Enjoying some of the world’s highest annual economic growth rates, and by the measure of the amount of infrastructures works, the East African Community (EAC) is one of the world’s fastest-growing regional trade blocs.
East Africa is undertaking some of the world’s grandest infrastructure works yet, ranging from fast-speed electric train railways and single cable bridges to imposing dams and oil and gas pipelines as well as multinational road networks.
It is just as well because trade on the continent is growing exponentially and is bound to grow even faster with the signing of the continent-wide free trade pact.
The latest mammoth construction is the multinational Tanzania–Uganda Road Project whose Feasibility Study and Detailed Engineering Design have just been completed. Thanks to funding from the African Development Bank (AfDB) under the NEPAD-IPPF facility, design works have been handed over paving the way for the groundwork of the over 250 kilometers road project.
According to the East African Community Secretariat, the designs, done by M/S LEA International Limited from Canada in a joint venture with LEA Associates Asia Pvt Ltd from India, covered 89.5 kilometers of the Masaka to Mutukula road section in Uganda; a 30 km section from Mutukula to Kyaka linking to a 133 km Tanzania section from Bugene to Kumunazi via Kasulo.
This multinational road network will serve to facilitate the development of the regional road transport market across the East African region. Now that the design works are completed, the EAC Secretariat shoulders the task of not only mobilizing funds to construct the road but also build cooperation with other regional, continental and global bodies to improve its road transport services and safety in general.
Other major works in the EAC include the 400 km long road that joins Kenya and Tanzania at a cost of USD322 million. Additionally, there is the over-500 km road that will link Tanzania and Rwanda; the infrastructure works are massive, to say the least.
In fact, since 2019, East Africa’s infrastructure construction projects were projected to grow immensely with investments in excess of USD98.8bn by 2022.
To get a clearer picture of the amount of work being done and the sums of money being spent consider this: there are at least 287 large-scale public and private sector infrastructure projects ongoing in East Africa. Together, these projects are worth over USD209.1bn and as mentioned, the larger of these are in the transport (rail and road) and energy sectors.
Road works account for 37.1% and pipeline construction works account for 45.2% with total values of USD77.5bn and USD94.6bn respectively.
In her comments, Yasmine Ghozzi, Construction Analyst at GlobalData, said, ‘‘Investment rates in transport infrastructure have been increasing, thanks to major continental initiatives such as the Program for Infrastructure Development in Africa (PIDA).”
PIDA is a strategic continental initiative meant to mobilize resources to transform Africa and have the continent enjoy modern infrastructure.
Infrastructure: Africa’s Road out of Poverty
Experts are of the view that Africa and in particular East Africa, needs these infrastructure works to drive itself out of poverty.
“Despite having some of the fastest-growing economies in the world, East Africa remains among the least competitive regions globally, mainly due to poor infrastructure,” said Mrs. Ghozzi.
So how do you fund these immense infrastructure works?
As of 2021, it was reported that the East African Community (EAC) needed more than USD100bn over the next four years for its infrastructure works. Notably, of this amount, USD78bn would be used on railways, roads, and energy projects over the next ten years.
To date, governments in the region have committed to allocating almost one-third of their annual budgets towards financing infrastructure development but it is still far from enough.
Mrs. Ghozzi comments on the financing hurdles that the EAC faces. “There are various factors that hinder infrastructure financing in East Africa, including higher transaction costs, inadequate availability of bankable projects, permits and licenses required, and the multi-governmental agencies and institutions that investors must deal with in a typical capital project.’’
These are aspects that the EAC itself can address to ease investor concerns like higher transaction costs, the number of permits and licenses required, and the multi-governmental agencies and institutions that one has to deal with.
To start with, such mega projects should have specialized transaction rates at least for the major parts of the construction works such as the importation of equipment.
Secondly, the EAC should reduce and/or unify their permits and license requirements to make it easier for investors to acquire the right to start working instead of going through a barrage of bureaucratic red tape just to get a license.
Finally, since these megaprojects0 are multinational, there should be single regional bodies under the EAC secretariat to deal with rather than dealing with individual entities in individual countries.