A recent NEPAD survey on the decision has analyzed the status o implementationat regional levels as ollows:

North Africa: Neither a liberalization agreement nor any agreement in con-ormity with the decision has been concluded between the countries. How-ever, a drat convention to liberalize air transport is being prepared;

West Africa : Te eight UEMOA member States and members o the BanjulAccord Group (BAG) have ully complied with the decision;

Central Africa : Only the member States o CEMAC and BAG are in con-ormity with the decision; and

Eastern and Southern Africa : COMESA, EAC and SADC jointly adoptedthe COMESAEACSADC Competition Regulations on Air ransportServices liberalization, Provisions and Procedures or the implementation o


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the common regulations in 2008. A joint competition authority (JCA) westablished in 2008 to oversee the air transport liberalization process.

9.3 Inormation and communicationtechnologies (ICT) sector

9.3.1 Overview o ICT development in Arica

We have said it time and again: The role o ICT in national, regional and continental deveopment, and, specifcally, in wealth creation, employment generation and poverty reductio

cannot be overemphasized. Disease, illiteracy, poverty and other ills are real social challenge

that must be addressed i we are to attain a good quality o lie. Fortunately, ICTs present them

selves as key, potent tools that can be used to address a number o these challenges . - Speecby His Excellency, Mr. Paul Kagame, President o the Republic o Rwanda, at the ocial open

ing o the Regional ICT Investment Summit in Kigali, Rwanda, 4-6 May 2006.

IC incorporates technologies or creating multimedia inormation content (souimages, text and data) on the one hand, and communication technologies used broadcasting and telecommunication on the other. Te inormation technology (component is computer-driven and supports dierent stages o creation, processistorage and delivery o content. Te communication technology (C) aspect is means o transporting to and receiving the above inormation in the orm o brocasting or telecommunications. When properly connected through an agreed se

protocols, all o these operate in a global network called the internet.

In 1996 Arican countries adopted the Arican Inormation Society Initiative (AIas a ramework or building Aricas inormation and communication inrastrture to oster development. Accordingly, the RECs have either already developtheir regional e-strategies or are ormulating them to build an IC inrastructustrengthen capacity and acilitate regional economic integration and trade.

Arica still lags behind the rest o the world in terms o IC access, especiallyinvestment-intensive inrastructure, such as main, or xed, telephone lines and broadband. However, the rapid growth in mobile cellular technology and pubinternet access has signicantly expanded access, thanks to increased private-secparticipation.


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Currently 85 per cent o international bandwidth trafc in Arica is directed viaEurope to its nal destinations. Access to the global backbone is vital or the devel-opment o this region, and, according to a study by the NEPAD e-Arica Commis-sion in 2004, Arica will require an additional 52,040 km o inrastructure or totalconnectivity: 15,950 km in Central Arica, 2,200 km in Northern Arica, 19,330

km in Western Arica and 145,060 km in Eastern and Southern Arica.

Table 9.13

Inrastructure development

Level Connected to submarine cable Coastal countries notlinked to submarine cable

Landlockedcountries

Countries Algeria, Angola, Benin, Cameroon,

Cape Verde, Cte dIvoire, Djibouti,

Egypt, Gabon, Ghana, Libya, Mau-

ritius, Morocco, Nigeria, Senegal,

South Arica and Tunisia

Others connected through transit

Botswana, Lesotho, Namibia,

Swaziland

Equatorial Guinea, Eritrea,

Gambia, Guinea, Guinea-

Bissau, Liberia, Mada-

gascar, Mauritania, Sierra

Leone, Sudan, Somalia,

Kenya, Tanzania, Mozam-

bique, Seychelles, Comoros

and Togo, DRC, Congo,

So Tom & Prncipe

Botswana,

Burundi,

Central

Arican Re-

public, Chad,

Ethiopia, Le-

sotho Malawi,

Mali, Niger

Rwanda,

Swaziland,

Uganda,

Zambia,

Zimbabwe

Source: ADB ICT Strategy 2008.

