An adequate supply of infrastructure services has long been viewed as a key ingredient for economic development, but Sub-Saharan Africa ranks at the bottom of all developing regions in virtually all dimensions of infrastructure performance. Yet, there are varying trends in the region's infrastructure performance across key sectors. In telecommunications, Sub-Saharan Africa has seen dramatic improvement in the quantity and quality of infrastructure, and the gains are broad-based. Access to safe water has also risen, with 77 percent of the population having access to water in 2015, from 51 percent in 1990, but disparities between rural and urban access rates persist.
In the power sector, by contrast, the region's electricity-generating capacity has changed little in more than 20 years. At about 0.04 megawatts per 1,000 people, capacity is less than a third of that of South Asia, and less than one-tenth of that of Latin America and the Caribbean. There is some variation by country, with little progress in electricity-generating capacity per capita in the region's low-income countries (LICs) and lower-middle-income countries (LMCs), but more than a doubling of capacity among upper-middle-income countries (UMCs). Access to electricity is low, at 35 percent of the population, with rural access rates at less than one-third of urban ones. Transport infrastructure is likewise lagging, with the region registering the lowest road and railroad densities among developing regions. Sub-Saharan Africa is the only region where road density has declined over the past 20 years (1990-2011). Despite a doubling in access to improved sanitation facilities, the access rate remains low, at about 30 percent in 2015; the largest gain in access has been in rural areas and LICs.
Controlling for geographic and demographic factors shows that most countries in Sub-Saharan Africa are close to the international norm that characterizes the relationship between infrastructure and development. This section considers that a country underperforms (overperforms) in a specific dimension of an infrastructure sector relative to an international norm if, after controlling for geographic and demographic factors, it has a level of infrastructure that is below (above) its level of economic development. But some countries are underperforming according to the international norm. For example, Angola, Gabon, Nigeria, Rwanda, and Tanzania underperform in telecommunications density and electricity-generating capacity; and Angola, Ethiopia, and Madagascar underperform in access to improved water source. Some countries do much better than predicted by the international norm, such as Kenya in Internet density and South Africa in Internet quality.
The growth effects of narrowing Sub-Saharan Africa's infrastructure quantity and quality gap are potentially large. For instance, growth in GDP per capita for the region would increase by an estimated 1.7 percentage points per year if it were to close the gap with the regional median (excluding Sub-Saharan Africa) of each infrastructure indicator. Eliminating the quantity gap would deliver 1.2 percentage points higher growth per capita per year; catching up in quality would bring about 0.5 percentage point higher growth per year. The growth effects of the quantity of infrastructure vary by sector, with the largest growth benefits obtained by narrowing the gap in electric power-generating capacity, at 0.7 percentage point higher per year. For quality, improving road quality provides the largest benefits.
Closing the infrastructure quantity and quality gap relative to the best performers in the world, as proxied by the top decile of the distribution of infrastructure stocks and quality, would yield higher growth rates in GDP per capita of about 1.8 and 0.8 percentage points per year, respectively. That is additional growth in GDP per capita of 2.6 percentage points per year. Again, the largest potential growth benefits would come from closing the gap in electric power-generating capacity. Narrowing the gap in the length of the road network would render large gains as well.
The growth benefits for Sub-Saharan Africa are directly related to the potential gains of narrowing the gap for LICs and LMCs in the region. Energy appears to be a more binding constraint among LICs, whereas roads are the most binding constraint among LMCs, in quantity and quality.
Public investment as a share of gross domestic product (GDP) in Sub-Saharan Africa is below its recent peak of 5.8 percent in 2014. The average masks considerable variation across country groups. The evidence suggests that public and private investment are substitutes in 19 of the region's countries (of 45) and complements in 26 countries. Public spending tends to be less procyclical or more countercyclical in countries with stronger institutions, and more procyclical in countries with more inflows of foreign capital or when access to global capital markets is procyclical.
Public capital spending, based on data collected by the BOOST initiative for 24 African countries, is estimated at 2 percent of GDP annually between 2009 and 2015. Roads accounted for two-thirds of overall investments. Capital spending on electricity and water supply and sanitation each accounted for 15 percent of total capital expenditures. Overall, actual spending in infrastructure was considerably lower than capital allocations during the same period. The latter amounted to around 3.4 percent of GDP, reflecting substantial under-execution of such investments. Foreign aid continues to play an important role in some of the infrastructure subsectors, with the share of the overall capital budget allocations funded through external aid registering 36 percent in 2015. In electricity, a substantial increase in foreign funded projects has been driven mainly by the infrastructure push embedded in the "Power Africa" initiative. Road transport is the sector with the greatest share of domestic contribution.
Public-private partnerships (PPPs) in Sub-Saharan Africa remain a very small market, with projects concentrated in only a few countries, namely, South Africa, Nigeria, Kenya, and Uganda. Together they account for 48 percent of the 335 total PPP infrastructure projects in the region in the past 25 years. This amounts to $36.7 billion of investment commitments, or 62 percent of the $59 billion in total investment commitments in the region. In the past five years, PPP infrastructure projects in the region have mainly been concentrated in the energy sector (78 percent)-mostly renewables-followed by transport (22 percent) and water and sanitation (0.5 percent). International financial institutions play a larger role in financing PPPs in Sub-Saharan Africa than in other emerging markets and developing economies. A robust institutional and regulatory framework is critical in attracting private investment for infrastructure projects. The region performs below the global average in each of the four PPP thematic coverage areas-project preparation, procurement, unsolicited proposals, and contract management.
The impact on growth of public investment can be enhanced by implementing policies that foster the efficiency of public investment. For instance, improving the institutions and procedures governing project appraisal, selection, and monitoring can render considerable economic dividends. Recent studies show that the public investment multiplier could double if the gap between the bottom and top performers in public investment efficiency is closed. There is evidence that countries with sound public investment management systems tend to have lower but more efficient levels of public investment, crowd in more private investment, and exhibit higher growth rates.