Africa’s infrastructure needs faces funding challenges
BY JACKSON OKOTH
Over half of Africa’s improved growth during last decade has been attributed to infrastructure spending. Yet, Africa’s infrastructure lags behind other developing nations, consistently ranking at the bottom on many indicators of infrastructure development.
This disclosure was made yesterday during the Africa Congress of Accountants, at the Kenyatta International Conference Centre (KICC), whose theme is Accountancy and Infrastructure in Africa.
“Eliminating the large infrastructure deficit could boost GDP growth by up to 2-3 per cent,” said Josephine Ngure, an officer with the African Development Bank (ADB).
In Africa, a large bulk of infrastructure funding comes from Central Governments and public institutions, which account for about 50per cent of current spending.
“We have seen a gradual participation of private investors, particularly in ICT and energy,” said Ngure.
In Kenya and other African states, the participation of China has been strongest. In 2010, it committed an estimated $ 9 billion to infrastructure projects in Africa, ahead of Arab funds, India and Brazil.
“In gross terms, Sub-Saharan Africa needs to spend about $ 93bn per annum until 2015 to meet its infrastructure needs,” said Ngure.
This is about 10-15per cent of its GDP, compared to about 5 per cent average spending at present.
With Africa’s estimated infrastructure spending at $ 45billion per annum, roughly half of this is not funded.
Matters have been made worse by the low fiscal revenues of most African countries, unpredictable flow from donors and debt sustainability concerns.
“The capital base of multilaterals is limited while weak institutional, legal and regulatory environment in most countries hinder public private partnerships, “said Ngure.
But whatever the funding options, accountants play a crucial role by providing reliable financial information, ensuring value for money and also giving out advisory services.
“Infrastructure funding requirements for most African nations is estimated at about 10per cent of GDP per annum until 2020,”said Paul Nyaga, Chief Finance Officer, Equity Bank.
While Kenya spends 23 per cent of its budget resources in infrastructure, this is not enough considering the country’s needs. All traditional sources are not considered adequate, necessitating the need to explore alternative sources.

GLANCE BOX

• Africa’s underdeveloped infrastructure has been a major obstacle for the continent’s development and its efforts to achieve a strong growth.

• Africa, especially sub-Saharan Africa (SSA), ranks consistently on the bottom of developing regions in access to infrastructure service.
• According to Africa Infrastructure Country Diagnostic (AICD) estimates, Africa’s total infrastructure financing needs amounted to $93 billion a year in 2008, with only $45 billion financed.