Because it is imperative to link the east coast o Arica, the East Arican SubmarineCable System (EASSy) is being developed and is expected to be operational by 2010.Several other undersea cable projects will provide bre-optic links to the Aricaneastern seaboard, notably SEACOM, which became operational in mid-2009. Addi-tional capacity is being developed on the west coast, notably Main One and GLO-1,both part o GLOBACOM in Nigeria, linking Lagos to the United Kingdom. Tenew high-capacity submarine bre-optic cables could signicantly reduce both thewholesale and retail prices o internet access, as evidenced by the already decliningbandwidth prices o the West Arican Cable and SA3.

Tese submarine cable networks are complemented by terrestrial and satellitenetworks that connect landlocked areas. Te major broadband initiatives includeCOMEL, EAC Broadband IC Inrastructure Network (EAC-BIN), SAA Back-

haul Links, Central Arican Broadband Network (CAB), INELCOM (ECOWAS),North Arican Loop and RASCOM.

Te Connect Arica Summit in Kigali in 2007 set the ollowing goals or IC devel-opment in Arica:


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Box 9.1

Goals o the Connect Arica Summit (Kigali, 2007)

Goal 1: Interconnect all Arican capitals and major cities with ICT broadband inrastructure anstrengthen connectivity to the rest o the world by 2012.

Goal 2: Connect Arican villages to broadband ICT services by 2015 and implemen

shared access initiatives such as community telecentres and village phones.Goal 3: Adopt key regulatory measures that promote aordable, widespread access t

a ull range o broadband ICT services, including technology and service-neutral licensingauthorization practices, allocating spectrum or multiple, competitive broadband wireless service providers, creating national internet exchange points (IXPs) and implementing competitioin the provision o international internet connectivity.

Goal 4: Support the development o a critical mass o ICT skills required by the knowledgeconomy, notably by establishing a network o ICT centres o excellence in each Arican subregion and ICT capacity-building and training centres in each country, to achieve a broad netwoo interlinked physical and virtual centres, while ensuring coordination between academia anindustry by 2015.

Goal 5: Adopt a national e-strategy, including a cyber-security ramework, and deplo

at least one fagship e-government service as well as e-education, e-commerce and e-healtservices using accessible technologies in each country in Arica by 2012, with the aim omaking multiple e-government and other e-services widely available by 2015.

9.3.3 ICT applications

Te improved inrastructure will allow or greater e-applications, such as e-governme-commerce, e-banking, e-health and e-schools, among others. Many programmalready have been instituted in various countries. One aspect, which is being purs

at the regional level in the ramework o NEPAD, is the e-schools programme.

Box 9.2

NEPAD e-schools initiative

NEPADs e-schools programme is being implemented by the NEPAD e-Arica Commissiowhich was launched in 2003 as the NEPAD ICT Task Team responsible or developing NEPAICT programme and implementing related projects. The objective o the e-schools programmis to impart ICT skills to young Aricans in primary and secondary schools and to harness ICto improve, enrich and expand education in Arica. The programme will do so by equipping aschools with ICT inrastructure that will use ICT to connect all schools in Arica to the NEPAe-schools network and the internet.

In collaboration with major private-sector ICT companies led by Cisco, Hewlett Packard, Microsot and Oracle, e-Arica Commission has initiated the e-schools project to conneall primary and secondary schools in Arica (estimated at 600,000) to the e-schools networby 2010. Demonstration projects already have been initiated in selected schools in 17 countries: Algeria, Burkina Faso, Cameroon, Egypt, Gabon, Ghana, Kenya, Lesotho, Mali, MauritiuMozambique, Nigeria, Republic o the Congo, Rwanda, Senegal, South Arica and Uganda.

Source: NEPAD e-Arica Commission.


