Subscriber Login

Features

Role of the AfDB: Transport infrastructure development [free access]

September 1, 2017

The African Development Bank (AfDB) Group is a regional multilateral development finance institution established to contribute to the economic development and social progress of African countries. It comprises three entities: the African Development Bank (ADB), the African Development Fund (ADF) and the Nigeria Trust Fund (NTF). Box 1 provides some basic information about the AfDB.

 

Box 1: Introduction to African Development Bank

 

Founded: August 1963

Objective: assist African countries – individually and collectively – in their efforts to achieve economic development and social progress

Headquarters: Abidjan, Côte d’Ivoire

Employees: 1,500 (mostly Africans)        

Sectors: agriculture, health, education, public utilities, transport and telecommunications, industry and the private sector

Ownership: 80 member countries, comprising 54 regional member countries (RMC) and 26 non-regional member countries (NRMC). The non-regional member countries are primarily from Europe, America and Asia. Initially, only independent African countries could become members of the bank. However, due to growing demand for investments from African countries and because of the bank’s limited financial resources, membership was opened to non-regional countries.

Emphasis on Africa: Bank activities exclusively cover Africa, headquartered in Africa, President is always African

Source: https://www.afdb.org/en/about-us/frequently-asked-questions/

 

Current scenario

 

Transport costs on the African continent are among the highest in the world, both for passenger travel and movement of freight. For African countries, it is often easier and cheaper to trade with the rest of the world than with each other.

 

The challenge in the transport sector is also social because existing transport strategies are not pro-poor. The Sub-Saharan Africa Transport Policy programme (SSATP) estimates that about 60 per cent of the rural population in Sub-Saharan Africa lives beyond two kilometres from an all-season road.

 

Most African countries are grappling with the challenge of dwindling public financing. Africa’s infrastructure deficit is estimate at USD90 billion yearly for the next decade, including transport, which accounts for 41 per cent of its current investments.

 

According to the World Bank, Africa has spent billions of dollars on improving and rehabilitating transport infrastructure. However, poor governance has been perpetuated by weak policies, legislation and regulations at many levels without any checks on how services are eventually delivered to users of transport, and whether their expectations are actually met.

 

Africa has an aging vehicle fleet, with most vehicles being 16-20 years old, contributing to the emission of harmful gases, according to United Nations Environment Programme. Air pollution, most of it occurring from the transport sector, is the cause of 176,000 deaths per year in Africa, states the World Health Organization.

 

Key trends in AfDB transport financing

 

Over its 50-year history, the AfDB has provided a total of USD30 billion to over 450 transport projects in Africa. Following are some key observations regarding lending for transport:

 

 

Figure 1 indicates the growth in urban transport investment up to 2016.

 

Figure 1: Growth in AfDB’s urban transport investment

 image001_532_01

Source: AfDB Annual Report 2016

 

At the end of 2016, the bank’s portfolio of projects in transport and ICT included 118 operations, valued at USD11.8 billion. The portfolio was spread across 47 of the Bank’s 54 regional member countries. It is estimated that more than 100 million people will benefit from better a transport system and infrastructure through these projects.

 

Road projects dominate the portfolio, with USD8.5 billion of operations, a slight decrease of 4 per cent from 2015. In 2016, urban transport grew by 50 per cent and became the second largest subsector with USD933 million. Investment in rail increased by 25 per cent.

 

Box 2 provides description of railway and urban transport projects supported by the AfDB.

 

Box 2: Examples of transport projects supported by AfDB

 

In Ghana, the AfDB supported the development of the Greater Accra Master Plan and strategies in partnership with local municipalities. The master plan will provide a common platform to develop integrated and collaborative decision-making tools for city planning and management.

 

In Morocco, AfDB has provided loan of USD112.3 million to double 142 km of tracks km between Settat and Marrakech. The total cost of the project is USD403 million. The national railway company ONCF is funding the remaining USD290 million. The project is expected to increase passenger capacity by 50 per cent and freight capacity by 100 per cent.

 

In Tanzania, the AfDB provided USD141.71 million to build the second phase of the Dar es Salaam Bus Rapid Transit (BRT) system. The project is part of the six-phase BRT system master plan and a continuation of BRT Phase 1 that was financed by the World Bank. It is expected to carry up to 495,000 passengers per day and deploy clean-fuel buses. The total cost of the project is USD159.32 million and the Government of Tanzania will provide the remaining funds.

Source: AfDB Annual Report 2016

 

Workshops

 

Liberalisation

 

In October 2016, the Infrastructure Consortium for Africa (ICA) held a one-day workshop at the AfDB headquarters to discuss findings of three studies on opening up aviation services, urban transport development, and trade facilitation.

 

Box 3 provides an introduction to the ICA.

 

Box 3: Infrastructure Consortium for Africa (ICA)

 

The ICA was launched at the G8 Gleneagles Summit in 2005. It aims to improve the lives and economic well-being of Africa’s people through investment in infrastructure, from both public and private sources.

