An AfDB press release notes that the promised funds will come from the bank’s low-interest lending window, the African Development Fund (ADF). In December, the Bank secured commitments from donors to contribute a record $8.9 billion to replenish the ADF for the next three years.
It has earlier been reported that the loans will finance regional infrastructure projects, including the construction of “a number of major road and rail projects aimed at crisscrossing the continent with transport corridors.”
Proposed projects would include transcontinental transportation corridors that would require a huge outpouring of money. They would serve to benefit exporters and, by extension, transnational companies that profit the most from Africa’s commodities.Some of the more ambitious proposed projects include the construction of “Trans-African highway projects to connect Beira in Mozambique to Lobito in Angola, Dakar in Senegal to Lagos in Nigeria, and Lagos to Mombassa in Kenya.”
While Africa suffers from an acute lack of infrastructure, it is important to consider what type of infrastructure is most needed to help alleviate poverty on the continent. By and large, transcontinental highways and railroads will require a huge outpouring of money and serve to benefit exporters and, by extension, transnational companies that profit the most from Africa’s commodities. Roads and high-quality railroads are indeed necessary to move goods to and from land-locked countries such as Uganda.
The sheer scale of transcontinental projects, however, could distract effort and funds from these more manageable projects, and in the end the more grandiose projects have a higher likelihood of being abandoned because of unmet expectations.
At the same time, Africa’s poor will likely remain cut off by the lack of basic local road networks and adversely affected by the intense footprint that such large-scale physical infrastructure projects often entail.
A recent study by International Rivers and Environmental Defense also shows that large, capital-intensive infrastructure projects such as these tend to be the most prone to corruption. Questions also remain as to whether the AfDB has the requisite experience to identify and mitigate the serious potential impacts of these projects, and whether it wields sufficient leverage to ensure that its social and environmental safeguards, which are strong on paper, are enforced.
Since it resumed regular operations after facing a financial crisis in the early 1990’s, the AfDB has sought to define itself as a lender with special expertise on infrastructure in Africa. It has consistently allocated a significant portion of its lending to the sector, and was chosen to coordinate regional infrastructure initiatives, such as NEPAD’s Infrastructure Action Plan and the Infrastructure Consortium for Africa (ICA). However, the AfDB has made limited progress in its convening role, and few of its ambitious plans to create regional energy, transportation, and water initiatives under NEPAD have come to fruition.
While African governments appear keen to benefit from this and other regional infrastructure schemes, it remains unclear the extent to which this latest initiative is demand-driven or being pursued at the behest of donors. The lion’s share of new donor commitments at the AfDB have been earmarked for infrastructure, while a new high-level panel (see “High-level panel issues report on prospects for African Development Bank”) on the Bank recognizes that the board of the ADF is disproportionately influenced by its donors. A recent Financial Times article suggests that AfDB President Donald Kaberuka “is facing dissent from some African staff concerned that efforts to carve out an independent role for the AfDB are being undermined by some western donors.”