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9.3.4 ICT regulatory ramework

o strengthen their capacity to regulate this ast-moving sector, Arican regulatorshave ormed regional and continental associations as orums or sharing experi-ences. Tese include the Arican Communication Regulation Authorities Network

(ACRAN), the Association o Regulators or Inormation and CommunicationServices o Eastern and Southern Arica (ARICEA), Communications Regulators Association o Southern Arica (CRASA) and West Arican elecommunicationsRegulators Association (WARA). Tese groups are supported by the Arican el-ecommunications Union (AU) and the International elecommunication Union(IU).

9.4 Energy sector

9.4.1 Status o energy development in Arica

Te continent is rich in exploitable energy resources to meet its needs (hydropower,coal, gas, oil, uranium, both new and renewable resources). North and West Aricaown the bulk o the oil and gas reserves, while Southern Arica holds most o thecoal deposits. Vast hydropower potential, located throughout the interior o the con-tinent, orms part o an extensive source o renewable energy. Te region possessessome o the largest watercourses in the worldthe Nile, the Congo, the Niger, Sen-egal, Volta, Orange and Zambezi river systems. In addition, geothermal resources

can be ound in the Red Sea Valley and the Rit Valley, and solar energy could be par-ticularly useul in areas ar rom national grids. Trough cooperation and regionalintegration, the huge energy resources can be developed to deliver aordable energyor the benet o the whole continent.

However, most o these resources remain unexploited, despite various initiatives andinvestments. Te situation must be reversed by harnessing the resources economicallyto provide aordable energy to the population and economic sectors. Te quality olie improves with commercially available energy, which increases economic activityand industrial development. Inadequate energy constrains development and spells

inadequate electricity, inadequate illumination, ewer labour-saving appliances andlimited communication and the reduced possibility or commercial enterprise.


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9.4.2 Non-renewable sources o energy (coal, oil andgas)

Arica is an important and growing net producer and exporter o oil, natural gas acoal. Te oil exports originate mainly in the countries o Nigeria, Algeria, the Lib

Arab Jamahiriya, Angola, Egypt, the Sudan, Equatorial Guinea, Gabon, Republithe Congo, Chad and Cameroon. Natural gas exports originate mainly in AlgeEgypt, Nigeria and the Libyan Arab Jamahiriya.

Paradoxically, intra-Arican trade in oil and gas is limited. Most non-oil producing cotries import oil rom markets outside the continent. Since the volumes involved are rtively small, the cost o procuring oil at the individual country level is high. Tus, mcountries expend, on average, more than hal o their export earnings on oil.

Such problems only urther constrain the economic development o these countr

Regional cooperation would provide a practical approach to reducing the cost oimports in Arican countries and at the same time enhance intra-Arican tradeenergy commodity resources. o this end, Arican ministers responsible or hydrobons have called or designating regional storage and distribution acilities to redinefciencies in petroleum product procurement and distribution. o support strategy, it has been proposed that an Arican Petroleum Fund (APF) be establishto mitigate the eects o increased oil prices on Arican economies. Several actiare proposed: to establish a strategic ramework or cooperation in regional oil pcurement, the utilization o reneries, storage and distribution acilities; to crearamework or inrastructure development to capture and distribute the ared ga

Arican countries and export; to expedite the development o gas and oil pipelinand to establish the Arican Petroleum Fund.

Several gas and oil pipelines are currently under development to urther intra-Acan trade in energy. Te major ones are:

West Arican Gas Pipeline (WAGP), 678 km to supply gas rom NigeriBenin, ogo and Ghana;

rans-Saharan Gas Pipeline (SGP), 4,128 km to export dry natural rom Nigeria to the European market through the Niger and Algeria;

anzaniaZambia Oil Pipeline (AZAMA), 1,710 km, connecting Da

Salaam Port to the Zambian Indeni Oil Renery at Ndola. Te pipelinebeen in operation since 1980s;

KenyaUganda Oil Pipeline, a 352 km extension into Uganda o the exing MombasaEldoret, Kenya pipeline;

MozambiqueSouth Arica Gas Pipeline, part o the Maputo DevelopmCorridor, operating since the 1990s; and


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unisiaLibya Gas Pipeline, chiey or the export o gas to Europe.

