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Industrialisation in Kenya: What do political party manifestos say?

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This article first appeared in The East African on July 24, 2017

 

Further development of manufacturing can play a central role in driving economic transformation and job creation in Kenya. There is now a window of opportunity for Kenya (and other East African countries) to capitalise on positive underlying factors in the global economy – including rising wages in Asia, the rebalancing underway in China, and strong regional growth in Africa – and significantly expand its capabilities and global presence in export-oriented, labour-intensive manufacturing within the next 20 to 30 years.

But the recent performance of the Kenyan manufacturing sector has been weak. The share of manufacturing in Kenya’s gross domestic product (GDP) was only 9.2 percent in 2016 (well below average for a country with Kenya’s level of income) and this share has been declining in recent years. Several decades ago, Kenya had a relatively complex and substantial industrial sector by regional standards, but its East African neighbours have been catching up in recent years.

Image result for manufacturing kenya

(source: http://www.industrialization.go.ke/images/kenya_manufacturing.jpg)

Decisive and comprehensive action is required in order to reverse the decline, double manufacturing production and employment, and increase the share of manufacturing to 15 percent of GDP within the next five years. With this in mind, the Overseas Development Institute (ODI) and Kenya Association of Manufacturers (KAM) developed a 10-point policy plan to transform Kenyan manufacturing and create jobs. These 10 points, based on close co-operation amongst a range of stakeholders, aim to inform pre-election debates and can also be used by the new government to implement a more focused and effective industrialisation strategy.

There has been an analysis of the manifestos of the three main political parties to determine the extent to which they support manufacturing in Kenya and the region. The manifestos of Jubilee, the National Super Alliance (NASA) and the Third Way Alliance were launched at the end of June 2017. All three parties emphasise the industrial agenda as central to Kenya’s economic transformation in general terms, which is encouraging, with NASA emphasising innovative initiatives and especially the small and medium enterprise (SME) and informal sector, and Jubilee and the Third Way Alliance being more specific in their recommendations.

There are a range of notable similarities with the 10 policy priorities in the KAM-ODI booklet. Firstly, all three parties prioritise addressing either general or specific aspects of the enabling environment. The Third Way Alliance commits to addressing counterfeit goods, one of the KAM-ODI action points. Secondly, all three parties want to enforce a fiscal regime that is predictable and fair, a key action point among the ten policy priorities, and emphasise fair taxation in particular. Jubilee further discusses the action point on devolution. The Jubilee manifesto discusses the KAM-ODI action point on land banks and NASA and the Third Way Alliance discuss industrial parks, which need land. The Third Way Alliance pledges to work with county governments to set aside land for industrial parks, offering a practical way to implement the KAM-ODI action point on securing land for SEZs and industrial parks.

The feasibility of the creation land banks and setting aside land for industry will be linked to issues of acrimony over land title and cost of relocating populations on said pieces of land. For example, an SEZ was due to be set up in the Western part of the country but had to be scrapped as an agreement could not be reached on what land could be used due to claims of title on the piece of land. Thus all parties will have to undergo a thorough land audit in the areas the government intends to develop industrial parks and SEZs and begin with areas where there is clear land title that is not contested.

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(source: https://www.newsecuritybeat.org/wp-content/uploads/2012/07/kenya1.jpg)

In terms of energy, NASA discusses the need for an energy policy. Jubilee highlights the need for lower electricity tariffs for industrial usage and the Third Way Alliance calls for liberalisation of the energy sector and revisions to electricity billing and pricing to reduce the cost of electricity for key manufacturing sectors. Both NASA and Jubilee highlight the need for investment in electricity infrastructure. Jubilee also emphasises green energy and, in a similar vein, NASA and the Third Way Alliance focus on ramping up clean and renewable power generation.

What most of the manifestos are not clear on is how they will reduce the cost of energy in the country. For example, Kenya needs a reduction of five cents per kilowatt hour would bring the cost down to that in Tanzania. It is only the Third Way Alliance manifesto that states they will tackle the cost of energy issues by liberalising the energy sector and revising electricity billing and pricing. However, an additional problem with energy in Kenya is power outages; Kenya has more power outages than Uganda, Rwanda and Ethiopia. None of the manifestos are not clear on how this will be addressed. All three manifestos are vague on the type of reforms and investments needed to address inefficiencies and incentivise investment in power transmission and distribution.

