Sunday, June 30, 2013

It is the Infrastructure Stupid!

What is the difference between a country on the path to greatness, and one permanently stuck in the underdevelopment trap? Well, I say it is the infrastructure stupid. Let me say, a visit UAE (Abu Dhabi and Dubai particularly) will convince you. Flying in from any direction, UAE is an amazing constructor's dream compared to Africa, and it was all but a swath of desert land few decades ago: an often forgotten desert backwater where nomads wandered and poverty was rife. In 2013, it is a descent into Lagos from overseas that looks like peering into a massive village with very little visible planning, network of roads and infrastructure  Compared to other African countries indeed, Lagos is like London. Flying into Lome or Contonu will remind one of a war zone even though no battle have been fought in either in any recent memory.

Infrastructure does four amazing things for Nation's stuck in underdeveloped state, for one it creates direct jobs. Building massive highways around a large country, airports as well as power stations, public water works, ports and rail require massive physical manpower that range from skilled to semi skilled and unskilled. Aside from direct jobs created, the families of employed laborers create more jobs, and demands of construction result in the rise of related industries if properly executed with in-country expertise. Speaking of expertise, infrastructure also cause technology and knowledge transfer. Potentially transforming big consumers to cheap manufacturers in the process of building. A combination of jobs and knowledge also often mean a rapid reduction in security challenges for any country. 

The last two advantages of infrastructure are experienced once the infrastructure is in place. Because it amounts to a massive tax cut on business as the cost of the lack of infrastructure is far greater to the aggregate of the individual players in the economy than it is when funded by the collective, it reduces the cost of doing business and reinvigorates the economy. Indeed, this is the definition of infrastructure. Whereas the infrastructure conceived for a country is beyond ordinary and bold, and it encourages business by reducing the cost of doing the industry of Tourism naturally develops wrapped around a revitalized back-bone; as the Brits will tell you- this is the only free money about town. Tourism money is free money and herein, is where Africa is really missing out! 

For Africa's teeming population with brawns it is time to tap into this muscle power to rebuild the continent. Africa's government have for far too long been high on promises and low on delivery - all attributable to lack of vision, corruption and poor planning. Infrastructure projects have to be prioritized for highest cost to job creation ratio, and sustainable impact. On the surface, transportation projects by far deliver on this metric more than power, public water and social infrastructure. But those can be equally expensive, and can take far too long to implement with no measurable multiplier effect as much as Power. 

While funding may be said to be a challenge, it is on record that trust and vision is actually the biggest impediment to the rise of Africa's infrastructure. Africans need to believe their leaders once again, and infrastructure is as much a social contract as it is a technical endeavor. The Three Gorges Dam Project as much as the Hoover Dam revitalized the hopes of China and American people respectively in their leaders and in themselves. Herein, lies the opportunity. Africa needs few good men of vision, comitted to changing the continent from a reputation of a basket case, with leaders dipping their hands in the basket for the funding to truly be secured. 

That process can begin by committing to transparently spend by consensus the resource revenues of our governments on infrastructure and do away with large security spending and big civil service that are payoff for the boys and spend where it is needed. For a population willing to sustain the current level of recurrent expenditure, such should only be funded with tax monies. Only when this effective link between the governed and the governors is restored will the core leakage of corruption be sealed: once and for all- helping the push for infrastructure. Once in place, private monies - concessions and PPP arrangements including BOOT (Build, Own, Operate and Transfer) or its variants will fund the much needed infrastructure for a continent badly in need of one!

Hence, the time is ripe for the right thinking generation of leaders. There is lot of free money out there- including the just announced Power Initiative by the United States to restart the engine of economic growth in Africa by investing proactively in infrastructure without siphoning millions into the pockets of kleptomaniac leaders. But can this generation be trusted? 


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