9.4.3 Electric power

9.4.3.1. Production and consumptionAricas electric power sector has low-generation capacity, low connection rates, hightari rates and poor reliability because o its underdeveloped inrastructure. Teinstalled generation capacity o the 48 sub-Saharan countries was 68GW in 2005(comparable to that o Spain), with 40GW in South Arica alone (EAI, 2005). Con-sequently, ew o the regions countries can exploit economies o scale in generation:33 o 48 sub-Saharan countries have national power systems o less than 500MW,and 11 o less than 100MW. Only about 20 per cent o the sub-Saharan Aricanpopulation has access to electricity, with the exceptions o Ghana, South Arica andZimbabwe, and the island countries o Mauritius and Seychelles, which exceed a 40per cent access rate. Access is also concentrated in urban areas. Comparable accessrates in other developing regions show South Asia at 50 per cent and more than 80per cent in Latin America. Since 1990 East Asia, Latin America and the MiddleEast have all added at least 20 percentage points to their electrication rates. Onthe other hand, access rates in sub-Saharan Arica declined, as population growthand household ormation outstrip the new connections. I current trends continue,ewer than 40 per cent o Arican countries will reach universal access to electricityby 2050 (Barnejee, et al., 2008).

Annual per capita consumption o energy in Arica averaged 618 kilowatt hours(kwh) in 2005, ranging rom a high o 5,000 kwh in South Arica to a low o 10kwh in Chad. Tis reects the continents low access rate. Sub-Saharan Arica is theonly region in the world where per capita consumption is actually alling (WorldBank, 2005).

Table 9.14

Electrifcation rates in Arica 2005

Region Electrifcation Rate Range(per cent)

Annual per capita power consumption(KWH)

North 27 - 99 952South 7 - 70 1767

West 4 - 40 155

Central 3 - 35 151

East 5 - 25 65

Source: UPDEA (2006).


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In 2005, the continent generated 75 per cent o its electricity rom fossil thmal energy, ollowed byhydropower at 15 per cent. Nuclear power and new arenewable sources are still in their inancy, with South Arica being the major opator o nuclear power plants in the region. Te growing demands or power suppglobal warming and increased saety o new nuclear technology are pushing ot

countries on the continent to consider using this technology or uture power geration. Tese include Egypt, Algeria and Nigeria, which have embarked on studinvestigating possible use o nuclear energy.

Aricas geothermal potential is estimated to be 14,000 MW. At present, the exptation o geothermal resources is mainly in Kenya, with 127 MW installed capacgenerating about 17 per cent o the national power supply. Ethiopia has instacapacity o 7 MW. Te two countries with signicant power generation rom warms are Egypt (375 MW) and Morocco (240 MW), while wind arms are unconstruction in unisia (120 MW) and South Arica (120 MW).

Solar energyis most commonly used or water pumping, heating and drying. Etric power generation rom solar sources using photo-voltaic cells is still limitedsmall-scale applications because o the technologies high cost.However, Egypt Morocco are developing two solar-thermal power plants o 150 MW and 30 Mgeneration capacities, respectively.

9.4.3.2. Cost and reliability o supply

Te average operating cost o predominantly thermal power systems in 2005

$0.20/KWH, considerably more expensive than the cost o hydro-based systeCountries with small national power systems (o less than 200 MW installed capity) ace an additional operating cost o as much as US$ 0.15/KWH, relativecountries with large national power systems (above 500 MW installed capaciTe cost or landlocked countries is generally higher, due to the additional costimporting ossil uels. Costs and prices have since risen sharply, reecting higglobal oil prices and tightening supplies (AICD/World Bank, 2008).