All three parties suggest the establishment of industrial funds or development banks specific for industrialisation, such as an export-import bank (Jubilee and the Third Way Alliance) or a co-operative fund for agro-processing (NASA). But none of the parties place strong emphasis on suggestions for financial sector development. Similarly, the three parties’ manifestos do not give attention to foreign direct investment (FDI) to promote industrialisation. While these plans sound feasible, the implementation of these financing schemes will determine uptake by private sector. Ideally, the funds should offer financing perhaps at concessionary rates. The most important factor however is that the funds need to be patient such that private sector has time to use the capital effectively and generate returns over a realistic period of time. Yet the manifestos are not very clear on how financing to the sector will be structured. The Jubilee manifesto comes closest to specifics, stating that they seek to provide long-term credit funded by long-term bonds; one wonders why this strategy has not already been deployed. Further, none of the parties place strong emphasis on suggestions for financial sector development or how to promote FDI to support industrialisation.

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(source: https://res.cloudinary.com/people-matters/image/upload/w_624,h_351,c_scale,q_80/v1409637524/7126.jpg)

In terms of skills, NASA and the Third Way Alliance highlight the importance of general education, whilst Jubilee prioritises the need to nurture a globally competitive work force to power industrialisation. NASA and Jubilee stress the importance of linkages between universities and the rest of society, although Jubilee seems clearest on this and explicitly mentions the need to develop formal linkages between the private sector, academia and government. At the moment, there is a sizeable gap between what is taught to students and what the job market requires. Therefore, if curricula are not significantly revised and linked to a push to encourage students to take up of science, technology, engineering and maths (STEM) subjects, any partnerships with academia may not be fruitful in terms of creating a labour force with skills required for industrialisation. Jubilee manifesto’s pledge to promote the study of science, technology, engineering and maths but again, one wonders this has not already been done. Both the NASA and Third Way Alliance manifestos do not contain specific details on which subject areas to target for educational improvements.

NASA and Jubilee highlight the role of a fit for purpose civil service to support industrialisation. NASA stresses the need to reduce contractors’ cost of doing business with government, streamline procurement, process payments promptly and inculcate a zero tolerance approach to corruption. Jubilee wants a truly fit for purpose public service, and mentions the importance of reducing waste, dealing with procurement and rationalising the public sector wage bill. The Third Way Alliance has a narrower focus on measures to combat corruption. This element will likely prove to be the most difficult to implement as Kenya has notoriously been unable to hold those implicated in corruption scandals to account. Thus, it is dubious as to whether any of the parties have the political will required to implement this element of the manifestos.

The Third Way Alliance manifesto places strong emphasis on developing value chains in priority manufacturing sectors, including agro-processing, textiles and leather; but some of the Alliance’s proposals to support value chain development are quite protectionist in nature. The NASA and Jubilee manifestos also mention value chains, with the NASA manifesto emphasising synergies and linkages amongst enterprises. The issue of value chains is closely linked to agriculture and what has become clear over the first iteration of devolution is that agriculture seems to be neglected by both county and national governments in terms of budget allocations. According to the International Budget Partnership (IBP), national government allocated the sector as follows: 2 percent in 2015/16, 1.3 percent in 2016/2017 and 1.8 percent in 2017/18. As IBP points out, the Maputo Declaration 2003 calls for allocation of at least 10 percent of total national budget towards agriculture. The average expenditure on agriculture in Africa is 4.5 percent; Kenya’s national allocations are clearly sub-par. Thus for the value chain manifesto declarations to work, there is need to more robust allocations to agriculture at national and county level and better coordination between the two levels of government; none of the manifestos articulate how they would make this happen.

In the context of the EAC, the push for exports in the KAM-ODI booklet is important. Both NASA and Jubilee press for better market access, NASA for SMEs in particular. Improving and/or maintaining market access in the EAC is an important element of the NASA and Jubilee manifestos, aligning well with the KAM-SET call for an export push. The Jubilee manifesto focuses on expanding Kenya’s access to the US in textiles, whereas NASA emphasises market access for MSEs. In contrast, improving access to markets for Kenyan exports is not prioritised in the Third Way Alliance manifesto.

