On Track For Success - Reasons To Be Positive About The Roads Sector In Africa

Author:Mr Jonathan Brufal and Tom Gray
Profession:Gowling WLG
 
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Africa urgently needs to develop or improve its national and international road corridors in order to facilitate connectivity. The correlation between economic growth and reducing the length of travel between people, markets, services and knowledge is strong - there is huge growth value in getting people connected.

International corridors are critical in allowing landlocked countries easier access to ports and trading partners. Domestic corridors are needed between major cities and to connect agricultural and mining areas.

A lack of Government infrastructure funding in the amounts required means alternative solutions will play a key role in the development and financing of the roads network across Africa, and here we set out some of the factors which are contributing to an increase in private sector involvement in the sector.

The development of roads, particularly toll roads, in Africa is now considered "high priority" by Governments and multi-lateral organisations alike

Stakeholders are keenly aware that a lack of transport infrastructure adds "economic distance" to trade, lowering agricultural yields, significantly increasing the cost of goods and hindering education uptake and health provision. Streamlining trade, increasing linkages and creating intermodal transport hubs has become a focus of African development planning and financing.

More than $93 billion of infrastructure investment is required each year for the next decade from a variety of sources in an attempt to solve Africa's infrastructure deficit. The lack of roads is seen as a key constraint on economic growth and prosperity. Funding deficits mean that private investor structures such as PPPs are expected and tolling likely.

The sector has the attention of African Governments, their development partners and the private sector. Successes in Senegal and South Africa and a pipeline of projects (Kenya, Uganda) mean that well known developers, advisers and funders are involved in structuring, developing or funding roads projects across Africa.

Governments are starting to get serious about private investment, enabling frameworks and sensible risk allocations

Across Africa, the time and resource invested into building the required capacity within Governments to facilitate large-scale private investment is paying off. Several countries have established PPP Units which are launching major roads programmes, supported by an enabling legal environment.

Kenya is an example - following a...

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