Lifting Senegal and West Africa to new heights

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via China Daily

Lifting Senegal and West Africa to new heights via chinadaily.com

Remember my post here on airports (Airports and their importance to Economic growth – lessons from Mozambique, Switzerland and Norway), this article on the new airport (Blaise Diagne International Airport) being built-in Senegal is quite interesting and worth a read.

Senegalese ministers and business leaders believe the construction of a modern airport is crucial for consistent socioeconomic development and that it sends out a positive signal to international investors that Senegal is stepping up to the world stage.

President Abdoulaye Wade is confident the multi-million dollar facility will act as a powerful magnet for fresh investment from China and beyond.

It’s evident that one way of accelerating economic development in Africa is to improve our transportation links to ensure that it is easier for business people to get to places, as it is the case in many other cities across the developed world. In London (or even Manchester or Birmingham) I can jump onto a plane headed for Tokyo within the next 3 or 4 hours with relative ease, and by tomorrow evening (taking account of the time difference 🙂 ) I will be in Japan. It’s impossible to do that kind of thing in some parts of Africa, and one has to travel hundreds of miles to Europe, South Africa or north Africa (e.g. Ethiopia), making some inconvenient (and costly) connections just to get to a major city in another part of the world.

In my view Africa will struggle to attract customers (for example in re Tourism) and investors if our infrastructure is not upgraded and if travelling continues to be a bottleneck. According to the World Bank:

“Air transport is perceived as a major constraint to Africa’s tourism development. Many argue high airfares are a handicap for destinations while others point to the inconvenient and insufficient service of scheduled or even charter services.”

How can Tourism to African countries improve when holiday makers can get better deals elsewhere, in South East Asia, or South America, where they are more likely to find (as if its a bonus) better facilities, improved security, better customer service, etc. And can Tourism to African countries improve when the reports of those that do visit (see here, here, here and here) can be severely damning.

An investor may not locate to your country if travelling is disproportionately expensive, difficult and the cost of bringing in goods and machinery (costs of freight) outweighs the realizable benefits?

Infrastructure

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While you’ll find several references to Infrastructure on this site, I think this time around I’ll leave it to the experts to do the convincing. Paja akulu anati mutu umodzi siwusenza denga

And if one takes time to browse through the cited references below (some of which are straight off page 1 + 2 of Google), it’s hard to argue against the fact that Infrastructure is one of the essential drivers of economic development. In this sense, and for the avoidance of doubt,  infrastructure is not limited to roads, railways, airports and buildings (for hotels, schools, Universities, hospitals, business centres, research facilities, etc), but also includes for example a good telecommunication network (internet, voice, data and the like) and power supply.

Infrastructure for sustainable development – European Commission

Intro reads: ” Good quality infrastructure is a key ingredient for sustainable development. All countries need efficient transport, sanitation, energy and communications systems if they are to prosper and provide a decent standard of living for their populations. Unfortunately, many developing countries possess poor infrastructure, which hampers their growth and ability to trade in the global economy. “

Infrastructure’s value to economic growth – Richard Lee, Partner, KPMG (via BBC)

which includes the statement : “…In fact, a recent KPMG International survey found that an overwhelming majority – 90% – of business executives said that the availability and quality of infrastructure affects where they locate their business operations…”