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(source: 2.bp.blogspot.com/-48G_E9Y-kRs/VSUGoKFDWuI/AAAAAAAHPkw/gNdn7sWCrdU/s1600/EAC-logo1.png)

To be clear, access to EAC for manufactured goods is riddled with problems. Total exports from Kenya the EAC registered a 4 percent decline in 2016 to KES 121.7 billion, with exports to Uganda and Rwanda falling by 9.3 percent and 2.5 percent respectively. Further, opportunities offered by the EAC’s integrated market has institutional and regulatory barriers to trade such as such as customs clearance, standards and certification, rules of origin, licences and permits, truck inspections and language barriers.  None of the manifestos address these issues. Further, the entry of China and India into the regional market has eroded Kenya’s EAC market share from 9 percent in 2009 to just 7 percent by 2013.  The World Bank claims that Kenya’s trade performance is declining quickly due to an influx of goods from China into Uganda and Tanzania, which are major export destinations for Kenya.  In the manifestos it is not clear how EAC market access issues will be addressed. The Jubilee and NASA manifestos make general statements about Kenya’s role within the EAC, but there is little detail in either manifesto in terms of specific measures or priorities to support access for Kenyan goods in the EAC market. The Third Way Alliance’s manifesto does not make any reference to Kenya’s role in a regional context.

Anzetse Were is a development economist; anzetse@gmail.com

How Kenya can industrialise in 5 years

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This article first appeared in my weekly column with the Business Daily on June 18, 2017

Manufacturing can play a crucial role in Kenya’s inclusive growth by absorbing large numbers of workers, creating jobs indirectly through forward and backward linkages to agriculture, raising exports and transforming the economy through technological innovation.

It is with this in mind that the Overseas Development Institute and the Kenya Association of Manufacturers coordinated a multi-stakeholder process to determine how the manufacturing sector can create 300,000 jobs and increase the share of manufacturing in GDP to 15 percent in 5 years.

A plan titled ‘10 policy priorities for transforming manufacturing and creating jobs’, has been developed focused on key actions that can be taken to build the manufacturing sector and achieve the aforementioned goals. The plan is rooted in the Kenya Industrial Transformation Programme and the Vision 2030 Manufacturing Agenda targeted at priority sectors of both formal and informal manufacturers (jua kali) as both sectors need support if Kenya is to industrialise equitably.

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(source: http://www.industrialization.go.ke/images/kenya_manufacturing.jpg)

The first issue to address is the business environment in Kenya. While Kenya has moved up 21 places, in its position World Bank’s Ease of Doing Business Rank, considerable constraints exist particularly in dealing with construction permits, paying taxes and registering property. Thus further action is needed to improve the business environment. Additionally, for manufacturing to flourish the country needs a fiscal regime that is more articulated to support the sector. Fiscal policy at both national and county level needs to be more deliberately leveraged to support industrialisation through, for example, developing fiscal incentives that drive investment into manufacturing.

The third action point concerns making land more accessible and affordable. Research by Hass Consult reveals that the price of land in and around Nairobi has increased by a factor of 6.11 to 8.05 since 2007. Aggressive increases in land price dampen investor appetite for investment in manufacturing which tends to be land intense. Thus there is a need to prevent inflationary speculation on land prices, and develop government land banks earmarked for industry.

Energy costs continue to be punitive in the country and make Kenya’s manufacturing sector less competitive than even its East African neighbours. Government efforts need to not only target increasing energy generation but also lower energy prices and increase the quality and consistency of energy to the industrial sector. This should be coupled with a key gap constraining the sector- access to finance. Manufacturing companies, particularly SMEs and informal industry, are undercapitalised and face multiple obstacles to obtaining access to finance. Bespoke financing mechanisms aimed at the sector, such as through an Industrial Development Fund, need to be fast-tracked.

