Africa stays in the slow lane with transport infrastructure
As the world’s poorest continent with the least developed transport infrastructure, it is no surprise that Africa trails the rest of the world in terms of fuel use
A region that has around 15% of the world’s population is likely to account for just 3.4% of global transportation energy demand in 2015, according to the US Energy Information Administration (EIA). Vehicle ownership data are no less gloomy. Only 26 people of every 1,000 in Africa (including the Middle East) owned a passenger car in 2009, compared with 550 in OECD North America. By 2035, Africa’s number will still be just 47, according to Opec. Despite the potential in this huge under-developed region, Africa’s demand growth is forecast to lag that in much of the rest of the developing world in coming decades. The EIA estimates average annual growth of 1.5% in Africa’s transport energy use in 2008-35, compared with 3.6% in the developing countries of Asia and 1.9% in central and South America.
However, such figures hide extreme regional variations. Much of North Africa’s transport market has more in common with that of the Middle East than sub-Saharan Africa (SSA) and is also a more likely destination for European investment. A number of European vehicle manufacturers have announced plans to build factories in the region. French marque Peugeot, for example, intends to build on its recent success across the Maghreb, in Algeria particularly, by expanding into SSA. Peugeot and others who are seeking a slice of the sub-Saharan pie will be taking on Japanese firms Toyota, Nissan and Honda, which have all sold cars on the continent for decades.
Disparities within SSA transport markets are also vast. Leading economies, such as South Africa, Nigeria and Kenya, have the transport infrastructure and access to investment to encourage substantial growth in vehicle ownership.
South Africa is likely to set the pace in the region, recording sharp growth in both public and private transport. It already has the continent’s longest road network totalling over 16,000 km, according to the government. Diesel is likely to play a prominent role in the transport sector, driven, in part, by output from Sasol’s gas-to-liquids plant at Mossel Bay, which produces 36,000 barrels a day of refined products.
The country is spending more than $8 billion in 2010-15 to upgrade and maintain its roads, which should help boost traffic. At present, minibus taxis handle around two-thirds of all urban passenger trips, and a high percentage of rural and inter-city journeys, the government says.
South Africa is also one of the very few countries in Africa wealthy enough to support toll roads, which account for around 19% of the road network. Meanwhile, the staging of the football World Cup in the country in 2010 provided impetus for the development of new railway capacity.
Historically, much of the rest of the continent has been heavily dependent on cash from multilateral donors for its major road finance. However, the days when the World Bank doled out funds for high-profile transport projects in Africa are largely over, given the delays and wastage that dogged many of them in the past. Instead, multilaterals tend to focus more on lower key health and education programmes to encourage economic development.
That means African governments have turned to the largesse of firms, notably those from China, which often provide transport infrastructure to help secure commodity exports, as well as funding from companies interested in building toll roads, where economically feasible.
The need for improved public transport is also likely to intensify, as rural-urban population drift results in cities becoming more congested than they already are. At last June’s UN-backed climate conference in Rio de Janeiro, a group of six multilateral banks, including the World Bank, said transport improvements in Africa would require investments of more than $18bn a year until 2020.
Which energy sources benefit from such investments will depend, to a large extent, on how successful development banks are in implementing programmes to introduce cleaner forms of transport to overcome the continent’s heavy reliance on oil-based transport fuels. The multilaterals have committed to put $175bn into sustainable transport globally and hope that this will attract further funding from private and public sector investors.