According to the World Bank, development happens through structural transformation, which shifts the balance of economic activity away from agriculture and towards manufacturing and service sectors, in the process creating increasing numbers of better jobs.
At the individual level, people join the labor force and find a job, get better at what they do, and move to better, more productive work. The move to a better situation typically involves moving across economic sectors and employment types. The key question is what role infrastructure plays in this process of transformation of economies away from low-productivity agriculture and towards higher productivity manufacturing and services.
This article by The African Catalyst reviews some institutional reports and publications on the role of infrastructure investment in promoting economic development in fragile regions of Africa.
Infrastructure Investment In Africa
According to the ECA, there is an urgent need to close Africa’s infrastructure deficit at scale and at speed if the continent is to meet its development objectives - as stipulated in various national development plans, the UN 2030 Agenda for Sustainable Development, and Agenda 2063. This means investing up to US$170 billion per year in sectors such as energy, transport, water, sanitation, urban, and ecosystems. These sectors are sensitive to the adverse impacts of climate change, including more frequent and intense floods, droughts, and heatwaves.
There is a case for Africa to ramp up investment in developing infrastructure that is vital to improving the standards of living for the African citizens as well as for the continent’s global competitiveness.
Against a background of increasing climate change impacts that are already costing Africa on average 5% of GDP per year, it is important to boost the confidence that the infrastructure investments will deliver services and return on investments in both today’s and tomorrow’s climate.
What role has infrastructure played in transforming these economies away from agriculture and towards manufacturing and services?
There has been a notable expansion in the geographic reach of infrastructure networks across these regions during the last 20 years. By combining spatial information on infrastructure rollout with georeferenced household surveys reporting on employment patterns, it becomes possible to investigate the resulting impact on economic structure.
Infrastructure investments play a substantial role in structural transformation. Access to paved roads by itself has led workers to move out of low-productivity agriculture primarily into manufacturing and services in Kenya and Ethiopia. The size of the effect is a reduction of 9 percentage points in the share of the workforce employed in agriculture in the Horn of Africa.
Access to the internet has led workers to move out of low-productivity agriculture into services. The size of the effect is a reduction of 6 percentage points in the share of the workforce employed in agriculture in the Horn of Africa and 3 percentage points in Lake Chad.
To what extent have the benefits associated with roads been amplified through complementary investments in electricity grids?
Bundling road investments with access to electricity leads to a much bigger impact. The share of employment in agriculture falls by as much as 20 percentage points in the Horn of Africa and 23 percentage points in Lake Chad. Furthermore, in this case, workers shift mostly into manufacturing in the Horn of Africa and into the services sector in Lake Chad.
What are the expected impacts of future regional transport investments in the Horn of Africa and Lake Chad Region?
Simulations based on a general-equilibrium model quantify the subnational and aggregate gains from future major transport investments of interest for the World Bank: a series of regional corridors in the Horn of Africa and the road and rail corridors in Chad and Cameroon.
Read more here.