Infrastructure development is a cornerstone for economic growth and development. However, the cost of building infrastructures varies significantly across different regions. In Sub-Saharan Africa, the cost of constructing infrastructure is notably higher than in Europe. This article explores the underlying reasons for this disparity, examining factors such as material costs, labor markets, political and economic conditions, geographical challenges, and technical capacity.
High material costs
The cost of building materials in Sub-Saharan Africa is significantly higher than in Europe. Many Sub-Saharan African countries rely heavily on imported construction materials. According to the African Development Bank (ADB), up to 70% of construction materials used in Africa are imported, subject to import duties, shipping costs, and currency fluctuations. In contrast, Europe often has a more developed local production industry, reducing reliance on imports. Additionally, poor infrastructure and logistical challenges in Sub-Saharan Africa contribute to inefficiencies in the supply chain. For example, transporting materials from ports in Mombasa or Dar es Salaam to inland locations can be prohibitively expensive due to inadequate roads and railways.
Labor market differences
Labor costs also play a crucial role in the cost disparity. Sub-Saharan Africa faces a significant shortage of skilled labor, which drives up wages for qualified workers. A study by McKinsey & Company highlighted that skilled labor shortages can lead to wages that are up to five times higher than those of unskilled workers. Training and retaining skilled professionals is a challenge due to limited educational and vocational training institutions. While unskilled labor might be cheaper in Sub-Saharan Africa, the lack of skilled labor leads to a reliance on expatriates. For example, large infrastructure projects like the Grand Ethiopian Renaissance Dam have had to hire foreign engineers and technicians, significantly increasing labor costs. In Europe, a more balanced labor market ensures a steady supply of both skilled and unskilled workers at competitive rates.
Political and economic conditions
The political and economic landscape heavily influences infrastructure costs. Frequent political instability in many Sub-Saharan African countries creates an unpredictable investment climate. For instance, projects in countries like South Sudan and the Democratic Republic of Congo often face delays and increased costs due to political unrest. This uncertainty raises the risk for investors and contractors, leading to higher risk premiums and insurance costs. Additionally, fluctuations in currency and inflation rates in Sub-Saharan Africa can lead to unpredictable costs over the life of a project. For example, the Nigerian Naira's devaluation significantly impacted the cost of infrastructure projects, as materials and services became more expensive. Europe, with more stable economies, offers a more predictable financial environment for long-term infrastructure investments.
Geographical challenges
The geographical conditions in Sub-Saharan Africa present unique challenges. Many infrastructure projects are located in remote or difficult-to-access areas. For example, the Lamu Port-South Sudan-Ethiopia-Transport (LAPSSET) Corridor project involves constructing infrastructure across remote and rugged terrains, significantly increasing transportation costs for materials and machinery and complicating project logistics. Harsh climatic conditions, such as extreme heat in the Sahel region and heavy rains in Central Africa, as well as difficult terrain, such as the Ethiopian Highlands and the Congo Basin, add to construction challenges and costs. Europe generally has more favorable and varied climates and terrain for construction, which helps keep costs lower.
Technical capacity and technology
Differences in technical capacity and technology also contribute to cost disparities. Europe benefits from advanced construction technologies and techniques that increase efficiency and reduce costs. In contrast, many Sub-Saharan African countries lack access to such technologies, relying on more labor-intensive and time-consuming methods. For instance, in many African countries, construction projects still heavily rely on manual labor and outdated machinery. The development of local technical capacity is limited in Sub-Saharan Africa, resulting in higher dependence on foreign expertise. Projects like Kenya's Standard Gauge Railway had to rely heavily on Chinese technology and expertise, significantly increasing overall project costs. Investments in local capacity building are crucial but require time and resources.
Conclusion
The higher cost of building infrastructure in Sub-Saharan Africa compared to Europe is a multifaceted issue. High material costs, labor market discrepancies, political and economic instability, geographical challenges, and differences in technical capacity all contribute to this disparity. Addressing these challenges requires comprehensive strategies, including improving local production capabilities, enhancing education and training for skilled labor, stabilizing political and economic environments, and investing in technological advancements. By tackling these issues, Sub-Saharan Africa can create a more conducive environment for affordable infrastructure development, paving the way for sustained economic growth and development.
For more detailed information, you can refer to the reports and articles from sources such as the African Development Bank and Oxford Business Group
By Arnold A. KAMANKE