With CFACT’s growing interest in helping spur economic and environmental prosperity in the developing world, this is the second in an ongoing series of articles dealing with Africa.
What is the value of a first-class highway network? Consider the 70,000-kilometer U.S. Interstate Highway System, which transportation expert Wendell Cox in 1996 described as “an engine that has driven 40 years of unprecedented prosperity and positioned the United States to remain the world’s preeminent power into the 21st Century.”
Total construction cost for the basic system was $129 billion, yet as of 1996 the return on this nation’s greatest investment in transportation since the transcontinental railroad was already “at least six dollars for every dollar spent in construction.” Moreover, the project had created many other benefits deemed “beyond quantification.”
We were reminded of these numbers as David Wheeler of the World Bank’s Development Research Group, speaking at the U.S.-Africa Infrastructure Conference in September, unveiled a proposal calling for construction of a 100,000-kilometer road network that would link every sub-Saharan capital on the African mainland and 41 other cities with over half a million people with all-weather highways at a total cost, including maintenance and overhead, of about $47 billion over 15 years.
Wheeler went on to state that the highway network – $20 billion for initial construction, about a billion a year for maintenance, and $12 billion for administration, monitoring of road conditions, and programs to compensate abutting settlements for lost revenue from barricades – would yield about $250 billion in economic benefits while generating 14 million person-years of employment for Africa’s poor.
Wheeler further stated that his estimates were low, given that they did not include intra-country trade increases or trade with non-African countries. Yet, even if his estimates were on the high end, it seems a slam-dunk that funding such a highway system might provide the highest return on investment (public or private) among all efforts to “make poverty history” in Africa.
But Wheeler is far from the first to propose highways as the key to unlocking Africa’s internal trade potential. The UN’s Economic Commission for Africa first proposed construction of a Trans-African Highway network back in 1971. Two years later, former ECA Executive Secretary R. K. A. Gardiner reported that “progress in road building in Africa during the last decade or so has been spectacular,” even though only a third of the continent’s road system could be described as all-weather roads.
Things got worse, not better, thanks in part to the refusal of emergent governments to coordinate highway planning across the colonially defined national borders. Moreover, existing African trade routes continued the legacy of colonialism, which had disrupted traditional intra-continental trade to focus on exports of African goods to European (and other) markets. One key result of this massive failure to build an intercontinental highway system is that Africa today, with 13% of the world’s people, accounts for but 2% of the world’s gross domestic product.
In 2001, another ECA Executive Secretary, K. Y. Amoako, reported that, “In Africa now, it is so very difficult to travel around the continent … It can take a long time to transport goods from Nigeria all the way to Cote d’Ivoire, given the number of roadblocks, the number of customs posts, the number of delays that one encounters.” In 2003, the African Development Bank admitted that what should be a 3-day trip from Bangua, Central African Republic, to Douala, Cameroon, can take up to 11 days and that loaded trucks on this route were paying about $580 per trip to pass through local barricades.
Not all the news is bad. In 2004, Kenya announced startup of construction of the Mombasa-Nairobi-Addis Abada highway, to be financed through a $51.6 million loan and $3.9 million grant from the African Development Fund and through other creditors and donors. Projections are that the project, set for completion in 2009, will increase annual trade between Kenya and Ethiopia by 500% – from $35 million to $175 million — and also “foster a conducive and enabling environment for the private sector and for attracting direct foreign investments.”
Across the continent, the Economic Community of West African States has been building large portions of the Trans West African highway network, which includes a trans-coastal highway linking Lagos, Nigeria, to Nouakchott, Mauritania, and a trans-Sahelian highway linking Dakar, Senegal, with N’djamena, Chad (with a goal of opening up landlocked countries in the region). These projects were bolstered by the New Partnership for Africa’s Development – that is, by Africans working together for their common future.
Even when fully built, these key projects will represent only a fraction of the network Wheeler wants to build – and even Wheeler’s network may be inadequate once intra-African trade and travel begin to escalate. Yet few Westerners believe African governments are capable of funding highway construction at such levels. Itai Madamombe, in the October 2006 issue of Africa Renewal, cited a recent World Bank estimate that it would take about 4% of Africa’s gross domestic product to construct roads alone, which he admits would be “a pricey undertaking considering African countries’ many other needs.”
From Madamombe’s viewpoint (and that of many others), Africa will have to rely on charity (grants and low-interest loans with plenty of strings attached, to be sure) if it wants to grow. Yet over the past half century institutions like the World Bank, European and other first-world nations, and other non-African organizations have provided over $2 trillion in “aid” without accomplishing a task that even today would cost under $50 billion.
How about private investment to build highways? South Africa, for example, is relying on private finance for design, construction, and maintenance of toll roads under the BOT (build, operate, transfer) and FROM (finance, rehabilitate, operate, and maintain) systems that will return the roads to public ownership after investors secure a reasonable return on investment. Elsewhere, road funds are being overseen by public-private boards that raise funds from vehicle licenses and user fees and contract out construction and maintenance to private developers.
Africans might take a close look at the Trans-Texas Corridor project, in which a private consortium has proposed to invest $6 billion to fully design, construct, and operate a 510-kilometer toll road between Dallas and San Antonio for up to 50 years (after which ownership would revert to the state). If this project, which would yield only $15 billion in economic benefits and create 150,000 new jobs (state estimates), is deemed worthwhile, then surely investors would be willing to seek a piece of what Wheeler and many others have indicated will be a much larger return on investment.
Who might participate in such a consortium? Consider this: Chris Fowler of the Maryland Department of Business and Economic Development says that WalMart alone could save $100 million a month (or $1.2 billion a year) in transportation costs by moving production facilities from China to the African continent.
There are, of course, several obstacles to an all-Africa highway network, not the least of which is bad governance and outright warfare in many sub-Saharan countries. Yet completion of major segments – for example, from Ethiopia to South Africa – may be just the spark needed for dysfunctional African nations to find better leadership.
All across Africa there is a growing recognition that the free market — and good government that supports trade by securing individual freedom from violence and civil disorder – is the key to unlocking Africa’s wealth for its people. Hopefully, the same recognition will persuade European and other first-world governmental and financial institutions – as well as private companies – to invest in Africa’s future. It is long past time for the African dream of a modern highway system to become a reality.