 

The ICA’s bilateral members include the G8 countries (Canada, France, Germany, Italy, Japan, Russia, the UK and the US). Membership is open to all countries in the G20, and the Republic of South Africa became the first non-G8 G20 member to join the ICA, in December 2013. Multilateral members include the World Bank Group, the African Development Bank Group, the European Commission, the European Investment Bank and the Development Bank of Southern Africa.

 

With a focus on regional programmes and initiatives, the ICA helps to facilitate infrastructure development in the water, transport, energy and ICT sectors. It is not a funding agency but facilitates the financing of infrastructure projects and programmes. It also works to overcome technical and political challenges in infrastructure development.

 

The ICA is supported by a small secretariat that is hosted by the African Development Bank in Abidjan, Cote d’Ivoire. The secretariat is funded by voluntary contributions from ICA members and staffed by a combination of permanent staff from the African Development Bank, consultants and experts on secondment from ICA member countries. 

Source: https://www.icafrica.org/en/about-ica/

 

The theme of the workshop was “ICA: Support to Transport Sector”. Participants reflected on how to implement key recommendations of the study on urban transport development in Sub-Saharan Africa, which identifies specific opportunities in five African cities, namely Accra, Addis Ababa, Dakar, Dar es Salaam, and Lagos.

 

The key recommendations included the following:                   

 

 

Climate Change

 

The AfDB’s transport team held a seminar with the Nordic Development Fund (NDF) climate team to share knowledge on the impact of climate change on the design of new transport projects.

 

The seminar aimed to identify early sets of targeted actions that could create considerable cost savings in the long term. It highlighted the best practices in Mozambique that have established precise national diagnostics and a map of vulnerabilities developed with the assistance of NDF. Transport assets in Mozambique are now critically analysed for climate change vulnerability. Mozambique has recently set up an alert system and an emergency repairing task force to respond to emergencies such as floods.

 

Urban transport project delivery

 

In March 2017, the AfDB conducted workshops in Addis Ababa (Ethiopia) and Accra (Ghana) to develop urban transport and mobility projects in the two cities. The workshops were attended primarily by policy makers, representatives from the AfDB, and multilateral and bilateral donors.

 

Discussion at the workshops focussed on the ICA-commissioned Diagnostic Study and Project Development/Investment Pipeline for Urban Transport in Sub-Saharan Africa, which looked at urban transport challenges and opportunities in five of Africa’s fastest-growing cities, including Addis Ababa and Accra.

 

The study identifies a pipeline of tangible and viable projects that address significant urban transport challenges in the five cities, and which could be implemented in the near to medium term.  These projects could have considerable impact on urban mobility in the five cities, while also generating substantial national and regional economic benefits.

 

The main highlights of the workshop included the following:

 

 

Workshops are also envisaged for the other three cities covered by the study – Dakar, Dar-es-Salaam and Lagos. The workshops will disseminate the results of the study to policy makers, transport operators, the private sector and other potential investors to enable them to consider investment opportunities.

 

Promoting women in transport

 

On March 8, 2016, International Women’s Day, the AfDB launched a two-day seminar on mainstreaming gender into the design and planning of transport infrastructure. The event was organised in collaboration with UK Aid. It provided an opportunity for knowledge-sharing between transport and gender specialists in the bank as well as managers and engineers working in partner agencies.

 

Strategy

 

AfDB held its Transport Forum in November 2016. At a session on “Sector Reforms, Governance and Institutional Capacity”, participants underscored the need to align transport plans and programmes with other strategies in order to achieve sustainable growth.

 

A single transport strategy for Africa was proposed as a critical tool that would help countries harmonise their transport structures, ensuring they serve the needs of all, including rural areas.

 

Good governance and transparency were identified as urgent measures to fix gaps in the transport sector and attract much-needed private-sector investment.

 

Offerings of AfDB           

 

The AfDB offers a diversified menu of financial products such as loans (those denominated in local currency, and syndicated loans), lines of credit (including for trade finance), guarantees, equity and quasi-equity, trade finance, and risk management products. In addition, it provides technical assistance to its clients through grant funds.

 

The African Development Fund Partial Risk Guarantee (PRG) and Partial Credit Guarantee (PCG) have been introduced recently to leverage resources from the private sector and other co-financiers for ADF countries

 

The bank group is constantly in discussions with sister institutions, particularly the Islamic Development Bank, on how best partial credit guarantee instruments can be structured to complement a sukuk issuance or other forms of Islamic financing structures.

 

Conclusion

 

Most African cities are ill-equipped to provide adequate transport facilities to residents and prepare for expected increases in transport service demand. Policy makers and planners are grappling with numerous issues, ranging from insufficient infrastructure to inadequate technical, institutional, and financial capacities.

 

The AfDB has adopted a holistic approach, which includes support for local players and associations to strengthen their service delivery. It encourages discussions between political decision-makers, builds capacity in public institutions, standardises regulatory environments and simplifies custom procedures.