World Bank Enterprise Surveys show that most Arican businesses suer requpower outages. In Senegal, this occurs about 25 days each year; in the United Rep

lic o anzania, 63 days; and in Burundi, 144 days. o cope, many businesses invin back-up generators, which represent a signicant proportion o total instalpower capacity; as much as 50 per cent in Democratic Republic o the Congo, Eqtorial Guinea and Mauritania, and a slightly lower average o 17 per cent in WArica. Southern Aricas gure is much lower, but it is likely to increase as the regdeals with more shortages (Foster and Steinbuks 2008).


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Many Arican countries have responded to the power crisis by installing emergencypower generators to support the national grid. By contrast to traditional power gen-eration projects, this capacity can be installed in a ew weeks, providing a rapidresponse to pressing shortages. Te cost o generation rom such small diesel units,however, is relatively high, and when added to high petroleum prices could exert

enormous nancial pressures on oil-importing countries.

9.4.3.3. Institutional ramework

Te current level and pattern o supply and demand or electricity provides excel-lent opportunities or promoting intra-Arican trade: uneven regional endowmentso energy resources, low access, high prices, low capacity and poor reliability. Ari-can countries have dierent endowments o natural resources. Some have abundanthydropower resources such as coal, oil or natural gas, while others are without domes-tic energy resources and depend on imported oil and gas uel to generate power. In

view o the relatively high costs o ossil uels or thermal generation, the AU hasadopted the development o hydro-power generation to expand regional trade inpower that would lower the costs o generating power, reduce carbon emissions romgenerating plants and insulate countries rom the high price o ossil uels.

Expanded regional trade would also encourage investments that might not other-wise be made. As a strategy to increase private-sector participation, the power sectorhas been un-bundledthat is, vertically disaggregated into three subsectors: gen-eration, transmission and distribution. Tis should open up opportunities or ini-tiatives such as regional transmission lines, private-sector participation, enhanced

competitiveness and reduced costs.

Arican countries have correspondingly set up mechanisms to exploit these oppor-tunities by promoting cooperation in this sector at regional, interregional and con-tinental levels. Te AU established the Conerence o Ministers o Electric Energy(2006) as the organ or continental policy coordination in developing energyresources, especially hydroelectric power, as a major option or renewable energy toensure sustainable development, regional integration, energy security and to lessenpoverty. Power pools have been established in the ve Arican regions to managethese integrated power systems. o this end, the ministers adopted a declaration

committing to support the integrated development o the continents hydropowerpotential in the ramework o NEPAD, and established a coordination commissionoverseeing major integrating hydropower projects. AFREC would provide the secre-tariat or this commission.

A power pool is a group o organizations that operate their power systems jointly ormutual benet. Te advantages o operating a power pool include reaping econo-


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mies o scale; increasing system reliability and security o supply; generation mand optimizing resources; reducing planning and operating reserves; rationalizinvestments; increasing the volume o electricity trade; seasonal and load diversand energy cost dierentials. Power pools are centralized electricity markets. Tstrategy is in line with NEPAD objectives or regional integration.

Southern Arica Power Pool (SAPP). Te power generation is mostly thermal per cent coal, 2 per cent gas), ollowed by hydro (20 per cent) and nuclear (4 cent). Te generation mix helps to mitigate the eects o drought. As o April 20SAPP had an installed capacity o 55,032 MW, implying a decit o about 8,0MW. SAPP has made signicant progress in developing agreements around tramission and has also developed a short-term energy market that enables daily innet trading. One o the aims o the Regional Electricity Regulators Association iharmonize regulatory regimes in the region, and it has already developed agreemeon the basic principles o regulations.

West Arican Power Pool (WAPP). Te current level o supply meets only 54 cent o estimated demand in the region. Nigeria is by ar the largest supplier aconsumer o electricity in the region, accounting or more than 80 per cent o supand 50 per cent o demand. Currently Nigeria supplies power to Benin, the Niand ogo. WAPP has consequently embarked on three major power-generatprojects, which could add a total o 1,000 MW capacity in the region: Maria G(400 MW), Aboaddze (400 MW) and OMVS (140 MW). Tese will be supporby the appropriate interconnecting transmission lines.