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(source: https://newsghana.com.gh/wp-content/uploads/2015/01/wpid-manufacturing150115.jpg)

Kenya cannot leverage manufacturing for economic development without creating a more aggressive export push into regional and international markets. Kenya’s exports to the EAC are declining and opportunities such as AGOA can be tapped into more effectively. Additionally, Kenya needs to reorient education policy and skills development towards STEM subjects so that the skills in the labour pool drive the growth of manufacturing.

Finally, overall coordination in the sector is crucial. An agency in government should be created that coordinates all government entities relevant to industrialisation such as agriculture, education and the National Treasury. The private sector also needs to better coordinate particularly along value chains to drive sub-sector growth in a more robust and targeted manner. Finally, there is a need for better coordination between public and private sector through fostering trust and reciprocity to drive industrialisation forward.

Anzetse Were is a development economist; anzetsew@gmail.com

Land issues hampering Kenya’s development

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This article first appeared in my weekly column in the Business Daily on August 21, 2016

Kenyans are well aware of the tensions and dynamics around land ownership in the country. The contentious issues around land are often linked to tribal and ethnic tensions; indeed land issues informed the ferocity of post-election violence in 2007/8. But beyond being a tension between different communities, land ownership issues are hampering the country’s economic development.

Firstly, land directly affects agricultural productivity, or the lack thereof. At the moment, statistics indicate that small-scale farming accounts for at least 75 percent of the country’s total agricultural output and 70 percent of marketed agricultural produce. In short, most of the meals eaten by Kenyans come from a smallholder farmer working away on his or her small patch of land. However, one of the reasons why agricultural productivity is so low in the country is precisely because the vast majority of farmers are farming over-worked, nutrient-depleted, small pieces of land that have been subdivided for generations. The situation is made more complex by the fact that many small holder farmers do not have the title deed to the land.

So while there may be a general acknowledgement by their community that the land they farm is indeed theirs, the costs related to registering land and acquiring titles are too high for most smallholder farmers. As a result the farmers do not legally own the land and thus cannot use the land as collateral to access credit that could allow them to make improvements to their farms and farming practices. More importantly, smallholder farms cannot be conglomerated in one large piece that can be more efficiently farmed with higher levels of mechanisation, productivity and profitability. As a result, Kenyans agriculture sector is stuck in a rut with no foreseeable way out because of the land issue. If anything, the situation will worsen as the average size of land holdings continues to reduce due to the cultural practice of subdivisions of the land for each son in the family for inheritance purposes.

(source: http://i.telegraph.co.uk/multimedia/archive/01537/farm_1537840c.jpg)

Manufacturing is also affected by Kenyan’s land problem because even if a company wants to expand operations to another part of the country, the process of procuring land on which the factory or plant will be built is daunting. The lack of legal title depresses demand for land because potential buyers do not want to negotiate the complexities of proving ownership. No one wants the nightmare of procuring a piece of land that is then mired in contention that prevents business activity from moving forward. Thus it must be asked: to what extent are land issues hampering the expansion of industry and manufacturing in the country? Further, the lack of legal ownership also makes it difficult for land holders to come together and combine smaller pieces of land into a mass that can more effectively attract capital investment. In short, both supply and demand are affected by the land question.

Finally, infrastructure development is more costly, mired in delays and incredibly complex because of land issues. In some cases communities do not agree with the valuation of land engendering renegotiations, in other cases absentee landlords make the process of land acquisition long and arduous. However, the most complex is where communities live on what they consider their ancestral land but the land is legally owned by another person or entity. Who is to be compensated in such cases not only from a legal, but also moral point of view? How is compensation to be negotiated without engendering protest? Land is a core factor behind the accrual of delays and expenses in some of the infrastructure projects in the country.

(source: http://www.theeastafrican.co.ke/image/view/-/2918134/medRes/528395/-/maxw/600/-/t4i5alz/-/infra.jpg)

In short, a great deal of Kenya’s economic potential is locked in the land. Sadly, due to the way politics is linked to tribal identity and thus land in Kenya, it may be decades before the country sees a crop of leaders prepared to address the land issue and unlock a great deal of the country’s economic potential.

