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Top1. Introduction
From an economic perspective, an adequate supply of infrastructure services has long been viewed by both academics and policymakers as a key ingredient for economic development. They are necessary to enhance the competitiveness of African firms and facilitate the flow of goods, services, persons and information within and across African economies and regions. As such, one of the critical ingredients in meeting the new continental and global sustainable development goals, namely the African Union (AU)’s Agenda 2063 and the 2030 Agenda for Sustainable Development Goals (SDGs) challenges is infrastructure. Nowadays, almost a fifth of the $94 trillion in global infrastructure investment required by 2040 risks being unfunded if present spending trends continue (Reuter, 2017). However, the world invests some US$2.5 trillion dollars a year in infrastructure in order to tackle the problem (MGI, 2016). Yet, this amount continues to fall short of the world’s ever-expanding needs, which results in lower economic growth and deprives citizens of essential services. To close the spending gap, annual infrastructure spending needs to rise. The world needs to invest around 3.8 percent of its GDP, or an average of $3.3 trillion a year, in economic infrastructure just to support expected rates of growth from 2016 through 2030 (MGI, 2016). Emerging economies account for some 60 percent of that need. But if the current trajectory of underinvestment continues, the world will fall short by roughly 11 percent, or $350 billion a year (MGI, 2016).
In Africa, however, underdeveloped infrastructure continues to be a binding constraint on sustainable development. African nations have paid insufficient attention to maintaining and expanding their infrastructure assets, creating economic inefficiencies and allowing critical systems to erode. According to Agenda 2063, building world-class infrastructure together with trade facilitation should see intra-African trade growing from less than 12 percent currently to about 50 percent by 2045 and the African share of global trade rising from 2 percent to 12 percent.1 Attempts to quantify the macroeconomic effects of scaling up infrastructure investment has found significant positive effects. Speaking of macroeconomic effects, the relationship between infrastructure and economic growth is empirically robust in the macroeconomic and microeconomic literature (Sahoo and Dash 2009; Estache, 2006; Calderon and Serven, 2003; World Bank, 1994; Munnell, 1990; Aschauer, 1989). Infrastructure in various forms plays a critical role in promoting home-grown entrepreneurs, foreign investors, economic development, and growth globally. Some kinds of infrastructure are vital because they contribute to economic expansion processes. There are four diverse sets of economic infrastructure – (i) irrigation for the agriculture sector, (ii) the information and communications (ICT), (iii) power generation, (iv) and transport infrastructure (road, rail, ports, and airports). They have a huge multiplier effect (a dollar spent on infrastructure leads to an outcome of greater than two dollars).