Paving new roads: how infrastructure and trade are recharting Africa’s economic landscape
Africa’s booming youth population and key infrastructure projects like the Trans-Sahara Highway and Libido Corridor are fuelling investment opportunities across the continent.
The RMB Africa Focus series with Crystal Orderson is brought to you by RMB
Acclaimed journalist Crystal Orderson, who specialises in economic and political matters regarding the African continent, joins CapeTalk's Lester Kiewit to discuss the growth of infrastructure and how new roads and railways are facilitating trade opportunities.
Africa's youth population is estimated to be over 400 million. That's 30% of the global population.
"We do have the youngest population in the world."
- Crystal Orderson, Journalist
Orderson states that the private sector's recognition of opportunities in healthcare, agriculture, education, and other sectors should not be underestimated.
The key to this development is the African Continental Free Trade Agreement (AfCFTA), which was agreed upon in 2019 and became operational in 2021.
"It is now seen as the world's second-largest integrated market, and it is a green shoot for the continent."
- Crystal Orderson, Journalist
Historically, intra-continental trade has been relatively weak. She explains that often when countries wish to trade with one another, they end up paying higher prices for goods than if they were to purchase from countries outside Africa.
Banks and the private sector are investing considerable effort in making this process easier and more effective.
"So there has been a really big push to connect the different countries."
- Crystal Orderson, Journalist
What are the key sectors driving the increase in trade and investment across Africa, asks Lester Kiewit?
Orderson highlights a variety of public-private partnerships in the area of infrastructure projects that are enhancing access and logistics. One of the most notable projects among these is the 9,000-kilometre Trans-Sahara Highway, linking Algeria to Lagos.
Initiated by the African Development Bank, this giant motorway stretches from Algiers to Lagos, linking the entire Maghreb and Sahel region.
"We saw the involvement of a number of private entities."
- Crystal Orderson, Journalist
It has facilitated the connection of various landlocked countries, resulting in growing trade and the opening up of transport corridors, she adds.
"We are looking at around 18,000km of road, with about 27 border crossings, representing around $14 billion, according to trade stats."
- Crystal Orderson, Journalist
She notes that this infrastructure development has significantly contributed to the growth of trade among African countries.
The Lobito Corridor is a 1,300 km railway that runs from Angola’s Lobito port through the Democratic Republic of the Congo (DRC) and into Zambia.
"It's seen as an absolute gamechanger because the corridor will provide a cheaper and quicker route for transporting critical minerals from the copper belt of the DRC to Zambia, from where it will go onwards."
-Crystal Orderson, Journalist
Orderson spoke to RMB Chief Economist Isaah Mhlanga, who had this to say:
"Rail infrastructure cannot be underestimated. It is critical given that most African countries' exports - commodities, think about copper in Zambia, think about cobalt in the DRC - needs to move across rail."
- Isaah Mhlanga, RMB Chief Economist
He emphasises the importance of having the same rail gauges, which allows trains to seamlessly cross borders without the need to redesign railway lines. This facilitates the transportation of bulk goods to ports such as Durban, those in East Africa, and Angola.
"We have to integrate all those systems."
- Isaah Mhlanga, RMB Chief Economist
Moving to the currency challenges, Orderson explains that currently, Africa has some 42 individual currencies.
This is where the cross-border market infrastructure, the Pan-African Payment and Settlement System (PAPSS), launched in 2022, has been a turning point, says Orderson.
"The system has allowed countries in Africa to pay for Africa trade in their local currency which is reducing costs and accelerating the settlement and payment of transactions."
-Crystal Orderson, Journalist
The importance of collaboration is evident as governments, investors, and the private sector work together on projects to develop roads, railways, and logistics networks vital for economic growth in Africa.