Anzetse Were is a development economist; anzetsew@gmail.com

Kenya’s Land Issues are Stunting Economic Development

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This article first appeared in my weekly column with the Business Daily on October 4, 2015

The on-going wrangle between the National Land Commission and the Ministry of Lands highlights the emotive nature of land issues, adjudication and control in the country. This dispute aside, it is important to understand how land issues in Kenya stunt the development of the country and the urgent need for the government and Kenyans to resolve land disputes.

(source: http://www.bbc.co.uk/staticarchive/f7b5a5c6a1dbfcf3aaba75067a6a83a35ec7a6c7.jpg)

One of the problems with land tenure issues in Kenya is the reality that felt ownership of tracts of land is not necessarily associated with ownership of land title deeds. Further, even if private land has established owners, it is well know that some of these tracts of land have been grabbed as has public and communal land creating outcry in local communities. This further muddies the water with regards to establishing clear proof of land ownership. How do these issues affect the economic development of the country?

Well firstly, in many parts of Kenya, land owned by individuals is usually passed down from parents to children in the traditional spirit of inheritance. Therefore, in some communities if you ask locals to whom a certain tract of land belongs, there may be local consensus on ownership. However, in many cases the owner of the land does not necessarily have the legal title deed proving and establishing him/her as land owner. Tracts of land in rural areas where most agricultural land lies and indeed where most of the land mass is located, is affected by this problem of traditional ownership of land with no legal title. This creates several problems with economic impacts. Firstly, if a rural smallholder farmer for example, doesn’t have legal title but actively farms his tract of land, he cannot use that land as collateral and use the loan to improve inputs into his farm to get better yields and thus income. As a result, the farmer tills his land, often using basic and out-dated methods of farming, unable to afford inputs thereby condemning him to low yields and the vagrancy of unpredictable weather. Further, when legal title is lacking, it is difficult for many smallholder farmers to come together, agglomerate their small parcels of land to create a larger tract of land that can be farmed more efficiently. In short the land cannot be used to its full economic potential. Further, it can be argued agricultural and food security issues in Kenya are linked to the amorphous nature of land tenure in parts of Kenya.

(source: http://blog.worldagroforestry.org/wp-content/uploads/2014/09/Farmer-in-Embu-County-Kenya-ByAke-Mamo.jpg)

Secondly, if parcels of land exist without legal owners, that land ceases to be an asset that can be effectively traded and used for commercial purposes such as industrial development. Investors may want to build a factory in a certain county but if the ownership of the land in which they are interested has contested ownership, the investors will not make that investment and move on to an area where land ownership is clear. Therefore, counties in which land wrangles are particularly virulent ought to be aware that this fact makes them a county that is less attractive for investors who need land to build structures that will be economically productive. Investors do not want to sink investment into an area only for the land into which capital has been injected to be the source of contention. So again, the lack of clear land ownership of land may impede the extent to which economically productive investments can be made.

Finally, it is a well- known fact that land issues in Kenya were the root cause of the tribal clashes in 1992, 1997, 2002 and even informed the post-election violence of 2007/8. We as Kenyans have proven ourselves willing to kill each other in the name of land. This is a shame because not only is there a loss of precious life, the resulting instability negatively impacts the economic productivity of Kenyans and also scares investors away from the country.

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(source: http://www.monitor.co.ke/wp-content/uploads/2015/04/PEV-snip.png)

The confluence of these factors makes it clear that there is a need for the country to do the work and have the courage to fairly resolve the land disputes that currently plague a great deal of the country. Failing to do so is a sure way of ensuring land issues in Kenya continue to stunt the economic development of the country.

Anzetse Were is a development economist; email: anzetsew@gmail.com

Africa’s Infrastructure Hype: Recommendations

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In last week’s post I discussed the opportunities and risks that Africa faces in what will inevitably be significant and targeted investment in infrastructure from local and foreign investors. The next question is: What can Africa do to make the most of opportunities in a manner that minimises the risks? The suggestions below are not exhaustive but rather seek to highlight key reccomendations:

1. Avoid Legacy Projects

Simple point but difficult to execute given African leader’s predilection for such projects as means of ensuring immortality and eternal adulation. The reality is that in some countries the culture will support legacy projects. In such cases it is imperative that such projects still be vetted for practicality, contributions to productivity and growth and just basic usefulness. As the World Bank states, ‘all investments under political consideration should pass at least a minimum threshold of economic viability’.[1]