Needs For and Benefits of Infrastructure Connectivity – Asian Development Bank Institute
which includes the statement: “… The rapid economic and population growth of Asian economies in recent years has put huge pressure on its existing infrastructure, particularly in transport and energy, but also in communications. Asia’s infrastructure is world-class in parts, but is generally below the global average. This is a bottleneck to future growth, a threat to competitiveness, and an obstacle to poverty reduction.”
which includes the following statement: – “…An adequate infrastructure is a prerequisite to economic development. Transportation and communications are important in developing and strengthening social, political, and commercial ties. These ties must be developed before trade can be handled on a regular basis.”
Why Is Infrastructure Important – David Alan Aschauer, formerly Senior Economist, Federal Reserve Bank of Chicago, and now (at the date of writing/publication) Elmer W.Campbell Professor of Economics, Bates College
Infrastructure and Poverty – The Global Poverty Project
the Intro reads: “Infrastructure – physical resources like roads, telecommunication networks, schools and drains – is necessary for a society to function: people can’t access healthcare if there are no hospitals; trade can’t take place if there are no roads on which to transport goods to markets. Infrastructure facilitates the basic functions of a society that are necessary to transport resources and people, produce and trade goods, provide essential services and ultimately reduce poverty.”
it follows with ” Lack of infrastructure also leads to lack of employment by acting as a disincentive to investment. Companies who struggle to produce and sell goods in an area with inadequate roads, electricity or water supply do not want to set up the factories or businesses that could potentially generate employment, improve living standards and reduce poverty. “
and “Lack of infrastructure can also lead to poor health and high mortality. Where there are no clinics or hospitals available, or where lack of roads or bridges makes them inaccessible, people cannot access the medical services that they require to be healthy and productive. A villager in Mozambique explains “The most dangerous thing is that [cholera] has always appeared during the rainy season, and it is then that the river is in spate and boats cannot cross.”
The Broader Benefits of Transportation Infrastructure – Ian Sue Wing, William P. Anderson and T.R. Lakshmanan, Center for Transportation Studies and Dept. of Geography & Environment, Boston University [similar article here]
uses the term Meso-scale to describe their approach. A slide from their presentation is quite appropriate in summarising some of the developmental + ‘equilibrium’ impacts, and worth replication:-
infra-messo
Finance and Infrastructure: The Economic Benefits of Infrastructure Projects Procured with Private Finance –  Andrew W Morley, International Congress Washington, D.C. USA, April 19-26 2002.
Infrastructure – Engineers Against Poverty
Intro reads as follows: “Without significant progress in the provision of infrastructure services it will be impossible for many countries to significantly achieve the Millennium Development Goals (MDGs). Globally, more than 1 billion people have no access to roads, 900 million do not have safe drinking water, 2.3 billion lack reliable sources of energy, 2.5 billion have no sanitation  facilities and 4 billion are without modern communication services.”
which contains the paragraph “When it comes to infrastructure development, Thailand has done very well compared with some other Southeast Asian neighbors. In fact, appropriate infrastructure, including access to power and water, has helped Thailand fuel rapid economic growth during the past three decades. Good infrastructure has made Thailand attractive to foreign investment, helped facilitate international trade, and improved the efficiency of everyday business activities. All of these led to more jobs, and more jobs led to more income for the poor. For some not-so-poor people, good infrastructure also helps them improve productivity or fulfill their lifestyles.”
RURAL INFRASTRUCTURE AND ECONOMIC DEVELOPMENT –  Dr. Mohammad Tarique, Lecturer, University Dept. of Economics, B.R.Ambedkar Bihar University, Muzaffarpur.
Abstract reads: “Infrastructure development has a key role to play in both economic growth and poverty reduction. Failure to accelerate investments in rural infrastructure will make a mockery of efforts to achieve the Millennium Development Goals in poor developing countries while at the same time severely limit opportunities for these countries to benefit from trade liberalisation, international capital markets and other potential benefits offered by globalisation”
Private Sector Participation in Infrastructure:the case of Thailand – Deunden Nikomborirak – Asian Development Bank Institute Discussion Paper No. 19
Road Funding: Time for a Change :- Economic Growth Benefits of Transportation Infrastructure Investment – Dr. John C. Taylor,  Associate professor of marketing and logistics at Grand Valley State University and a senior policy analyst with the Mackinac Center for Public Policy in Midland, Michigan.
which contains the statement “…No, the key benefit and reason for transportation investment is from helping to make businesses and individuals more productive, across the geographic landscape. We rely on our transportation investments to increase the economy’s overall productivity – both in terms of making individual travel (business and personal) faster and more reliable, and in terms of the productivity benefits of making freight flows faster and more reliable…”
World Bank — Malawi’s infrastructure: A continental perspective: Vivien Foster; Maria Shkaratan, ISSN: 1813-9450.

As you can see, the above papers + articles present a credible argument that a good and functional infrastructure is essential for economic development.
But that’s not to say that there are no credible counter arguments against infrastructure. That’s not what I’m saying. I’m sure one can cite the prevention of deforestation or preservation of natural habitats as factors against excessive infrastructure. Also, there is the issue of encouraging tourism which could probably mean encouraging greater biodiversity, creating / preserving forests  and wildlife reserves (but even in such circumstances, you still need a world-class airport for a good first impression (the kind of impression you get when you first land at Hong Kong International); functional roads (at least 3 lanes on each side between major cities) that minimises journey times; and world-class hotels and resorts. Why should you give tourists (who in large numbers can be the source of much-needed forex revenue) less than what they are accustomed to, and expect that they will return to your country, or recommend a visit to their friends?). Never mind recommendation, how can you compete on the global stage, when your facilities are substandard? Further, why shouldn’t it be possible to build modern factories with reduced carbon footprint (see Marks & Spencer’s ‘eco-factories’ initiative here) side by side with wildlife/forest reserves?
So, considering all this, I find it hard to imagine a credible setting in which arguments against infrastructure may find pre-eminence, over arguments for infrastructure; especially for a poor country whose majority infrastructure was built  50-year ago; whose roads are littered with pot-holes, with virtually no world-class business centres; that has old airports – with poor facilities including smelly badly looked after toilets; a country that experiences intermittent blackouts almost every week; that is struggling to attract significant investment from abroad; a country where 74% of the population live below the poverty line; which is heavily reliant on agriculture and dwindling tobacco exports + has negligible industrial output; has few natural resources; has a large relatively unskilled young population and suffers widespread corruption and cronyism, even in the upper echelons of its government.

