Infrastructure imperative: Redefining ‘outdated pit-to-port models’

Africa is in urgent need of new and innovative approaches to steer its economies back to potential growth.

Despite decades of progress Africa’s infrastructure development has not kept up with the growing needs of its population with dependence on “outdated pit-to-port models” hindering economic growth.

However, global economic shifts in supply chains and the transition to green energy present an opportunity for Africa to redefine its economic role by leveraging its rich raw materials and youthful population.

Yet a key conclusion from a new study on the State of Africa’s Infrastructure  initiated by the Africa Finance Corporation (AFC) is that Africa has an unprecedented opportunity to accelerate development by aligning its abundant renewable energy resources with solutions for its infrastructure deficiencies.

The report highlights critical gaps in key sectors including power, transport, logistics, digital communications, and commodity-based value chains. It aims to quantify the extent of Africa’s infrastructure opportunities and provide strategic guidance for prioritising investment for sustainable growth.

The report highlights global economic shifts in supply chains and the transition to green energy present an opportunity for Africa to redefine its economic role by leveraging its rich raw materials and youthful population.

According to the AFC, for Africa to capitalise on this, “decisive and urgent action is required to develop the infrastructure and value chains that will enable industrialisation and climate-adaptive development”.

African governments are grappling with “formidable challenges” stemming from over leveraged balance sheets and soaring debt repayment obligations. In recent years, the report notes, many African countries have significantly increased borrowing to fund infrastructure projects and fulfill budgetary needs stemming from successive crises.

Call to action

AFC President and CEO Samaila Zubairu says the State of Africa’s Infrastructure Report is a call to action for stakeholders across the continent to collaborate for a smarter, more targeted, and better coordinated investment approach.

“This report is not just about identifying challenges; it’s about unlocking the immense potential that lies within our collective resolve,” Zubairu says.

Focusing on energy access as a cornerstone to development, the report highlights the disparity in access to electricity as the most significant barrier to industrial growth.

“For this reason, progress in the crucial area of energy access should be measured not just by reductions in household energy poverty, but also by the capacity to provide sustainable energy solutions that support industrial and economic development,” the AFC reports.

“The potential for growth by bridging Africa’s energy deficit is illustrated using new metrics such as the Modern Energy Minimum, and application to the processing needs for commodities like bauxite and copper.”

Taking Guinea as a case study, the State of Africa’s Infrastructure report observes that despite possessing the world’s largest bauxite reserves – and being a major producer – Guinea cannot capitalise on its resources without receiving significant investment to boost its energy systems and processing facilities.

By contrast, the reports notes Australia has similar bauxite volumes, extracts more than twice the economic value due to advanced refining and smelting capacities, which is supported by a robust natural gas-powered energy infrastructure.

“This disparity underscores the urgent need for West Africa to develop robust energy systems and processing infrastructure. Investments in cross-border electricity and gas networks, leveraging existing Economic Community of West African States (ECOWAS) treaties, could enable the region to build new industrial supply chains and move beyond raw material extraction,” the report adds.

The reports says coordinating transport and logistics networks is crucial to reducing high transportation costs, which currently inflate the price of goods by up to 40%.

Significant investments in port infrastructure need to be matched by improvements in connecting road and rail networks. The report identifies opportunities to support trade corridors with new cross-border rail and road networks and to expand cargo handling at airports.

Established in 2007, the AFC is a catalyst for private sector-led infrastructure investment across Africa. The AFC’s approach combines specialist industry expertise with a focus on financial and technical advisory, project structuring, project development, and risk capital to address Africa’s infrastructure development needs and drive sustainable economic growth.

Write to Adam Orlando at Mining.com.au

Images: AFC
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Written By Adam Orlando
Mining.com.au Editor-in-Chief Adam Orlando has more than 20 years’ experience in the media having held senior roles at various publications, including as Asia-Pacific Sector Head (Mining) at global newswire Acuris (formerly Mergermarket). Orlando has worked in newsrooms around the world including Hong Kong, Singapore, London, and Sydney.