Central Arican Power Pool (CAPP/PEAC). Tis region has a huge hydroelecpotential (150 GW), with about 70 per cent located in DRC alone, in particulaInga (44 GW). Te current installed capacity stands at slightly under 5 GW, wslightly over hal located in DRC. Tere are plans to construct the Grand Inga dwhich will have a total capacity o 40 GW. Te Inga currently supplies electrito SAPP and projects are already under way or interconnection with WAPP EAPP, and eventually to COMELEC through the Sudan and Egypt, and possiblyEurope. It is envisaged to be the greatest integrator power project o the contine

East Arican Power Pool (EAPP). Tis region is endowed with hydropower pottial in DRC, Ethiopia and Uganda; oil and gas in Egypt, the Sudan and the Uni

Republic o anzania; and geothermal resources in the Rit Valley regions in KenEthiopia and Djibouti. Resource-sharing in the Nile basin is coordinated by Nile Basin Initiative (NBI), an intergovernmental organization involving all the NBasins riparian States. Its objective is to oster sustainable socio-economic develment through the equitable use o the basins common resources.


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Comit Maghrbin de llectricit (COMELEC). Tis is the equivalent o a powerpool or the Arab Maghreb Union (UMA) o North Arican countries (Algeria, theUnited Republic o anzania, Mauritania, Morocco and unisia), in addition toEgypt. Te total installed capacity in COMELEC member countries was 21,773MW. Termal generation counts or 90 per cent o the total, hydropower 9 per cent

and renewable energy 1 per cent. Te North Arica countries do not ace energycrisis and COMELEC exports part o the available power to Europe.

Recognizing this, the First Conerence o Arican Ministers Responsible or Elec-trical Energy, held in Addis Ababa, Ethiopia, on 20-24 March 2006, adopted adeclaration committing to support the integrated development o the continentshydropower potential. o this end, under the ramework o NEPAD, the ministersdecided to establish a coordination commission or the development o major inte-grating hydropower projects. AFREC would provide the secretariat or this com-mission.

9.5 Utility regulation in Arica

9.5.1 The role o regulation

Te purpose o building inrastructures or transport, energy, communication, waterand sanitation is to provide services to the public or economic and social develop-ment. Regulatory regimes are thereore essential to ensure that service providers meet

the service requirements on the one hand, while receiving appropriate compensationto ensure continued operations on the other. Eective regulation has become all themore necessary with the increased number o service providers and the associatedcompetition or markets.

Regulation plays two important roles in ensuring quality and coverage o servicesavailable to citizens: by protecting consumer interests and encouraging efciency bywatching or possible misuse o monopoly power or other orms o market ailure;and by inuencing the opportunities, risks and incentives aced by service provid-ers, thus determining the volume and composition o investment, the required level

o consumer taris and the responsiveness o rms to consumers. Reconciling theinterests o consumers and operators is not easy, particularly in complex inrastruc-ture sectors that involve large investments with long pay-back periods, and wheretaris and other dimensions o service are oten politically determined.

Over the years, with increased private-sector participation and increased competi-tion in service provision, countries around the world have experimented with vari-


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ous approaches to regulation and have discovered many weaknesses in approacto regulation through state ownership or through discretionary political contTere is now a consensus that the utility regulation should, at a minimum, relycompetition rather than regulation wherever easible; have regulatory rules thatspecied in laws, licenses or other instruments to reduce investor uncertainty a

that are designed to create incentives or efciency; and have regulatory rules thatadministered transparently by a specialist body operating at arms length rom service provider and political authorities.

Some o the challenges Arican regulators ace include protection against unpolitical intererence; avoidance o regulatory capture by utilities, investors or csumer groups; the lack o capacity o regulatory bodies; lack o experience; and a lo predictability o regulatory decisions and their impact on business environmwhich would oster private sector investment.

