alexa Why it is to Africa’s crucial interest to address transport challenges urgently - Daily Nation

Why it is to Africa’s crucial interest to address transport challenges urgently

Monday September 26 2011

By TOBIAS HEINEMANN

Conservative estimates indicate that by 2040, Africa will be home to one billion people.

By then, China’s population will be shrinking and India’s will only be growing at three million people annually to add to the current 1.6 billion.

Political reforms in many African countries have improved business, and the continent continues to attract domestic and foreign investment.

But most importantly, Africa’s intra-regional trade is on the rise, and in recent years, the continent has experienced robust business and trade, with constant movement of goods within its borders.

Trading with regional partners provides easier access to markets, reduces the cost of transporting products and mitigates the risk of external factors, such as the global financial system crisis, beyond the control of producers.

Intra-regional trade is also aided by roads, bridges, rail lines, ports, and airports, which are critical to delivering economic and social benefits by connecting producers to markets and enabling populations to access basic necessities such as water, health care, education and fuel.

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To meet rising demand for regional trade, some urgent work has to be done to alleviate the challenges facing the region’s transport infrastructure.

In its current state, the infrastructure network cannot meet existing demand and emerging challenges.

Today, it costs about $5,000 to ship a car from Abidjan to Addis Ababa, but just $1,500 to ship the same car from Japan to Abidjan. These prohibitively high costs are a barrier to trade and investment.

Without reliable and competitively priced freight transport systems, delivered on the foundation of sturdy infrastructure, different regions have little hope of trading their goods profitably.

If they cannot transport their produce to markets from isolated rural areas, farmers will be unable to break out of subsistence agriculture. Transport makes markets work.

The importance of transport cannot be overstated. It is an open secret that transport inefficiencies are the biggest impediment to Africa’s realisation of its economic and poverty alleviation goals.

Furthermore, with rising globalisation, expectations have been raised and the Internet has made it easier for people to see how things work and what is available elsewhere in the world.

However, as we know, transport infrastructure is not cheap. Government budgets are constantly stretched and donor funding — especially in times of global economic crisis — may not be forthcoming.

For Africa’s economic growth to soar, with its booming population, the continent needs investments of some $100 billion a year in infrastructure alone.

The International Finance Corporation (IFC) has estimated that Africa invests $10 billion each year in power energy, but actually needs investments of $40 billion annually in this sector alone.

Recent developments have been made with the Kenya-Uganda railway, which received a significant finance package from global lenders, demonstrating the important role transport infrastructure is expected to play in boosting regional development.

In fact, traffic on the existing network (Rift Valley Railways; Tanzania Railways Ltd; and Tanzania-Zambia Railway Authority) has the potential to increase from 3.7 million tonnes in 2007 to over 15 million tonnes by 2030, at an annual rate of growth of 6.7 per cent.

This would greatly boost intra-regional trade, which presently accounts for almost 9 per cent of total African commerce, compared to nearly 50 per cent for emerging Asia.

Regional economic communities — Comesa, SADC, EAC also referred to as the Tripartite, and Igad — are aware of the need to reduce these transport inefficiencies and are working concertedly to highlight priority infrastructure projects on the Northern, Central, Lamu and Djibouti corridors to key stakeholders at the Tripartite and Igad Investment Conference to be held in Nairobi tomorrow and on Thursday.

Development in Africa will only be enabled if all stakeholders work towards using the least possible resources to implement appropriate solutions to existing challenges.

The continent must build on existing resources, and not reinvent the wheel, by ensuring the most effective utilisation of available resources and existing infrastructure, as well as by promoting new investment. Failure to do this will result in a major economic crisis.

Dr Heinemann is the chief marketing and commercial officer at Rift Valley Railways, Nairobi.

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