2. Match infrastructure projects with specific economic development goals

In order to generate revenues for newly built infrastructure, investment should be concentrated in high potential areas through developmental corridors and primary production centers which promise the greatest economic return such that they become infrastructure hubs with efficient ports and airports to maximize scale. [2] After all, Africa must avoid‘unsustainable infrastructure development that pose a huge financial burden on the host government.’[3]

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3. Secure funds for maintenance spending

While raising investment capital governments should be cognizant of maintenance needs and ensure these are catered for. Further, ‘maintenance offers one of the highest returns to infrastructure spending; it may be more helpful to think of maintenance as a kind of investment in asset preservation’.[4

4. Use infrastructure to catalyse regionalism and African integration

Where possible and pragmatic, African governments should work with other governments in regional and multi-country infrastructure projects to reap benefits such as:

  • Cost effectiveness: For example the West Africa Power Market Development Project could see Nigeria and Cote d’Ivoire reduce their power generation costs from 8-10 US cents per kWh to only 3.5 and 4-4.5 cents per kWh.[5] Other projects include those in Southern and East Africa. This trend should be encouraged.
  • Creates economies of scale: Regional infrastructure not only harnesses regional public goods, it fosters intra-regional trade and global trade.[6] Shared inter-country infrastructure also, ‘addresses the problems of small scale and adverse location by increasing the scale of construction, operation, maintenance and revenue. It reduces costs, pools scarce technical and managerial capacity and creates a larger market’. [7]
  • Peace building: Connected countries foster cultural interaction and provide a platform for the development of collaborative arrangements to deal with peace and security concerns.[8]

5. Foster Public Private Partnerships (PPPs)

The private sector has mainly invested in expanding the ICT footprint on the continent with investment in power plants and container terminals as well. The private sector, particularly the LOCAL private sector, not only can play a role in tackling costly management inefficiencies such as undercollected utility revenues, low labor productivity, or neglected road maintenance, ‘companies have an important role to play in evaluating the social and environmental impacts of their activities’.[9],[10] The private sector role can be expanded by African governments by making PPPs attractive through mechanisms such as [11],[12]:

  • Identifying the contributions that the private sector can make using costs/benefits analysis
  • Create risk-mitigating instruments such as guarantees and co-financing facilities that can help to attract private sector investment
  • Ensure appropriate risk allocation across partners
  • Engage the private sector to formulate their requirements and constraints in order promote mutual understanding and better appropriateness of contracts.
  • Develop appropriate tariff schemes and/or funding mechanisms that allow for proper operation and maintenance of infrastructure and account for the different levels of affordability

Bear in mind that, ‘in countries with well-developed frameworks for PPPs, project preparation costs are generally about 1% as a percentage of total project costs, but for countries without much PPP experience, the project preparation costs run between 3% and 10% of total project costs.’[13] Africa has to get this right.

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6. Strengthen line ministries

Ministries related to infrastructure have to be engaged and strengthened since they, ‘take the lead in sector planning, participate in the formulation of the public budgets, and execute investments.’[14] One approach to strengthening line ministries is through, ‘creating engineering universities within line ministries to support infrastructure development’, as China did.[15] This means there needs to be a conversation between the line ministries and the ministry of education to ensure the universities teach the skills the ministry needs. Other strategies include[16]:

  • Strengthening sector planning such that the construction of critical new assets begins early enough to come on stream when needed
  • The development of sound technical methodologies for identifying and selecting infrastructure projects
  • More rigorous project screening such that infrastructure investments are selected according to their expected returns and are appropriately sequenced and synchronized with one another and broader development plans
  • Another key element of strengthening line ministries is improving the budgetary process such that the process is medium-term, link sector objectives and resource allocations and are underpinned by clear sector plans that go down to specific activities and their associated costs

7. Address the land issue

Crucial to infrastructure projects is ensuring the lands on which the projects are built are not beleaguered in conflicting claims and acrimony. There are examples of strategies to address this. For example in Burkina Faso, Rwanda and Sierra Leone the Investment Climate Facility for Africa automated land registration processes which led to facilitating access to credit and prevented land disputes.[17]

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8. Foster Harmonisation [18]

Given the multitude of actors that will be involved in African infrastructure projects, there should be coordination between different bodies where possible. This could be done via pan African bodies such as the AfDB due what some consider as its robust financial management systems and firm commitment by all stakeholders. Such coordination would also allow for common reporting and joint monitoring and evaluation processes. Investors and implementers can also organise informational exchange meetings on infrastructure activities at national or regional levels. Further, division of labour among investors such that each administer small portions of the total investment for Africa’s infrastructure can be considered.

