By Desta Mebratu

The 2018 African Economic Outlook suggests that African countries will continue to develop. Such a growth outlook would be supplemented if the nations matched it with transformative infrastructure development, which takes renewable energy and digitisation into consideration.

The African Development Bank recently released the African Economic Outlook report for 2018.The report noted that overall economic real output growth of African countries is estimated to have increased by 3.6pc in 2017. By this year and the next, it is projected to accelerate to 4.1pc. It also concluded that the recovery of growth had been faster than expected, especially among economies that are not resource intensive.

The report further highlighted some of the significant policy measures that need to be taken by African countries to achieve structural transformations that would create more jobs and reduce poverty.

Beside providing an overall annual review of macroeconomic developments and structural change, the report mainly focused on financing infrastructure development in the continent.

In this context, the report highlighted the existing major infrastructure gaps that impeded the highly required economic diversification that may lead to structural transformations. The report talks about the insufficient stock of productive infrastructure in Africa.

It also underlines the critical importance of developing high-quality infrastructure to achieve the Sustainable Development Goals, which are globally targeted for attainment by 2030, and other related regional goals.

Overall, the report provides valuable analysis and recommendations on the importance of addressing existing infrastructure gaps. It also provides useful suggestions on possible strategies that need to be considered by African countries and its development partners on how to finance infrastructure development in Africa.

However, it falls short in highlighting the key considerations that African countries should make in terms of building high-quality infrastructure.

Primarily, the fourth industrial revolution, aka “Industry 4.0”, is driven by increased digitisation and robotisation. It is one of the significant disruptive developments that will redefine the global economy of the 21st century. This development will obviously result in some key challenges that need to be addressed, both individually and collectively, by countries.

There are also major opportunities that may positively influence the quality of the infrastructure we develop in the 21st century. This ranges from the development of smart grids for power infrastructure to the development of distributed manufacturing systems supported by more efficient supply chain management.

Another major development that will determine the character of the 21st-century economy is the inevitable transition in the global energy system that is driven by progress in the renewable energy sector.

The distributed nature of renewable energy resources coupled with the potential empowerment of individuals and communities due to the development in the ICT sector could provide a strong basis for an economy that fosters job creation and value addition at the local level.

This would require developing a new generation of energy infrastructure that has an optimal scale and resource efficiency combination.

Just as important a factor that African countries should consider is that the decision they make on the kinds of infrastructure they build today has huge potential to lock them in for the coming decades.

This is particularly true if they continue investing in the conventional infrastructure of the 20th century, which may not be responsive to developments in the 21st century. In this regard, applying life-cycle planning and management of infrastructure development is key to ensuring the development of quality infrastructure that reduces or eliminates such lock-in possibilities.

Quality infrastructure of the 21st century is ultimately characterised by its potential to create an inclusive, low-carbon and resource-efficient economy that results in multiple economic, social and environmental benefits to society.

This is, in essence, the aim of the SDGs and the aspirations of the African Union’s Agenda 2063, which call for transformational change. Africa, as a region that is yet to develop a large proportion of its infrastructure, has a huge leapfrogging opportunity if it sets a goal of developing a transformative infrastructure for the 21st century by considering the future first.

 

Picture source: http://www.theindependentbd.com/printversion/details/145577

Originally published at: https://addisfortune.net/columns/transformative-infrastructure-route-to-better-growth-output/