Developing Angola's Infrastructure

26 Pages·2011·2.68 MB·English

WP 2011: 3
Infrastructure has remained a main focus for SADC in its efforts to advance C Developing Angola’s
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regional cooperation in Southern Africa. Development of Angola’s infrastructure o
r
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is also a key priority for the Angolan government in the reconstruction and Ing p Infrastructure:
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rebuilding of the country. Angola is a member of SADC, but what are the links pe
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between national and regional approaches to infrastructure development? P
20 What is SADC’s role?
1
The paper takes stock of this, summarises main polices and efforts to promote 1: 3
infrastructure, identifies key projects involving Angola and highlight future
challenges. The focus of the paper is on energy, transport and water.
Elling N. Tjønneland
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INDEXING TERMS
Angola
SADC
Infrastructure
Energy
Developing Angola’s Infrastructure

What is SADC’s role?

Elling N. Tjønneland

WP 2011: 3
Project title
Angolan infrastructure in a regional perspective

Project number
28614
CMI WORKING PAPER DEVELOPING ANGOLA’S INFRASTRUCTURE WP 2011:
Contents

1. Introduction ............................................................................................................................................................ 4
2. Africa and Infrastructure – The Issues ........................................................................................................... 5
3. SADC – Regional Cooperation for Development ........................................................................................ 8
3.1 Infrastructure priorities ......................................................................................................................................... 10
Energy ..................................................................................................................................................................... 11
Transport.............................................................................................................................................................. 12
Water ..................................................................................................................................................................... 13
Bumpy roads: From policies to implementation .................................................................................. 14
4. Angola, SADC and Infrastructure ................................................................................................................... 16
4.1 Energy ............................................................................................................................................................................ 16
4.2 Transport .......................................................................................................................................................................1 7
Trans - Cunene Corridor ..................................................................................................................................1 7
Lobito – Benguela Corridor............................................................................................................................1 7
Malange Corridor .............................................................................................................................................. 18
4.3 Water.............................................................................................................................................................................. 18
Okavango River Basin ..................................................................................................................................... 18
Zambezi River Basin ........................................................................................................................................ 19
Cuvelai River Basin .......................................................................................................................................... 20
Congo River Basin ............................................................................................................................................ 20
5. Findings and Challenges ................................................................................................................................... 21
CMI WORKING PAPER DEVELOPING ANGOLA’S INFRASTRUCTURE WP 2011: 3
CMI WORKING PAPER DEVELOPING ANGOLA’S INFRASTRUCTURE WP 2011: 3
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1. Introduction
Development of Angola’s infrastructure is a key priority for the government in the country’s
reconstruction. There is also a strong interest from Angola’s neighbours, SADC and other regional and
continental organisations in the regional dimension of Angola’s infrastructure. However, the links
between regional and national approaches to infrastructure development in Angola have received little
attention in public debate or in the scholarly literature. This report takes stock of these relations,
summarises main polices and efforts in Southern Africa to promote regional infrastructure
development, identifies key projects involving Angola and highlights future challenges.2

Infrastructure has remained a major focus for the main regional organisation in Southern Africa – the
Southern Africa Development Community (SADC). Since its establishment in 1980, the organisation
has emphasised the need for developing cross-border projects in energy, water and transport.
Cooperation in such areas has been judged to be crucial both for facilitating development in member
states and for fostering regional cooperation. SADC’s emphasis in recent years on promoting
economic integration and poverty reduction has reinforced this focus on infrastructure.

Historically, Angola has been a key player in the development of SADC’s policies on infrastructure.
In the 1980s and 1990s, Angola co-ordinated SADC’s work in the energy sector. SADC’s current
Deputy Executive Secretary for regional integration is from Angola, and was the former head of
SADC’s Energy Commission, which was based in Luanda before it moved to the Secretariat in
Gaborone. Several Angolans are working in the Secretariat. In Angola, a high-level SADC National
Committee is in place to manage the country’s relations with SADC. It is coordinated by the SADC
focal point in the Ministry of Foreign Affairs. Angola has signed nearly all of SADC’s Protocols – the
legally binding policies and instruments for inter-governmental cooperation within SADC – but has
not ratified all. Some important exceptions are the Protocol regulating the management of Zambezi
river basin, the Mutual Defence Pact, and the Protocol on Politics, Defence and Security Cooperation.
Angola has also decided not to join the SADC Free Trade Zone.

