Infrastructure is the backbone of every successful economy, but it certainly doesn’t come cheap. Africa needs anywhere between USD 130-170 bn a year in infrastructure financing to meet the African Development Bank’s (AfDB) targets, the lender said in a recent report (pdf). To develop all of these transport, utilities, and energy projects across the continent, the wider African private and public sector has been increasingly looking toward Egyptian firms to design, build, and even manage many of these projects.

Despite an abundance of ambition, the continent faces a USD 96 bn financing gap, which the report attributes to a shift of fiscal priorities away from long-term development spending that started with Covid-19. The AfDB even thinks that around 40% of productivity rate declines in African nations can be “directly attributed to inadequate infrastructure,” taking off a sizable 2 percentage points in annual GDP growth on average per nation.

(Tap or click the headline above to read this story with all of the links to our background as well as external sources.)

But the AfDB thinks the tide may be turning, as African nations prioritize “infrastructure not just as a development tool but as a lever for economic competitiveness and a geopolitical tool for resilience and realignment.” Alongside progress to bring down tariffs between African nations spearheaded by the African Continental Free Trade Area, infrastructure is also a hugely important non-tariff barrier that the continent is looking to address. “Efficient, interconnected infrastructure, including cross-border energy networks, railways, ports, and trade corridors, is essential to unlocking intra-African trade, reducing logistics costs, and enabling Africa’s structural transformation,” according to the report.

Poor infrastructure is a big contributor to high prices — and with it low levels of intra-Africa trade. A big contributing factor to why products from other African nations are either not so common on store shelves or are unusually expensive is that 29% of the cost of products traded between African nations is due to road transport costs, according to the AfDB.

As things stand, just 16 of the 52 African countries source more than 0.5% of their intermediate goods from within Africa. Despite all sitting on the same continent, imports from outside Africa are often cheaper — a fact that the African Union, AfDB, and many others are trying to change.

It’s not just poor roads making African products expensive; poor energy infrastructure is also a bugbear, especially with over half of Africa lacking reliable electricity access. Unreliable or insufficient energy makes manufacturing a much less attractive option, especially if you’re a foreign investor. Agriculture is also particularly affected by energy supply shortfalls, which the bank says is a big contributing factor to why only 10% of arable land in Africa is cultivated and 6% irrigated.

Expanding water access and sanitation takes up the lion’s share of projected financing needs, with the continent needing USD 56-66 bn a year to meet its target of complete water access in both urban and rural areas.

Both state-owned and private sector players have been active on this front on the continent, including big-ticket projects like Orascom Construction and its Besix arm’s public-private partnership to build the USD 257 bn Hamma Seawater Desalination Plant in Algeria. State-owned Arab Contractors has been the most prominent Egyptian company working on water-related projects in Africa, having signed contracts for six wastewater treatment plants in the Ivory Coast and completing a drinking water purification station in Equatorial Guinea.

Energy infrastructure needs are expected to be pretty costly, amounting to anywhere between USD 25-50 bn a year for the bank to reach complete electrification of cities and 95% coverage for rural areas.

Once again, private and public sector players from home have been playing an important role in both big and small projects. On the large side is the USD 2.9 bn Julius Nyerere Hydropower Plant and Dam in Tanzania, which was designed and constructed by a joint venture between the Arab Contractors and the private sector’s Elsewedy Electric, using the help of 1k Egyptian workers. Elsewedy Electric has a presence in Algeria, Ethiopia, Nigeria, Zambia, Morocco, Burkina Faso, Uganda, Kenya, Libya, the Ivory Coast, and Madagascar for a range of electricity and transmission projects. Orascom Construction subsidiary Besix set up a hydroelectric power project on Cameroon’s Sanaga River in 2023, which covers some 30% of the country’s energy needs.

Other African countries are looking toward Egypt for help with solar projects in particular, with potentially over USD 5 bn worth of projects lined up for Egyptian companies on the continent over the next five years, informed sources have previously told EnterpriseAM.

Planes, trains, and vehicles — along with everything else we need to move goods and people — also come with a hefty price tag, with a lower estimate of USD 35 bn and higher estimate of USD 47 bn.

Again, Arab Contractors has an outsized presence with logistics infrastructure, with several projects by the state-owned company spanning the entire continent. The company has numerous completed or in-the-works road projects in several African countries, including the 1.7k km road connecting Egypt, Libya, and Chad.

Egypt is also setting up a logistics zone in Rwanda in a bid to help facilitate Egyptian companies’ access to the Rwandan market, which will be accommodated by a logistics corridor connecting Tanzania and Rwanda in a bid to facilitate the flow of Egyptian exports to Africa. Egypt and Sudan also inked a contract to establish a logistics zone on the border crossing between them last month, and there’s been talk of a similar project with Libya for some time. Local players have also been working on several port development projects, including the Arab Contractors’ EUR 60 mn Comoros port project.

Your top infrastructure stories for the week:

Tags: