2015 resakss conference – day 2 - maximo torero

Infrastructure Challenges

and Potential for Africa

South of the Sahara

Maximo Torero

[email protected]

IFPRI

Key points

What we know on infrastructure in SSA

Estimated effects on costs

Estimated infrastructure gaps

Why is central for increasing income and

reducing income inequality – example of energy

Importance of complementarities

How we move forward

Infrastructure Coverage is Low

World Low Income SSA

Rural Urb. Total Rural Urb. Total Rural Urb. Total

% Population with electricity 72 97 85 12 59 25 15 72 35

% Population with access to safe

water

82 96 89 55 87 63 52 85 64

% Population with improved

sanitation

46 79 64 22 39 27 23 41 30

Telephone subscriber / 1000

people

160 8 11

Cellular subscribers / 1000 people 931 507 659

Paved roads (% of total) 57 20.6 15.6

Unequal Access to Infrastructure in Africa

Quintiles

1st 2nd 3rd 4th 5th

Safe water 34% 49% 54% 67% 85%

Network electricity 0% 4% 12% 28% 71%

Transport to school

(% in less than 30mn)

62% 65% 66% 68% 72%

Transport to Health

(% in less than 30mn)

56% 60% 70% 73% 79%

Very large access disparities across income categories

Electricity is the most unequal

Source: http://trendvee.com/africa-at-night-from-space/

High Transportation costs

Notes: The extent of agriculture includes areas with at least 10 percent irrigated, cultivated or grazing

lands, net of areas with a growing season of zero days.

Source: Nelson (2006) and Sebastian (2007b).

Access to roads

Cellular Phone subscription and Population

0

1

2

3

4

5

6

7

8

Bill

ions

Population Cellular phones

Source: Mobile phone subscriptions are from the International Telecommunication Union (ITU) and country categories are

from the World Bank.

Ratio of Mobile Phone subscriptions to

Population in Developing Countries, by Region *

* EAP = East Asia and Pacific; ECA = Europe and Central Asia; LAC = Latin America and the Caribbean; MENA= Middle East and North Africa; SA = South Asia; and SSA =

Sub-Saharan Africa. High-Income (OECD and non-OECD) are excluded from the sample.

Source: Mobile phone subscriptions are from the International Telecommunication Union (ITU) and country categories are from the WorldBank.

Source: Nakasone, Torero and Minten (2013). “The Power of Information: The ICT Revolution in Agricultural Development”.

IFPRI.

0

0.2

0.4

0.6

0.8

1

1.2

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

SA

OECD

SSA

LAC

ECA

MENA

EAP

% Urban % Rural % All

Bolivia (2007) a/. 77.6% 18.7% 57.0%

Brazil (2009) a/. 83.3% 53.2% 78.8%

Colombia (2010) a/. 90.2% 71.7% 86.0%

Ecuador (2010) a/. 82.9% 59.7% 75.5%

Mexico (2007) a/. 66.6% 45.0% 55.2%

Peru (2010) a/. 82.2% 47.1% 70.4%

India (2011) b/. 76.0% 51.2% 59.2%

Bangladesh (2010) c/. 82.7% 56.8% 63.7%

Tanzania (2010) d/. 77.5% 34.2% 45.4%

Kenya (2010) e/. 71.9% 55.0% 59.8%

South Africa (2008 / 09) f/. 87.5% 82.0% 85.7%

Liberia (2009) g/. 69.0% 20.7% 43.2%

Malawi (2010) h/. 72.7% 32.3% 39.0%

Ghana (2010) i/. 63.4% 29.6% 47.7%

Nigeria (2009) j/. 88.3% 60.3% 70.6%

Egypt (2008) k/. 54.1% 27.8% 40.5%

Ehtiopia (2011) l/. 65.2% 12.8% 24.7%

Uganda (2011) m/. 86.8% 53.1% 59.4%

Senegal (2011) n/. 95.4% 81.7% 88.4%

Mozambique (2011) o/. 66.8% 20.0% 34.1%

Nepal (2011) p/. 91.6% 71.9% 74.7%

Zimbabwe (2011) q/. 90.1% 48.0% 62.2%

Rwanda (2010) r/. 71.8% 35.1% 40.3%

Cambodia (2010) s/. 90.1% 56.2% 61.9%

China (2010) t/. 76.3% 60.7% 67.9%

Percentage of Households that Own a Mobile Phone,

by Residence Area

Source: Nakasone,

Torero and Minten

(2013). “The Power of

Information: The ICT

Revolution in

Agricultural

Development”. IFPRI.

Ratio Land Lines to Population

Page 14Source: Nakasone, Torero and Minten (2013). “The Power of Information: The ICT Revolution in Agricultural Development”.

IFPRI.

0

0.05

0.1

0.15

0.2

0.252000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

SASSA

LAC

ECA

MENA

EAP

Ratio of Broadband Subscriptions to

Population

Page 15Source: Nakasone, Torero and Minten (2013). “The Power of Information: The ICT Revolution in Agricultural Development”.

IFPRI.

0

0.02

0.04

0.06

0.08

0.1

0.122000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

SASSA

LAC

ECA

MENA

EAP

On Irrigation

Source FAO : Latest data for 2012.

Page 17

Sub-

Saharan

Africa

South

Asia

All

Developing

Countries

Middle

Income

High

Income World

Agricultural land (as % of

land Area) 50% 55% 40% 46% 34% 39%

Irrigated land (as % of

cropland) 3% 46% 23% 28% 14% 21%

On Ports

Location constraint for the sustainability of certain ports

Port capacity usually results from inadequate maintenance

Impact of port efficiency on port productivity and costs (dwell time may vary between a reported average of 7 days in Abidjan and 17 days in Douala)

Importance of a legal setting: the institutional framework of a port in WCA has depended primarily on its inheritance of either the French or the British models.

Cumbersome procedures and poor links to the hinterland reduce port efficiency

In addition, there are the traditional “non-infrastructure” and “non-official” barriers

Key points







How we move forwardPage 19

Africa’s infrastructure services several times

more expensive than elsewhere

International comparison of the costs of a basic plan of mobile telephony (prepaid) in 2009 US $ PPP

Source: Hernan Galperin, Broadband Prices in Latin America and the Caribbean, Working Paper #15 (Buenos Aires, Argentina: Universidad de San Andrés, 2013). Notes: PPP = purchasing power parity. Prices include taxes. Equipment and connection costs are not included. The low-volume basket includes 30 outgoing calls and 33 SMSs per month. The following structure of calls is assumed: local to fixed phones (15%), national (7%), mobile in-network (48%), mobile out-of-network (22%), and voice mail (8%). The estimations assume that 48% of calls take place during peak times, 25% in off-peak times, and 27% during the weekends. The following duration of calls is assumed (in minutes): 1.5 for local and national, 1.6 for mobile on-net, 1.4 for mobile off-net, and 0.8 for voice box. The tariffs are prorated according to the market shares of each operating company.

Disposable income for telecommunications in Brazil (5% of income) per income decile

Source: H. Galperin, Tarifas y Brecha de Asequibilidad de los Servicios de Telefonía Móvil en América Latina y el Caribe (Lima, Peru: Diálogo Regional sobre

Sociedad de la Información, 2009), 22.

Note: R$ = Brazilian real.

Key points








100%

80%

60%

40%

20%

Efficiency gap $17

Existing spending $45

0%

Spending needs $93

All figures in US$ billion a year

Infrastructure will require an additional US$31

billion a year and huge efficiency gains

100%

80%

60%

40%

20%

Efficiency gap $17


0%

Spending needs $93


100%

80%

60%

40%

20%

Efficiency gap $17

Improving operational

efficiency $7.5


0%

Spending needs $93


100%

80%

60%

40%

20%

Efficiency gap $17

Increasing

cost recovery $4.7Improving operational

efficiency $7.5


0%

Spending needs $93


100%

80%

60%

40%

20%

Efficiency gap $17

Increasing


efficiency $7.5

Prioritizing

public spending $3.3


0%

Spending needs $93


100%

80%

60%

40%

20%

Efficiency gap $17

Increasing


efficiency $7.5

Spending budgeted

resources $1.9

Prioritizing



0%

Spending needs $93


100%

80%

60%

40%

20%

Funding gap $31

Efficiency gap $17

Increasing


efficiency $7.5

Spending budgeted

resources $1.9

Prioritizing



0%

Spending needs $93


Key points








Impact path ways of rural electrification

El Salvador – Measuring Reduction of Indoor

Pollution

Cuelgue el cable de un

clavo o protuberancia en la

pared, columna, o techo

(marco de foto)

detector

1 metro

más de 1.50 metros de la

ventana o puertas operables

1.50 metros de

altura

How does infrastructure affect

welfare?

Change in the

proportion of time

for activity “i”

Change in the total

number of hours

worked by the

household

Interaction

effect

Δ𝑌𝑖 ≈ 𝐿

𝑗

Δ𝑆𝑙𝑖𝑗𝑦𝑖𝑗

𝑙𝑖𝑗+ Δ𝐿

𝑗

𝑆𝑙𝑖𝑗𝑦𝑖𝑗

𝑙𝑖𝑗+ 𝐿

𝑗

𝑆𝑙𝑖𝑗Δ𝑦𝑖𝑗

𝑙𝑖𝑗+ Δ𝐿

𝑗

Δ𝑆𝑙𝑖𝑗𝑦𝑖𝑗

𝑙𝑖𝑗

Change in

returns to labor

Expected Results of Rural ElectrificationTerm Theme Indicator Expected Impact Gender heterogeneity

ImmediateCoverage and

Access

Percentage of households connected to the gridPositive No differentiated effect

Cost of electricity Negative No differentiated effect

Reliability of electric services Positive No differentiated effect

Short term

Coping costs

Number of sources used Negative No differentiated effect

Consumption of electricity Positive No differentiated effect

Energy input collection time use Negative Larger effect for females

Coping expenses in other energy sources Negative No differentiated effect

Health

Indoor pollution Negative No differentiated effect

Incidence of acute respiratory disease among

vulnerable groups Negative No differentiated effect

Education,

Leisure, and

Information

Hours in education or studying in the homePositive No differentiated effect

Hours spent in childcare No change No differentiated effect

Hours spent in entertainment and other leisure

activities Positive Larger effect for females

Productivity

Total hours of work Positive Larger effect for females

Percentage of hours of agricultural Negative Larger effect for females

Percentage of hours of non-agricultural work Positive Larger effect for females

In home business productivity/revenue Positive Larger effect for females

Long term Economic Growth Change in total income and expenditure Positive Larger effect for females

Percentage of poor households Negative Larger effect for females

Results of Rural ElectrificationTerm Theme Ethiopia El Salvador

ImmediateCoverage and

Access

15% points more likely to connect 11% to 19% more likely to connect

Spillover effects: 2% from baseline

of 41% connection rate25% of the effect of the voucher

Short term

Coping costs

Changes in use of kerosene for

lighting

Changes in use of kerosene for

lighting

No changes in cooking practices No changes in cooking practices

Health

N.A65% reduction in overnight air

pollutants

N.A

Reduction of 37-44% on acute

respiratory infections incidence

among children < 6

Education,

Leisure, and

Information

No effect Increase hours of studying in 7%

No effect More appliance ownership

No effectLeisure reduced in average by 0.7

hours per day

Productivity No changes Non agricultural independent

activities increased by 13%

Long termEconomic

Growth

N.AAnnual per capita income increased

in $ 186 (34% of baseline income)

N.A Positive distributional effects

Key points








Complementarities of infrastructure

Peru, 2002

Pipeline water

0%

10%

20%

30%

40%

50%

60%

% c

hang

e of

PC

HH

Inco

me

Water +

electricity

Water + elect +

phone

Water + elect +

phone + road

Source: Escobal and Torero, 2004.

Infrastructure

does seem to

have an impact

on household’s

welfare

There exists

complementariti

es in the

provision of

different types

of infrastructure

Bangladesh, 2000-2004

Electricity

0%

10%

20%

30%

40%

50%

60%

% c

hang

e of

PC

HH

Exp

Elec + phone Elec + road Elec + road +

phone

Source: Chowdhury and Torero, 2006

How does infrastructure affect welfare?

PERU, 2002PSM (kernel); control group: HH with no assets

A) Households work more hours B) Households increase non-agricultural hours

of work

2 infrastruct 3+ infrastruct1 infrastruct

0

0.5

1

1.5

2

2.5

3

3.5

4

addi

tiona

l wee

kly

hour

s of

wor

k

-25

-20

-15

-10

-5

0

5

10

15

% c

hang

e in

tim

e al

loca

tion

Ag salaried Non-ag salaried

Ag self-empl Non-ag self empl

1 infrastr

2 infrastr

3+ infrastr

Source: Escobal and Torero, 2004.

Infrastructure seems to have different

impacts on men and womenBangladesh, 2004: ATT effects of infrastructure among men and women

(PSM among men and women)

ATT

Treatment: 1 infrastructure

Control: No infrastructure

0

2

4

6

8

10

12

14

16

-0.1 0 0.1 0.2 0.3 0.4

dens

ity

Male

Female

Diff =

0.02

Treatment: 2 infrastructures


0

2

4

6

8

10

12

14

16

-0.2 -0.1 0 0.1 0.2 0.3 0.4 0.5ATT

dens

ity

Male

Female

Diff =

0.04

Treatment: 3 infrastructures


-1

0

1

2

3

4

5

6

-0.4 -0.2 0 0.2 0.4 0.6 0.8ATT

dens

ity

Male

Female

Diff =

-0.08

Treatment: More than one infrastructure


0

5

10

15

20

-0.2 -0.1 0 0.1 0.2 0.3 0.4ATT

dens

ity

Male

Female

Diff =

0.02

Key points








1. Regional coordination to boost supply

capacities- corridor concept

Africa’s economic geography is a serious

challenge infrastructure is inherently

regional

• 20+ countries with populations of <5

million

• 20+ countries with economies of <US$5

billion

• 60 international river basins

• 15 landlocked countries

2. Prioritization

Need of evaluation and prioritization based on

ERR and PRR (result of wealth creation)

Prioritized infrastructure corridors with Economic

development corridors (potentially use a typology

of development domains).

Need to learn from existing information by

systematizing it and developing concrete plans to

implement it.

Modeling Isoprofits

AB

Modeling Isoprofits

Graphic representation of a stochastic production

frontier in the single-output, single-input case

AB

Modeling

Isoprofits

Agricultural

typology areas

Mozambique

http://amazinglytimedphotos.com/soldier-yawning/#.U7Zny7HfpD8

We need to be out of synchrony

3. Financing

Multilaterals HAVE to play a crucial role but they need to think regionally – Need to change their way of operation

Public – Private partnership for infrastructure development

Innovations to broaden and deepen markets including niche and preferential markets

4. Complementarities

Significant evidence of importance of

complementarities

Need to think on a value chain approach

Need to learn from experience with compacts

on infrastructure

• In Africa roads and electricity are

extremely costly for users

• One of the major restrictions to trade

underachievement is infrastructure

5. On regulation

Recommend regulatory changes to enable themarket to work better

increased competition

open to new technologies

open to new business models

Outline an approach to subsidies to extend servicesbeyond the market

using market forces

minimal regulation

5. On regulation (cont)

Distinguish two types of service shortfalls:

market efficiency gap

real access gap

For the market efficiency gap:

identify current regulatory problems and issues thatregulatory agency can address (example EU remedies forregulation)

examine new technologies that could help to reduce costs

For the real access gap:

draw on best practices developed in rural areas

complement and extend these for application in rural andperi-urban areas.

6. Governance and Accountability

Resources are needed from ODA, private

sector, and governments, but nothing will

work if the appropriate governance and

accountability is not in place

First is the need to reduce corruption and

allow incentives for proper work.

Second, monitoring systems and institutional

designs for basic accounting and regulation

are all neededPage 53

INVESTMENT HOURS HOURS NET GAIN

GAIN LOST

MALI 20,560,940 2.1 6.50 -4.40

BURKINA DE FASO 20,560,940 2.1 3.60 -1.50

GHANA 20,744,700 1.9 3.60 -1.70

TOGO 22,256,140 2.6 3.00 -0.40

Source: USAID: Report on the First Results of the improved road

transport Governance (IRTG) initiative on interstate highways

7. Leapfrogging

Not need to repeat what happen in the past

and what was done in developed countries –

clear example is the cellular industry

Use best technologies

Use green infrastructure – this could be an

advantage in SSA

Page 58

Thanks!