Angola is also a member of the Economic Community of Central African States (ECCAS), which
includes another SADC member – DRC (in addition to Burundi, Cameroon, Central African Republic,
Chad, Congo, Equatorial Guinea, Gabon and Sao Tome and Principe). ECCAS has so far not been a
player in relation to infrastructure development in Angola and will not be considered further in this
paper.

Before analysing relations between national and regional approaches, the paper will first look at some
recent trends in infrastructure development in Africa.

1 This paper has benefitted from comments and inputs provided by José Oliveira, and is an output of the CEIC-
CMI Cooperation Programme.
2 Some of the issues covered in this paper were addressed in an early paper by Elling N. Tjønneland & Louis
Bonfin, SADC and Angola, The Case of Infrastructure Development, paper prepared for the CEIC-CMI Annual
Conference Luanda, 2 July 2009.
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CMI WORKING PAPER DEVELOPING ANGOLA’S INFRASTRUCTURE WP 2011: 3
2. Africa and Infrastructure – The Issues
Public infrastructure in most African countries increasingly lags behind that of other developing
countries. Infrastructure sectors – power, transport, water, information and technology – suffer from
insufficient investment and poor maintenance. A recent major review – Africa’s Infrastructure: A
Time for Transformation – concludes that Africa has the weakest infrastructure in the world. Africa’s
infrastructure networks are characterised by missing regional links and stagnant levels of household
access. The study argues that well-functioning infrastructure is essential to Africa’s economic
performance and that improving inefficiencies and reducing waste could result in major improvements
in Africans’ lives.3

Power is Africa’s largest infrastructure challenge. Chronic power shortages affect 30 African
countries; the entire installed power generation capacity of 48 Sub-Saharan African countries is 68
gigawatts, not more than Spain’s, and 25% of that capacity is unavailable because of aging plants and
poor maintenance. Studies have also found Africa’s power to be expensive to produce by global
standards. Regional trade can significantly lower costs.

The water sector in Africa is undermined by high hydro-climatic variability, inadequate storage, rising
demand and lack of transboundary cooperation. Less than 60% of Africa’s population has access to
drinking water. With more than 60 transboundary rivers on the continent, developing large-scale
infrastructure to manage water use and avoid conflicts is a huge challenge.

The transport sector is also characterised by inefficiencies and ineffectiveness. Linkages
between different transport modes (air, road and rail) are weak. Poorly equipped ports, ageing
rail networks and inadequate access to all-season roads are key problems facing Africa’s
transport system. Only 40% of rural Africans live within 2 kilometres of an all-season road,
compared to some 65% in other developing regions. Improving road accessibility in rural
areas is critical to raising agricultural productivity across Africa. Limited co-operation in the
trucking industry keeps road freight tariffs unnecessarily high, while red tape along
international trade corridors keeps movement of freight slow, increases costs and restricts
intra-regional trade.

There has been a dramatic push for infrastructure investment and development in Africa over the past
few years. We have seen a strong focus on national and domestic projects, but we have also witnessed
increased emphasis on the development of regional infrastructure.4 At the strategic and political level,
one of the early and most important expressions of these new priorities was the NEPAD founding
statement from 2001. This statement identified infrastructure as a key sectoral priority and called for
increased investment both in maintenance and in new infrastructure, new regulatory frameworks, and
the promotion of public-private partnerships. This was followed by various pan-African initiatives and
plans, such as the NEPAD Short Term Action Plan. At the global level, the donor countries and
partners in the South also agreed to a number of steps to strengthen infrastructure development. The
Monterrey conference on Financing for Development agreed inter alia that improved infrastructure
was essential for sustained economic growth, poverty reduction and employment creation. An

3 This study was conducted by a partnership of institutions, including the African Union Commission, NEPAD,
the African Development Bank, the Development Bank of Southern Africa, the Infrastructure Consortium for
Africa, and the World Bank. It is available from http://web.worldbank.org/WBSITE/
EXTERNAL/COUNTRIES/AFRICAEXT/0,,contentMDK:22386904~pagePK:146736~piPK:146830~theSitePK
:258644,00.html
4 There is large body of literature available on infrastructure development support in Africa. See e.g., the chapter
on infrastructure in Economic Commission for Africa and OECD, The Mutual Review of Development
Effectiveness in Africa: Promise and Performance, Addis Ababa and Paris: UNECA and OECD 2009 (available
from www.oecd.org). The chapter also contains a list of key literature.
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CMI WORKING PAPER DEVELOPING ANGOLA’S INFRASTRUCTURE WP 2011: 3
Infrastructure Consortium for Africa, hosted by the African Development Bank, was also established
in 2005 to facilitate the mobilisation of investment in African infrastructure.

