Infrastructure, Connectivity and Trade in Africa

Infrastructure and connectivity are the backbone of a functioning economy. They stimulate employment creation, economic growth and development. The relationship between infrastructure investment and economic growth is well established in the literature. Infrastructure investment in Africa between the 1990s and early 2000s accounted for 99 basis points in GDP per capita over the period. And this compares favourably with the 66 basis points attributed to improved structural policies. Evidence suggests that advances in penetration of telecommunication services alone accounted for almost the entire impact of infrastructure investment on economic growth between 1990 and 2005. Africa’s infrastructure in all the key areas lags the rest of the world. The poor electricity supply situation in many countries in Africa is the biggest threat to economic growth and job creation. Access to reliable electricity supply reduces the cost of doing business, stimulates economic growth and facilitates job creation. This chapter reviews the state of infrastructure development and investment across the region. It then examines the theoretical and empirical evidence associated with infrastructure, connectivity and trade. Lastly, we provide policy suggestions to drive investments in infrastructure to enhance Africa’s competitiveness in internal and external trade.