While regulation is exercised at the national level, there is an obvious need or h

monization at the regional and continental levels. Tus the ve major regionsArica have established various sector associations or regulation o inrastructservices. Te Arican Forum or Utility Regulators (AFUR) was established at continental level as a orum or all utility regulators under the auspices o NEPA

9.5.2 Regional regulatory rameworks

Te RECs have taken steps to harmonize inrastructure policies and regulationacilitate regional integration o Arican markets. Teir respective treaties prov

or the development o regional inrastructures and the harmonization o poliand regulatory rameworks. Tey have set up the respective organs or regulatingsectors, in particular energy and communication.

AFUR is a voluntary organization o more than 30 Arican utility regulators witmission to develop eective utility regulation across all sectors, including telecomunications, energy, water, sanitation, transportation and other inrastructure stors where regulation is necessary. Its objectives are to harmonize regulatory poliand legislation and promote autonomous utility regulation and good governanTe ormation o AFUR was motivated by the strategic ramework o NEPADdrive reorm in support o Aricas inrastructure development.

Using regulatory peer review is also to be considered. Peer learning can be a powetool to strengthen institutions and regulate eectively.


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Table 9.15

Arican regional regulatory bodies

REC TELECOM/ICT ENERGY

COMESA/IGAD/EAC ARICEA: Association o Regulators

or Inormation and Communication

Services o Eastern and Southern

Arica

EAPP: Eastern Arica Power Pool

RAERESA: Regional Association

o Energy Regulators or Easternand Southern Arica

SADC CRASA: Communications Regulatory

Authorities o Southern Arica

RERA: Regional Electricity Regula-

tors Association

SAPP: Southern Arican Power

Pool

ECOWAS/UEMOA WATRA: West Arican Telecommuni-

cations Regulators Association

WAPP: West Arican Power Pool

ECCAS/CEMAC CAPP: Central Arica Power Pool

UMA COMELEC: Comit Maghrebin

dElectricit

CONTINENTAL ACRAN: Arican Communication

Regulation Authorities Network

UPDEA: Union o Producers,

Conveyors and Distributors o

Electrical Energy in Arica

ATU: Arican Telecommunications

Union

Source: AFUR.

9.6 Financing Aricas inrastructure

9.6.1 Financing requirements

Aricas demand or transport and energy inrastructure and services are enormous.Te public sector alone cannot meet the requirement or several reasons: budgetaryconstraints reduce public outlays or investment; recent experience with debt prob-lems have spurred Arican governments to reduce public spending; and OverseasDevelopment Assistance (ODA), traditionally a major contributor to public-sectorinvestment, has declined signicantly. In its report in 2005, the Commission orArica5 estimated the continent needed at least US$ 20 billion a year investment ininrastructure development until 2015 or it to eectively integrate with the globaleconomy. Tis estimate was based on World Bank calculations that inrastructure

investments in sub-Saharan Arica should exceed 5 per cent o GDP in order toachieve the MDGs, and an additional 4 per cent o GDP should be added or opera-tions and maintenance to ensure sustainability o inrastructure investment (AICD,2008). However, this estimate was nearly doubled by the later AICD study in 2008to around US$ 40 billion per year, with maintenance and operations costing a ur-

5 Our Common Interest - Report o the Commission on Arica (2005, Chapter 7, para. 67).


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ther similar amount per year, or a total estimate o US$ 80 to 90 billion per yeTe bulk would go to the energy and transport sectors, which account, respectivor US$ 23 billion and US$ 11 billion in capital investment, and US$ 19 billion aUS$ 11 billion in operating and maintenance expenditures.

