Energy Revenues to Help Africa Trim ‘Infrastructure Gap’

With growth steady, inflation low, Africa’s attention turns to quality of growth

Better roads, railways, ports, power supply would boost employment

Energy earnings offer new revenue stream to devote to infrastructure

Three finance ministers and a central bank governor told a Washington news briefing that Africa’s “infrastructure gap” is a significant development obstacle that will have to be overcome for the continent’s economic growth to be more inclusive.

The officials told reporters during the IMF-World Bank Spring Meetings that investment in infrastructure is a major priority for Africa as the continent’s governments strive to create more jobs and expand social services. They noted that many African countries had achieved macroeconomic stability with steady growth and relatively low inflation. Governments were now aiming for better-quality growth by focusing on creating jobs and improving health and education.

The finance ministers of Uganda and Chad said significant shares of new revenue streams arising from their countries’ recent and upcoming crude oil and natural gas production had been and would be devoted to infrastructure development.

“Our oil reserves are about to start production,” observed Ugandan Finance Minister Maria Kiwanuka, “but our biggest challenge is our infrastructure gap.” She noted, however, that development of Uganda’s roads and railways is under way.

Dedicated revenues

“Our petroleum revenues will be dedicated to building infrastructure,” Kiwanuka said. She noted that that Uganda has a young population. “Therefore our need is for job creation, rather than pensions. So all monies coming from our oil and gas revenues will be invested through our budget, duly appropriated by the parliament of Uganda, in our infrastructure program over the next 20 years,” she declared.

“It’s a question of transforming robust growth into inclusive growth with more jobs, more even income distribution, and better health care and sanitation,” said Mozambican Finance Minister Manuel Chang.

He stressed that targeting better infrastructure is a key part of the government’s investment strategy. “Mozambique is clear about what sectors it needs to support to reduce poverty: the social sectors—health, education— along with infrastructure already 65 percent of the budget is channeled here. And the results are visible.”

Port connections

Now investment would focus on energy, railways, ports, agriculture, tourism, and natural gas as enablers...