The long, tortuous journey to an official pan-African free trade area covering the entirety of the continent has begun. The bumpy road to the emergence of an African Continental Free Trade Area has already been full of many hair-raising twists and turns, and it should be safely expected that this will continue to be the case. The latest curve-ball has been a global pandemic of unprecedented scale, with devastating impact on public health, trade, investments, economic growth, and development everywhere in the world. But if you’re an optimist about the future of Africa like I am, we can look to the future and begin to imagine what a more closely integrated continent could look like.
One thing is already clear, physical infrastructure is one important barrier to be overcome for intra-continental trade and investments to truly flourish. But infrastructure is not the most important barrier: domestic political-economies, multiple legal systems and languages, protectionist ideologies, government bureaucracies, and competing business interests would probably rank as high or higher on the long list of constraints to an effective Continental Free Trade Area. Yet, economic infrastructure is critical, and this being my area of expertise, will be the subject of this article.
One of the brightest hopes of AfCFTA proponents like me has been the potential for a larger pan-African market that will create more efficient and viable cases for investments in roads, bridges, rail lines, power plants, pipelines, telecoms infrastructure and heavy industrial assets across Africa. This kind of forward thinking is already prevalent in the minds of all the key economic actors on the continent and has been factored into the conceptualization of the most ambitious projects and businesses. Today, I will discuss briefly my Top Ten African infrastructure projects that are either already in existence or in advanced concept stage, all of which are banking on greater continental integration for their success. This is a diverse group of infrastructure projects spread out across the entire continent, and several of which Africa Finance Corporation is playing a role in promoting or supporting.
Read Also: As the ‘world’s largest free trade area’ approaches, a lesson from the past
Let’s start close to home. The proposed 1,080km, six lane, multi-national highway road project linking Abidjan, Accra, Lomé, and Cotonou to Lagos is an ambitious initiative with potentially transformational impact on a corridor which is reported to be responsible for nearly 75% of West African trade flows according to UNCTAD (the United Nations Conference on Trade and Development). This project is at advanced concept stage, being led by the ECOWAS Commission and with detailed technical and commercial studies being funded by the African Development Bank. When completed, it will contribute to bringing ECOWAS official intra-regional trade (estimated by UNCTAD at about $11.4bn) closer to the $34.7bn level observed in the more intimately connected Southern African Development Community (SADC).
Speaking of Southern Africa, the crippling supply shortfalls experienced by Eskom, the primary electricity supplier in its largest regional economy have led to discussions about long-term purchases of power from other sources in Africa. One of the more significant of those potential sources (up to 2,500MW of energy purchase has been mooted) is from the largest hydropower project in the Democratic Republic of Congo, which harnesses the immense power of the Congo River to generate large amounts of electricity. This is part of the long-proposed expansion of the Grand Inga Dam into a $14bn investment that would generate up to 40,000MW of electricity generation capacity, much of which can be exported to multiple African countries including South Africa. While much work remains to be done to truly give life to the Grand Inga Dam expansion, an ambitious project on this scale would be one of the primary beneficiaries from a truly integrated African Continental Free Trade Area.
Staying in Congo, the largest country in sub-Saharan Africa also contains some of the most significant deposits of rare and bulk minerals under its lands but is dependent on difficult-to-reach coastal berths in the Indian and South Atlantic Oceans for their export. There is now ongoing work in Tanzania to change this via an ambitious new 1,457km network of railway lines being constructed to connect Dar es Salaam on the coast with not only Democratic Republic of Congo, but also Burundi and Rwanda, its equally land-locked neighbours. There is a lot of work to be done, and a lot of financing still to be raised, but this is an important opportunity set within the context of trade and commerce integration in Africa.
In nearby Uganda, a substantial oil discovery (of which more than 2.2bn barrels are estimated to be recoverable) was made in the last decade and is now being developed by a Sino-French consortium of major oil companies. Some of the crude oil is proposed to be refined locally, but a 1,445km pipeline is still required to ship most of the barrels to the Tanzanian port of Tanga. About 80% of the pipeline is expected to run through Tanzania, and when completed the long-awaited project will be another major example of the benefits of intra-regional cooperation.
Staying in the region, the unrecognized but quite efficient republic of Somaliland is seeking to replicate some of the successes of its neighbours in Djibouti, currently the leading entrepot for import and export trade into landlocked Ethiopia. The proposed expansion of the Berbera Port complex in Somaliland to a 500,000 TEU capacity is planned to complement the ongoing construction of a 250km dual carriageway between Berbera and the Ethiopian border, creating a potential new trade corridor with the largest country in the region, terminating with access to the Arabian Sea.
Sticking with Ethiopia still for a minute, in spite of its current internal security challenges, which are threatening, to spill over into a regional conflagration, the proposed telecommunications industry liberalization and rollout is highly anticipated and expected to cause an economic revolution on the same scale as was seen in Nigeria starting in 2000. This is even more remarkable when considered alongside the controversial $5bn Grand Ethiopian Renaissance Dam that is expected to transform the regional electricity supply balance when completed.
Returning to Congo, the long-standing bizarre absence of a permanent crossing between the twin-cities of Kinshasa and Brazzaville near the mouth of the Congo river is now being rectified by the construction of a 1.75km road and rail bridge across the river at a location 65km from Brazzaville and 87km from Kinshasa. This important project, which will have the additional benefit of connecting Kinshasa by rail to a deep-water port at Pointe-Noire, is being funded by a $210m loan from the African Development Bank. It is yet another example of the kinds of projects that will benefit and be made further viable by increased intra-African trade.
Recent trade data suggests that nearly one-third of average annual intra-African trade is in Mineral products (compared to 50% of African exports to the rest of the world). Coming closer home again, the long-anticipated Dangote Refinery and Petrochemicals complex located near the new port of Lekki is expected to feed into this trend. Intended as an ambitious project to not only fulfill domestic demand but also serve as the leading regional fertilizer and refined petroleum supplier, the Dangote complex when completed will be a major potential beneficiary from reduced hurdles to intra-African trade.
Further down the Gulf of Guinea coast from Lagos, the transformational Kribi Port and Industrial Zone project has sprung to life after many years of development and planning. As central Africa’s only deep seaport, this $1.3bn project is designed to open up iron ore, cotton, cocoa, timber, and other commodity exports from Cameroon, Chad, and the Central African Republic. An oil and gas terminal is also envisaged for Kribi, which might yet prove useful even as a trade catalyst with Nigeria’s Niger Delta and southern states.
Finally, in Nigeria, work is ongoing to construct a new Standard Guage Rail line across the spine of the country, starting with a (recently completed) Lagos to Ibadan spur, but continuing on to the major Northern commercial hub of Kano, and subsequently linking with Maradi on the border with Niger Republic. Much remains to be done, both in terms of construction and financing work, but when completed and if kept in proper operating conditions, such a network will prove critical for national and regional transport connectivity.
In summary, this list is only my Top Ten selection of projects illustrating the significant ongoing work in the area of physical infrastructure to create enabling conditions for a future Continental Free Trade Area that is worthy of the great potential that has been ascribed to it. Much is yet to be done, and several dozens of other projects are ongoing or in early conception stage. But it should hopefully be clear with these few examples that the trend toward pan-African economic integration is irreversible, and all hands must be on deck to quicken the pace.
Fola Fagbule, is senior vice president & head of financial advisory at Africa Finance Corporation