Table 9.16Annual inrastructure fnancing needs in sub-Saharan Arica, 2005-2015(US$ billions)

SECTOR CAPITAL OPERATING TOTAL

Transport 10.7 9.6 20.3

ICT 0.8 1.1 1.9

Energy 23.2 19.4 42.6

Irrigation 4.1 0.8 4.9

WSS 2.7 7.3 10.0

Total 41.5 38.2 79.7

Source: ICA Annual Report 2007; AICD Synopsis, 2009.

Tese are still relatively modest amounts compared with similar investments in sokey emerging world economies. For instance, in 2007 Brazil launched a our-yplan, worth US$ 300 billion, to modernize roads, power plants and ports. Inplans to spend around US$ 500 billion over the next ve years (ICA, 2008).

9.6.2 Sources o fnance

Tere are ve main sources o inrastructure nance in Arica: public budget; ofdevelopment assistance (ODA) rom OECD partners on a bilateral basis; loans (ccessional and non-concessional) and grants rom international and regional ncial institutions (World Bank, ADB, and others); ofcial loans rom non-OECnanciers (including the EXIM banks o China and India); and the private sectTe relative importance o the dierent sources o nance varies according to inrastructure sector in question. For instance, private nance is geared to the Isector while public budgets, supplemented by ODA, are the main sources o uing or transport and water. Te power sector draws primarily on public budgand on non-OECD nance, with only a relatively small share coming rom OD

or private nance.

Following the launch o the Arica Action Plan in support o NEPAD by the Summit in Kananaskis, Canada, in 2002, the Commission or Arica report releaat the 2005 G8 Gleneagles Summit specically recommended the scaling upcritical inrastructure investments to raise productivity, support trade and thersustain growth and reduce poverty on the continent (Commission or Arica, 200


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Te G8 set up the Inrastructure Consortium or Arica (ICA) to broker a strategicpartnership among development partners and stakeholders to acilitate the develop-ment o inrastructure in Arica.

Box 9.3

Inrastructure Consortium or Arica: ICA

ICA was launched at the G8 Gleneagles Summit in 2005.

Membership: G8, World Bank Group, Arican Development Bank Group, European commis-sion, European Investment Bank, Development Bank o Southern Arica.

Secretariat: Arican Development Bank.

Mission: Help improve the lives and economic well-being o millions o Aricans by scaling upinvestments or inrastructure development rom both public and private sources.

Objectives:

To increase the level o nance going to sustainable inrastructure in Arica rompublic, private and public-private sources;

To acilitate greater cooperation among members o the ICA and other importantsources o nance, e.g., China, India and the Arab Funds;

To highlight and help remove policy and technical barriers to progress; and

To increase knowledge o the sector through monitoring and reporting on key trendsand developments.

Since its establishment, ICA members have steadily increased their commitmentsto Arica, reaching US$ 12 billion in 2007 and a similar level in 2008. Most o the

commitment is directed to sub-Saharan Arica, where the inrastructure needs aregreatest. While the commitments are encouraging, implementation has been slowdue to countries inadequate capacities to push projects to the stage o nancing. TeNEPAD Inrastructure Project Preparation Facility (IPPF) was thereore establishedin 2005 to help these countries push commitments into actual nancing.

Table 9.17

ICA commitments to inrastructure projects in 2007 regional distribution(US$ millions)

Region North Arica SSA (Less SA) South Arica Total

Bilateral 684 2,661 218 3,742Multilateral 1,554 6,790 502 8,846

Total 2,238 9,451 720 12,588

Source: ICA Annual Report 2007.


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Other signicant ODA commitments included the Arica-EU Energy Partners(2007) on energy access, energy security and climate change, and the EUArPartnership Inrastructure rust Fund (2007) to support regional developmenour priority areas: transport, energy, water and inormation technology and ecommunication networks.

Arica has traditionally depended on ODA to meet its inrastructure needs. a growing share o the regions inrastructure nance is now coming rom ntraditional sources and could be considered complementary to support rom Imembers. Leading this trend are non-OECD nanciers, chiey China, India athe Arab Fund. While the Arab Fund has operated in Arica or decades, China aIndia began

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