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My question to you then is: why are the leaders of such countries not investing heavily (sooner than later) into major infrastructure projects, when it is in fact a determinant factor in economic development and a serious game changer? Is it because they are in fact not cut out for the job and would be better followers instead of leaders?

Airports and their importance to Economic growth – lessons from Mozambique, Switzerland and Norway

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AirportLilongwe

The images above show sketches of the new Nacala International airport  designed by Brazilian Architects Fernandes Arquitetos (who own the copyright to the images)  [More here]. According to the above Wikipedia entry,  “Once the airport is open people will not have to go to Maputo to get in to the country “. In other words, this will open up the North of Mozambique to the world, essentially removing the bottleneck that necessitated international passengers travelling by plane from the North, to go all the way to Maputo, which is ~1500km South west of Nacala, even when such passengers were destined for the north part of the country.

The impact of such an upgrade must not be underestimated. According to Laurie Price, Director of Aviation Strategy at Mott MacDonald, airports not only create employment and act as business getaways, but they are the main driver for tourism growth. He goes on to map a graph that lists aviation trips in countries in terms of their Propensity to Fly against Economic Strength (GDP).  Norway, a country with the highest Human Development Index features at the top with the highest propensity to fly, and interestingly, the highest GDP:

table on trips per capita against gdp - norway at top

He also makes reference to  an Air Transport Action Group (ATAG) September 2005 study that revealed that “25% of all companies sales are dependent on air transport.” and “70% of businesses report that serving a bigger market is a key benefit of using air services.”

Categorising Africa & Middle east, Russia & China and part of South America as restricted by regulation, Price appears to suggest that liberalised airline transport industries of Europe and North America make the greatest contribution to GDP.

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While the links between economic growth and air transport may not be welcomed news for the pro-green lobby who would have us each drive a Toyota Prius (or better, not drive at all),  similar views as those of Laurie Price have been reflected elsewhere; James Cherry, President and CEO Aéroports de Montréal, called airports

“..economic engines and most of all a reflection of the communities they represent “ [See here]

He gives an example of Canada where he says

“… airports generate an estimated $34 billion in economic activity and are responsible for 300,000 direct and indirect jobs “

This probably suggests that a thriving air transport industry that interconnects a country to the outside world is essential for economic development. For landlocked countries not receiving supplies directly via their own ports, one would imagine that the air transport industry (including Cargo services) becomes a much more crucial factor to their economic activity.

Looking at the airports of the countries on the above graph, it appears that most countries with thriving tourist industries either have an extensive airline communication network or have many international airports within them, for some an  international airport connecting each of their major cities (or tourist centres) to the outside world. Even Switzerland, a landlocked country smaller than Malawi in size (at  15,940 sq miles – roughly one-third of Malawi’s total area [~ 45,560 sq miles]) has at least 7 airports that appear to be international airports, with flights by the local carrier serving over 70 destinations in 38 countries.

The Mozambican project was made possible by a loan of $80 million from the Brazilian government via the Brazilian development bank, Banco Nacional de Desenvolvimento Economice Social (BNDES), as part of a $300 million credit line opened up to support projects in Mozambique.

While the airline industry in southern Africa currently appears chaotic and in tatters, with Malawi having recently flogged 49% of its airline to Ethiopian airlines,  it may be time to try different tactics. When some people have complained of unfair treatment and lack of understanding [See the sad story of Nyasa Express here] on the part of Malawian politicians regarding opening up Malawi to international travel, it would probably be wise, in my view to reconsider this issue, and abandon protectionist measures.

If Mzuzu airport, Chileka airport in Blantyre, Karonga airport and Salima airport were expanded and upgraded, to handle international flights, following a similar approach to what has happened in Mozambique with Nacala airport, it is not inconceivable to see how such measures  would create employment, begin to stimulate industry, attract investment and open up the Malawi to global trade.

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