WILLEM DE LANGE for TIME BLOCK PARTY A worker at the Coega site in front of a huge concrete block, used to build breakwaters and painted with the South African flag

( )  INFRASTRUCTURE Building Confidence
	Why big infrastructure projects are vital to Africa's long-term development
	By SIMON ROBINSON | Coega

Posted Monday, May 30, 2005; 16.00 BST
The two arms of Coega, South Africa's newest port, extend into the Indian Ocean in graceful arcs. These breakwaters — one is 2.6 km long, the other 1.3 km — are built from thousands of dolosse, huge, oddly-shaped, 30-ton concrete blocks that interlock. They are designed to protect the vessels that, when the port is fully operational in 2007, will use this facility to ship manganese, iron ore and other South African products to China, India and the rest of the world. The government-funded Coega Development Corporation (CDC), which is building an industrial zone on 11,000 hectares of farmland next to the port, likes to think of the massive complex on South Africa's southeast coast, 20 km from Port Elizabeth, as a symbol of industrial Africa flexing its muscles. "If you want to change lives and the history of this continent, you need to develop infrastructure," says Vuyelwa Qinga-Vika, spokeswoman for the cdc. "We're not going to advance if we don't even have the roads to bring medicine to the rural areas. We've got to start building."

The call to construction is ringing out across Africa. Infrastructure is the new buzzword, pushed by leaders from South Africa's Thabo Mbeki to Senegal's Abdulaye Wade. It's also a key topic at this week's World Economic Forum (WEF) meeting in Cape Town, where political and business leaders from Africa will meet with heads of some of the world's biggest companies to discuss, among other things, how Africa's priority infrastructure projects can boost growth. According to a Gallup International survey commissioned by the WEF, Africans "focus more heavily on economic issues than do citizens in other parts of the world." One in three Africans fear a failure of the economy compared to just one in five globally.

Despite a commodity boom that pushed growth to 5% in Africa last year, the continent's leaders want better infrastructure to win more business. The New Partnership for Africa's Development (NEPAD), an African initiative that aims to lure $64 billion in annual investment by tackling bad governance, ending conflicts and making the continent more business-friendly, has put improved infrastructure near the top of its to-do list. "There can be no meaningful development without trade," reads NEPAD's infrastructure action plan. "And there can be no trade without adequate and reliable infrastructure."

The need is as obvious as it is urgent. Africa's roads and railway lines, ports and power grids are neither adequate nor reliable. Outside of southern Africa and Mauritius, much of the continent's infrastructure is crumbling or nonexistent. Consider the Democratic Republic of Congo. You could fit France, Germany, Italy, Norway, Spain and Britain inside it, and the country is packed with timber and minerals, yet it has only a few thousand kilometers of paved road and 10,000 fixed telephone lines, and produces about the same amount of power as Albania. In other war-torn countries, such as Somalia and Sierra Leone, public buildings have been destroyed by years of fighting. Corruption and mismanagement have left public utilities in places such as Cameroon and Nigeria run down and inefficient.

The lack of infrastructure deters many companies from investing — and drives up costs for those that do. The World Bank estimates that to ship a container from Baltimore in the U.S. to Tanzania costs about $1,000, but to transport that same container from Tanzania to neighboring Burundi costs $10,000. "In many countries, companies have to generate their own power, dig for water, pay heavy distribution and telephone charges," says David Hampshire, chairman of Diageo Africa, one of the continent's biggest marketers of beer and spirits. "All these costs add up, and they end up being paid for by the consumer."

To attract more investment, Africa has drawn up plans to spend billions over the next few decades. Zambia and Burkina Faso, both landlocked, want to build new rail lines through neighboring states to improve their connections to the sea. In East Africa, the Kenyan government and the rebel movement in southern Sudan plan to build a new railway track — at an estimated cost of more than $4 billion — from Sudan more than 1,000 km south to Rongai, Kenya, about 170 km northwest of Nairobi, where it will connect with the existing line to the Indian Ocean port of Mombasa. That notoriously inefficient harbor, along with some half a dozen others around Africa's coast, is set to undergo a massive expansion and modernization program over the next few years.

The next decade may also finally see the completion of the Trans-Saharan Highway from Algeria to Lagos, Nigeria. Equally bold is the West African Gas Pipeline, which will tap natural gas from the Nigerian oil fields in the country's southeast and then run almost 700 km along the coast with links to power plants in Lagos, Benin, Togo and Ghana. The most ambitious plan is for a massive dam on the lower Congo River which would eventually produce more than twice the power generated by China's controversial Three Gorges scheme — enough to sell electricity across the continent as well as export it to Asia and Europe. But that project is at least 20 years away.

Surprisingly, funds for new projects aren't lacking. Africa's richest countries are eager to build. South Africa's government, for instance, is funding the new Coega port and industrial zone. "Private business is not too keen on putting money into infrastructure, so the government has said it will take the lead," says Lionel Billings, manager for Coega's enterprise development and investor interaction. Rich donor nations in the West often help finance schemes in poorer countries, as does the World Bank. A growing number of private and foreign government-backed infrastructure funds based in Europe and the U.S., such as AIG African Infrastructure Fund and New Africa Infrastructure Fund, are also supplying capital.

The problem is confidence. Financiers, whether private or public, need projects that they can rely on. "We've got liquidity we're embarrassed about," says Keith Palmer, chairman of the London-based Emerging Africa Infrastructure Fund and vice chair of the U.K. investment bank NM Rothschild & Sons Ltd. "But there's a lack of well-structured, creditworthy opportunities." Business leaders cite numerous hurdles to investment: corruption, political instability and African governments' lack of capacity to run huge projects and reluctance to hand over control of projects to the private sector. Richard Laing, chief executive of the Commonwealth Development Corporation, Britain's agency for investment in the developing world, says the problem is dealing with African governments which have "an unwillingness to let go and a lot of distrust."

There's also a catch-22: Africa needs investment and improved infrastructure to develop, but finds it hard to attract the capital such projects need without more development. Thormählen Schweisstechnik, a German company that last year won the right to construct and operate for 25 years the planned railway line from Southern Sudan to the Kenyan coast, is already running into problems with the Kenyan government. Klaus Thormählen, head of the company, says, somewhat euphemistically, "the decision-making process [does not] maintain its dynamics during the times of our absence." A spokesman in the Kenyan President's office says that Kenya backs the scheme and is working with the German company to make sure the line is built.

Back at Coega port, a huge crane lifts another concrete block into position. The dock area, which was constructed behind a dam wall, has now been flooded, and is awaiting its first ship. "One of the things that will make it meaningful for South Africans is to see the first businesses set up here," says Qinga-Vika. "It may just be concrete and steel and new roads, but this is a symbol of hope that we're doing something to turn this city and continent around."

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