Population growth and the rapid rate of urbanization in Sub-Saharan Africa elevate infrastructure needs. The pace of development and economic growth does not match the growing needs of a burgeoning population. Most governments operate on insufficient budgets making it difficult for them to fulfill their mandate. Owing to the reality that some services are too essential, alternatives need to be sought to fill this infrastructure gap. In this regard, the private sector can be tapped to bring on board the skill set and expertise needed to design, operate and manage public infrastructure. For private sector players to chip in, governments need to provide compelling incentives. Public –Private Partnerships become indispensable.
Public – Private Partnerships (PPP) are contractual agreements between a public sector authority and a private party where the two agree to share resources in the provision of public services. PPPs, when properly structured, encourage efficiency, oversight and transparency. With proper mechanisms in place, governments and the public will reap the benefits of private sector efficiency in the provision of public services. Infrastructure development and economic growth have a positive correlation.
According to the Africa Infrastructure Country Diagnostic (AICD), sub-Saharan Africa needs to spend an excess of US $93 billion annually over the next 10 years to meet infrastructure needs. The current expenditure is less than half that amount leaving a US $50 billion shortfall. The state of Sub-Saharan Africa’s infrastructure reduces productivity by as much as 40 percent and cuts national economic growth by two percentage points every year. Governments are seeking ways to improve the prevailing state of infrastructure through partnering with the private sector and sharing the risks and responsibilities associated with public services. However, governments retain ownership to avoid the pitfalls linked to privatization.
Sub-Saharan Africa’s infrastructure needs can be broken down into three main categories; energy, transport and Information Communication Technology (ICT). PPP as a development finance model can offer the much-needed support to boost regional integration which will in turn support intra-African trade in many ways including reducing transaction costs. The value chain effect drawn in by the pursuit of diversification and value addition will ultimately increase economic growth and reduce income disparity.
Rapid economic growth in Sub-Saharan Africa is piling pressure on many countries’ energy grids to keep up with mounting demand. Africa has huge untapped and renewable energy potential. Exploiting this potential requires concerted effort between governments and development partners. There’s general consensus that the future of Africa’s development is pegged on a capable energy sector. In July 2013, former US president Barak Obama launched the ‘Power Africa’ initiative aimed at supporting economic growth and development by increasing access to reliable, affordable and sustainable power in Africa. Affordable and clean energy is one of the 17 Sustainable Development Goals. PPP continues to play a vital role in Africa’s infrastructure development. It is estimated that 60% of Africa’s infrastructure needs are in the energy sector. A larger percentage of investments need to be channeled to the energy sector. Today, less than 50% of Sub-Saharan Africans have access to electricity compared to 99.8% in China. Africa has enormous power potential in wind, geothermal, hydro and solar energy. Taking advantage of this potential is crucial to spurring and sustaining economic growth.
The transport sector is critical and there is dire need for investments in road networks, railway, airports and ports. Sustaining high economic growth levels requires having the right infrastructure in place. Handling capacity in both airports and ports needs to be increased and clearing times at customs departments reduced. Procedures need to be as efficient as possible to reduce lags. Modernizing systems will go a long way in supporting much needed regional integration across Africa. Africa Development Bank (AfDB) held a discussion in November 2015 to deliberate on how to increase PPPs in the transport sector. The title of the discussion was “Financing-Public Private Partnerships, how to push for more?” The panel highlighted successes and challenges associated with PPPs as well as lessons learned. AfDB has funded projects in this sector. Some of those projects include the Dakar-Diamniadio Toll Road in Senegal, the SANRAL Road Network in South Africa and the Lagos Lekki Port Project in Nigeria. Despite the success, there is need for more collaboration with development partners in the private sector to bolster the transport network
Internet penetration rate in sub-Saharan Africa is the fastest in the world. According to TeleGeography, African internet bandwidth grew 41% between 2014 and 2015, and 51% compounded annually over the last five years, to reach 2.9Tbps. The potential is massive. Africa has experienced exponential growth in the ICT sector owing to mobile and internet penetration. In 2016, Afrobarometer, a pan-African, non-partisan research network reported that 93% of Africans have cell phones. Smartphone penetration is also on the rise meaning more people can connect to the internet. Several innovations have been initiated in Africa to address challenges in health, education, agriculture and finance. M-pesa (the Kenyan mobile phone-based money transfer and microfinance service) has enable millions of Kenyans locked out of the formal financial sector to access financial services with ease using their handheld cell phones. They can send and receive money, get credit facilities and even pay for goods and services using their mobile phones. In 2016, it was reported that M-pesa receives up to 900 transactions in a second. On the same note, 14 million transactions, with an average value of sh.15 billion (US $150 million), are processed daily via M-pesa. Another ICT sensation that grabbed headlines is Konza Technology Park, a project proposed by the Kenyan government. This project is part of the economic blueprint seeking to transform Kenya into a middle-income nation by 2030 dubbed ‘Vision 2030.’ This is a worthy example of a PPP project in the ICT sector. Upon completion, Konza will facilitate business activity and promote the acquisition and usage of Information Technology. With the right infrastructure, ICT penetration will be enhanced allowing more people to get connected thus get access to tons of useful information capable of changing lives.
Costs play a big role in determining the success of businesses in a country and in attracting new investments. Efficient production is dependent on reliable and sustainable energy, efficient transport networks, and a capable ICT set-up. The prices of products and services reflect the cost of production and ultimately determine their competitive advantage in an open
