Roads to the Millennium Development Goals : Financing the Sub-Saharan Road Network

Sub-Saharan Africa (SSA) needs to invest 1.5-2.0 percent of its gross domestic product (GDP) on roads annually, over at least five years, which amounts to typically a threefold increase in spending. Otherwise the road network will continue to pose a major impediment to achieving the first goal of the Millennium Development Goals (MDGs): halving income poverty estimate of 1990 by the year 2015. However, transport is but one of the sectors yearning for increased public funding; there is competition from sectors like health and education. It is therefore imperative that the much needed finances are drawn from the private sector. This paper explores ways of capturing private finance, and management expertise, for road network management. The paper starts with an exposition of the relationship between roads and equitable economic growth in SSA. The state of the SSA road network is then discussed. It is observed that all-weather roads constitute only approximately one quarter of the network. The poor state of the network is attributed to the widespread notion that roads are a public good. It is argued that this is a delusion that must be dispelled. A change in attitude would make the heavily trafficked roads attractive to private finance; create fiscal space for low volume roads; and subsequently lead to a sustainable road network. The future of domestic equity and debt markets - key drivers of private infrastructure financing - is explored. Lessons on enhancing SSA domestic markets are drawn from Asia. The paper then presents emerging success stories in private road financing in Africa. Benefits of maturity in private infrastructure financing, based on the UK experience, are outlined. The paper concludes that road space should be treated as a private good, subject to market forces of demand and supply. Where demand is high, road space should be packaged and taken to the marketplace