Identification of regional infrastructure development priorities that support balanced development and increase intra-regional trade

Recent research investigating the impact of infrastructure development upon economic activity has arrived at two conclusions: firstly, that the economic gains from infrastructure development are greater the smaller the initial stock of infrastructure; and secondly, that infrastructure development, both in terms of quantity and quality, tends to reduce income inequality
More simply, the less infrastructure a country has: the less energy capacity or access to electricity, the lower the access to high-speed phone and internet networks, the smaller or less efficient the road, rail, port or air transport systems or the lower the access to clean water sources and sanitation, the more the total population has to benefit from infrastructure development.
The benefits of organized and efficient infrastructure networks are enormous: generous and efficient infrastructure provision has the ability to reduce business and production costs, to increase both human and technological productivity, to increase regional and international trade and ultimately to provide East Africa with a competitive business environment. Yet, East Africa suffers an enormous infrastructure deficit (table 1).
Table 1: Infrastructure capacity

World

SSA

EAC

Access to electricity (%)

85

35

16

Mobile phone subscribers (%)

97

71

57

Internet users (%)

41

19

16

Logistics Performance Index 1

2.8

2.3

2.4

Access to clean water (%)

91

68

70

Source: World Bank

AfDB estimate that Sub-Saharan Africa may have grown 2 percentage points per year faster since the turn of the millennium under improved infrastructure.
Whilst the East African Community has grown above the SSA average since 2000, its potential under a lesser infrastructure deficit may be even more than 2 percentage points higher (given the lesser initial stock of infrastructure). Nonetheless, whilst the East African infrastructure deficit has most certainly contained economic growth even more severely, it also presents an opportunity to raise productivity and long-term growth to a greater level. Happily, infrastructure development is exactly what many of the East African governments are undertaking.
Decomposing infrastructure into energy, ICT, transport and water and sanitation (figure 1), infrastructure development will greatly increase the welfare of the EAC population, individual’s (and businesses) access to markets, and thus competitiveness of the EAC (through providing low cost and reliable access to energy, ICT and transport infrastructure, and providing access to safe drinking water, sanitation and water for irrigation systems).

Figure 1: Infrastructure development gains

now

EADB Moody’s Report 2018

Furthermore, if conducted at a regional level, infrastructure development will benefit from economies of scale and will enhance EAC integration, thereby further promoting trade, labour mobility and poverty reduction.

At present, infrastructure development is being driven by both the EAC Governments (in particular for energy and transport) and the private sector (predominantly for ICT); so long as infrastructure development continues to be a priority area it will bring enormous economic and social gains. However, to maximize the benefits of the enormous ongoing infrastructure investments, invested parties would do well to collaborate on a regional basis, to ensure that connectivity between member states expands and that the EAC becomes a globally competitive market.