The African Infrastructure Report (see above) estimates that USD 93 billion is needed annually over
the next decade to provide Africa with adequate infrastructure. Current spending is about USD 45
billion (most of this from domestic resource mobilisation in African countries). Some additional USD
17 billion could be made available through efficiency improvements and reduction of waste. This
leaves, according to the report, a funding gap of USD 31 billion every year, and most of this can only
be mobilised from external sources – as development finance from aid agencies or investments from
the private sector and public/private partnerships.

The new political objectives and agreements to invest more in infrastructure have also led to some
action. Investments have risen significantly in certain areas. The African Development Bank, the
European Commission and the World Bank – which together account for around 70% of all external
donor money to the infrastructure sector on the continent – have agreed to improve collaboration
during their interventions in the various infrastructure sectors and to give priority to inter alia support
to regional projects and to AU/NEPAD “flagship” projects. In November 2010, the G20 Summit in
Seoul identified nine key areas where action and reform are most critical. Increased financing for
infrastructure projects is highlighted in their recommendations.

Significantly, the expanding role of China and other emerging powers has also helped strengthen the
focus on infrastructure. China, in particular, has strongly pursued transport and hydropower projects in
its engagement with African countries. Chinese construction companies were also important in
implementing infrastructure projects, including projects funded by others. However, China has never
had a strong focus on regional projects in their Africa engagement. The Chinese have concentrated
their operations in a few countries, including Angola, and Chinese finance deals have been linked to
the supply of oil and other raw materials to Chinese markets. Chinese policies to facilitate this trade
have revolved around aggressive marketing coupled with substantive finance through mechanisms
such as the Chinese Export-Import Bank and the China Development Bank.5

Commitments from investors and donor agencies have increased, but actual delivery is lagging behind.
The global financial crisis has further weakened the delivery of promises. In fact, actual flows of
development aid to Africa, excluding debt relief, have basically remained flat in recent years. China
has increased its provision of development finance – mostly through credits and loans –, but it is far
less than what is required to compensate for failed delivery from Western countries. Significantly, it is
also noted that African capacities – or willingness – to make use of the Chinese facilities is far less
than perhaps originally envisaged. This is perhaps most strongly illustrated with Chinese credit lines in
Angola, where significant amounts available credit lines have not yet been used.

A recent joint Africa-OECD review of progress in infrastructure development and poverty reduction
concludes with a series of recommended actions.6 African governments need to:

• make further progress in developing strategic frameworks;
• improve project preparation, development of business plans and implementation;
• give increasing priority to regional projects, including better co-ordination between regional
bodies; and
• intensify efforts to ensure more equitable provision of basic services to rural areas.

5 There is a rapidly expanding literature on China and other emerging powers’ role in Africa. See especially the
principal study from Deborah Brautigam, The Dragon’s Gift. The Real Story of China in Africa, Oxford: Oxford
University Press 2009.
6 See the reference to the report above (note 3).
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CMI WORKING PAPER DEVELOPING ANGOLA’S INFRASTRUCTURE WP 2011: 3
Recommendations to northern development partners (OECD) include:
• Sustaining the current expanded investment in infrastructure, including regional projects;
• Providing adequate resources for upstream project preparation to help accelerate
implementation of projects and programmes;
• Providing capacity support for RECS, regional sectoral bodies and infrastructure agencies at
country level;
• Accounting for the impact of climate change in programmes of support for regional
infrastructure; and
• Increasing the number of joint-financing opportunities by playing a greater role in bringing
China and other partners and the private sector into regional infrastructure projects.

Southern Africa has a long track record of working for regional co-operation in developing
infrastructure. What is the state of regional infrastructure, and what are current regional priorities?
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