Africa needs to be spending U.S.$93 billion each year on infrastructure, according to the African Development Bank (AfDB), more than double the current outlays. The deficit is hampering growth and contributing to poverty and inequality. "Millions of poor households in Africa lack access to even the most basic infrastructure services, and universal access to modern services is 50 years away in most countries," the bank reports.
About two thirds of the total $93 billion is needed for new investment, with the remainder for maintenance. The AfDB breakdown includes $41 billion for power, $22 billion for water and sanitation, and $18 billion for transport.
In Washington this week, officials from some 20 African governments will gather with business leaders and U.S. officials to explore investment opportunities in such infrastructure-related sectors as energy and renewables, transportation, water, and technology. The biennial infrastructure conference is hosted by the Corporate Council on Africa (CCA), whose members include more than 200 of the largest and most active American companies operating in Africa.
Stephen Hayes, who has been president and chief executive officer of the organization for 12 years, explained in an AllAfrica interview why infrastructure is important both for CCA members and for the countries where they are doing business.
Why does the CCA choose to make this a key focus?
As a country and as a government, we haven't put the emphasis on infrastructure that it deserves. And our membership includes a growing number of infrastructure companies.
But infrastructure is not only important to infrastructure companies is it?
That's right. If a country is going to develop, it has to invest in infrastructure. Infrastructure or lack thereof impacts the whole economy, and it affects all companies doing business there in a major way. This is why the infrastructure conference has become our most popular and probably most successful program. There is not another conference [that focuses on] U.S.-Africa infrastructure.
Why are you having the conference in the midst of the annual forum that is mandated by the African Growth and Opportunity Act (Agoa)?
We thought it important to address issues that are going to make a difference and that will help to make Agoa more effective. Agoa isn't working well, and everybody knows it, whether they want to say it or not. One of the reasons is the lack of infrastructure in Africa. Most countries can't really use AGOA. There are other issues, but infrastructure is key, and we want everyone, including governments, to recognize that. If we hadn't moved our infrastructure conference up against the Agoa forum, I question whether the U.S. government would have made infrastructure the theme!
From your vantage point, what more should the U.S. government be doing on infrastructure in Africa?
We could be doing much more. Agoa is clearly not enough There needs to be far more private-sector to public-sector engagement on Africa. Look at the bi-national commissions that are going on [with Nigeria and South Africa]. These need to involve the private sector. How can you talk about development issues and not have the key people who are responsible for development in the dialogue? You assume too much on that basis without understanding how businesses really operate and survive.
How can you talk about energy and not have the oil companies and power companies at the table? It makes no sense. There needs to be more trust so that the private sector and public sector can start working together. And that needs to happen within Africa as well as within the United States.
Governments can help considerably, but a lot of the capital comes from the private sector. Until you have people working together in a more comprehensive way, then the development process is going to be very slow, and that makes it harder for companies to invest. We need a more comprehensive approach. We haven't had a statement from leadership about Africa since President Obama's stop-over in Ghana in 2009. And there needs to be a plan of action behind it.
Is the United States losing out on key opportunities in Africa?
If not losing out, there is at least the danger of falling behind many others in Africa. Our involvement in Africa hasn't decreased per se. It also hasn't increased significantly. What is changing is the greater number of investors in Africa.
It's good that you've got these other investors now taking an interest. But U.S. long-term interests are absolutely vitally linked to Africa. If we are not one of the significant investors in Africa in the next 10 years, then those nations that are invested in Africa will be the primary partners to African countries, and we will be left out. That will hurt our political interests and our economic interests. It's also going to diminish our access to resources since – like it or not – a very high percentage of the world's resources comes from Africa. If we are not part of that market, we are going to have to be far more inventive than we ever have been to find out ways to replace those resources.
Is interest in Africa rising in the business community?
Yes, absolutely. That's a really encouraging thing. Over the last six to nine months we have seen a far broader range of companies coming into CCA. They are joining because they see Africa as an important market. These include the largest consumer companies in the world. Proctor & Gamble, Colgate, Walmart have all joined CCA – not because we exist. It's because Africa exists. They are making major investments, and they feel we are one of the better tools to use.
IBM, Microsoft and Motorola Solutions have joined CCA as well. These are pretty important companies to infrastructure, as is Cummins Engines, which is doing a lot of infrastructure and is starting to work on vocational training. Bloomberg News has also joined because they now see Africa as a business destination and not just a place from which to report crises.
Merck has come back as a member. Cargill, the largest private grain company in the world, has also re-joined. When they left CCA four years ago, they said "we don't see Africa as a viable market in the long term". That has changed rather dramatically and they are saying they want to become far more engaged in Africa. So despite the economy these last three years, we have seen our membership increase every year. And while most companies haven't made major investments yet, they are getting to the stage of making investments.
You have outlined what the United States needs to do to promote investment in Africa. What changes does Africa need to make to attract needed capital?
Regional co-operation is very important. Those economies aren't going to work well unless there's more harmonization of customs and duties. Countries need to be operating on the same rail gauge, for example, so you don't have to switch engines at the border. There needs to be a viable road system connecting countries. River transport needs to work. The ports must work.
Regionalization would make it a lot easier for companies to invest too. Major companies – the ones Africa says they want, like Proctor & Gamble – need larger markets. They can't go into a market of 10 million people. Many of our members have been telling us to work on regionalization more than we have in the past.
What do you hope to see coming out of the conference?
Our primary goals are getting more companies engaged in Africa. The workshops themselves are educational, but conferences are a means to bring people together. Most important is the networking.
So you are expecting deals to come out of this?
Absolutely. Several countries are bringing their projects with them – what's available, what's coming down the pike. Companies can't plan bids if they only learn about opportunities three weeks in advance, which is what has happened so many times over the last decade. (That really means the deal is already done somewhere.) So, yes I think there will be opportunities presented. We've set up more informal networking – like we did at our summit last year. And summit participants tell us that worked.
AllAfrica