9. Create an enabling environment

Bear in mind that, ‘the enabling environment cannot be dissociated from broader governance reforms—for instance, anti-corruption measures or a developed financial sector’.[19] African governments have to prove they have the capacity to manage the incoming investment, deliver on projects and ensure deadlines are met efficiently. This means eliminating issues such as poor policy planning and weak operational performance or poor municipality/county functioning crucial to project implementation.[20] These key elements, also addressed in points 5,6 and 8, are crucial to fostering confidence for continued investment in infrastructure.

10. Remember affordability

Infrastructure development, particularly basics such as roads, water and electricity, cannot afford to leave out the poor. This is a challenge because in the case of water and sanitation ‘an estimated 60 percent of the African population cannot afford to pay full cost-recovery tariffs or extend consumption beyond the absolute minimum subsistence level’.[21] African governments and investors have to find a means through which access to infrastructure such as water, energy will be affordable where affordability is, ‘measured by the share of infrastructure spending in the total household budget and whether it exceeds a set threshold.’[22] African governments therefore must take the time to consider affordability needs at the public finance level. If households, ‘cannot afford to pay cost-recovery tariffs, the move toward universal access will create burgeoning liabilities for the state, which must bridge the gap between the tariffs the public can afford to pay and the real cost of service provision’.[23] Therefore governments must assess how, when and, ‘whether subsidizing services to reach universal coverage is an affordable strategy at the country level.’[24]

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[1] Vivien Foster and Cecilia Briceño-Garmendia (2011), ‘Africa’s Infrastructure: A Time For Transformation’, Agence Française de Développement and the World Bank,, http://infrastructureafrica.org/library/doc/552/africa%E2%80%99s-infrastructure-time-transformation

[2] Tanya Konidaris and Clare Allenson (2011), ‘Africa’s Infrastructure Regional Challenges And Opportunities, Johns Hopkins University-Sais, http://www.wilsoncenter.org/sites/default/files/Infrastructure%20Discussion%20Paper.pdf

[3] OECD (2012), ‘ Mapping Support for Africa’s Infrastructure Investment’, http://www.oecd.org/daf/inv/investment-policy/MappingReportWeb.pdf

[4] Vivien Foster and Cecilia Briceño-Garmendia (2011), ‘Africa’s Infrastructure: A Time For Transformation’, Agence Française de Développement and the World Bank,, http://infrastructureafrica.org/library/doc/552/africa%E2%80%99s-infrastructure-time-transformation

[5] Benno Ndulu, Lolette Kritzinger-van Niekerk and Ritva Reinikka (2005), ‘Infrastructure, Regional Integration and Growth in Sub-Saharan Africa’, Africa in the World Economy – The National, Regional and International Challenges, http://www.fondad.org/uploaded/Africa%20in%20the%20World%20Economy/Fondad-AfricaWorld-Chapter9.pdf

[6] Tanya Konidaris and Clare Allenson (2011), ‘Africa’s Infrastructure Regional Challenges And Opportunities, Johns Hopkins University-Sais, http://www.wilsoncenter.org/sites/default/files/Infrastructure%20Discussion%20Paper.pdf

[7] Benno Ndulu, Lolette Kritzinger-van Niekerk and Ritva Reinikka (2005), ‘Infrastructure, Regional Integration and Growth in Sub-Saharan Africa’, Africa in the World Economy – The National, Regional and International Challenges, http://www.fondad.org/uploaded/Africa%20in%20the%20World%20Economy/Fondad-AfricaWorld-Chapter9.pdf

