January 28, 2009 / 2:13 PM / 10 years ago

Africa must focus on infrastructure despite crisis

ADDIS ABABA (Reuters) - Africa risks a “lost decade” of under-development if it neglects projects to boost energy and transport infrastructure because of the global financial crisis, the World Bank said on Wednesday.

A man prays on a hill overlooking Johannesburg's Hillbrow suburb in this September 14, 2006 file photo. REUTERS/Siphiwe Sibeko

The theme of next week’s African Union (AU) summit in Ethiopia is infrastructure, and technocrats have been meeting for days ahead of the arrival of the continent’s heads of state.

Inger Andersen, a senior World Bank infrastructure official, said initial hopes that Africa might be spared the worst of the global credit crunch were premature. Governments would be hit by falling demand for commodities, reduced revenues from remittances, tourism and domestic taxes.

But African nations must not make the same mistake as Asian states that neglected to fund infrastructure projects during the 1990s — a period she said they now mourned as a “lost decade.”

“There will be a budget squeeze ... it is going to be real and we don’t know the duration of it,” she told reporters at AU headquarters, adding that African leaders should follow the lead of President Barack Obama’s new U.S. administration.

“They are proposing infrastructure projects precisely so that jobs and investment will come along too,” Andersen said.

The February 1-3 summit aims to gather commitments from leaders to concrete transport and energy plans, AU officials said, as well as improving cross-border cooperation and identifying big “flagship” infrastructure projects for promotion.

It was not clear how these schemes would be funded, although China has been active in infrastructure projects in Africa in recent years as it seeks to expand its influence in the resource-rich continent.

The world’s poorest continent uses nearly a third less energy per capita than the global average. If current trends continue, officials say, more than 60 percent of Sub-Saharan Africans will still not have access to electricity by 2020.

The African Development Bank estimates it will cost $27 billion a year to provide universal access to reliable and increasingly clean electricity in all its 53 countries by 2030.

Experts say that while the global economic slowdown will have a major impact on infrastructure financing, Africa has huge untapped potential in renewable or “green” energy sources like hydropower, geothermal, biofuels, wind and solar generation.

Only 5 percent of the continent’s hydropower potential has so far been harnessed, according to the latest U.N. figures, and less than 0.6 percent of its geothermal.

“This credit crisis should be a wake-up call to us all,” said Bamanga Tukur, a Nigerian academic who heads the Nepad Business Group and African Business Roundtable.

“Infrastructure really is the backbone of Africa’s development ... but there needs to be political will to do it.”

Writing by Daniel Wallis; Editing by Myra MacDonald

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