[8] Benno Ndulu, Lolette Kritzinger-van Niekerk and Ritva Reinikka (2005), ‘Infrastructure, Regional Integration and Growth in Sub-Saharan Africa’, Africa in the World Economy – The National, Regional and International Challenges, http://www.fondad.org/uploaded/Africa%20in%20the%20World%20Economy/Fondad-AfricaWorld-Chapter9.pdf

[9] Vivien Foster and Cecilia Briceño-Garmendia (2011), ‘Africa’s Infrastructure: A Time For Transformation’, Agence Française de Développement and the World Bank,, http://infrastructureafrica.org/library/doc/552/africa%E2%80%99s-infrastructure-time-transformation

[10] Céline Kauffmann(2008), ‘ Engaging the Private Sector in African Infrastructure’, NEPAD and OECD, http://www.oecd.org/investment/investmentfordevelopment/41775965.pdf

[11] Céline Kauffmann(2008), ‘ Engaging the Private Sector in African Infrastructure’, NEPAD and OECD, http://www.oecd.org/investment/investmentfordevelopment/41775965.pdf

[12] Tanya Konidaris and Clare Allenson (2011), ‘Africa’s Infrastructure Regional Challenges And Opportunities, Johns Hopkins University-Sais, http://www.wilsoncenter.org/sites/default/files/Infrastructure%20Discussion%20Paper.pdf

[13] OECD (2012), ‘ Mapping Support for Africa’s Infrastructure Investment’, http://www.oecd.org/daf/inv/investment-policy/MappingReportWeb.pdf

[14] Vivien Foster and Cecilia Briceño-Garmendia (2011), ‘Africa’s Infrastructure: A Time For Transformation’, Agence Française de Développement and the World Bank,, http://infrastructureafrica.org/library/doc/552/africa%E2%80%99s-infrastructure-time-transformation

[15] Calestous Juma (2012), ‘Poor Infrastructure Is Africa’s Soft Underbelly’, Forbes, http://www.forbes.com/sites/mfonobongnsehe/2012/10/25/poor-infrastructure-is-africas-soft-underbelly/

[16] Vivien Foster and Cecilia Briceño-Garmendia (2011), ‘Africa’s Infrastructure: A Time For Transformation’, Agence Française de Développement and the World Bank,, http://infrastructureafrica.org/library/doc/552/africa%E2%80%99s-infrastructure-time-transformation

[17] Omari Issa (2013), ‘Africa Infrastructure Investment Report 2013’, Commonwealth Business Council http://www.cbcglobal.org/images/uploads/docs/The_CBC_Africa_Infrastructure_Investment_Report_2013.pdf

[18] OECD (2012), ‘ Mapping Support for Africa’s Infrastructure Investment’, http://www.oecd.org/daf/inv/investment-policy/MappingReportWeb.pdf

[19] OECD (2012), ‘ Mapping Support for Africa’s Infrastructure Investment’, http://www.oecd.org/daf/inv/investment-policy/MappingReportWeb.pdf

[20] OECD (2012), ‘ Mapping Support for Africa’s Infrastructure Investment’, http://www.oecd.org/daf/inv/investment-policy/MappingReportWeb.pdf

[21] Sudeshna Ghosh Banerjee and Elvira Morella (2011), ‘Africa’s Water and Sanitation

Infrastructure: Access, Affordability, and Alternatives’, World Bank http://www.oecd.org/daf/inv/investment-policy/MappingReportWeb.pdf

[22] Sudeshna Ghosh Banerjee and Elvira Morella (2011), ‘Africa’s Water and Sanitation

Infrastructure: Access, Affordability, and Alternatives’, World Bank http://www.oecd.org/daf/inv/investment-policy/MappingReportWeb.pdf

[23] Sudeshna Ghosh Banerjee and Elvira Morella (2011), ‘Africa’s Water and Sanitation

Infrastructure: Access, Affordability, and Alternatives’, World Bank http://www.oecd.org/daf/inv/investment-policy/MappingReportWeb.pdf

[24] Sudeshna Ghosh Banerjee and Elvira Morella (2011), ‘Africa’s Water and Sanitation

Infrastructure: Access, Affordability, and Alternatives’, World Bank http://www.oecd.org/daf/inv/investment-policy/MappingReportWeb.pdf