MAPUTO, May 29 – Africa’s fast growing economies need to spend $93 billion a year just to bring infrastructure up to speed, the head of the IMF said on Thursday, sketching out the daunting challenges still faced by the continent.
Opening a major meeting for finance ministers and central bankers in Maputo to plot Africa’s rise, Christine Lagarde said the continent still faced massive challenges.
“Only 16 percent of all roads are paved, compared with 85 percent in South Asia. These shortfalls represent huge costs to business — and to people.”
Sub-Saharan African economies, some of the fastest growing in the world, are expected to expand by more than five percent this year.
But poor infrastructure, including a lack of capacity in electricity production and poor roads, is seen as curbing growth.
“High quality infrastructure can be a magnet for foreign investment,” said Lagarde.
After years of hailing Africa’s economic development, policy makers want to usher in a second phase of development that sees economic gains benefit all.
While the emergence of a middle class has boosted consumer growth, much of the continent’s growth has come from oil, gas and other natural resources.
“Let me be frank, in too many countries, the rents from extractive industries are captured by just a few,” said Lagarde.
“Mining can account for an important share of output and export earnings, but often contributes relatively little to budget revenues and job creation.”
Beyond the corridors of power and conference talk-shops, Africans are increasingly frustrated by the lack of good jobs.
“Jobs are scarce,” says Maputo street vendor Ercilia, who sells bread to passers by. “Some days I make a living and some days I don’t.”
“I believe in Africa some day all this will change,” said security guard, Marcelino Jaime, noting that few jobs were available for uneducated young people.
“In Africa we need a lot of creativity to improve things,” he added.
Lagarde earlier hailed the leaps made by African economies in the last decade as “nothing short of remarkable.”
But as policymakers take stock of Africa’s strong economic performance, many are also looking at the risks that lie ahead.
The region could face lower demand for its exports should growth slow in increasingly important emerging markets like Brazil, India and, in particular, China.
Beijing is a top buyer of African resources from copper to oil and gas.
In rapidly growing cities such as Maputo the Chinese presence is manifest, from a Chinese-built airport to the country’s businessmen chattering on cell phones as they walk from meeting to meeting.
But poverty perhaps remains the continent’s biggest challenge.
Ahead of the meeting, rights groups questioned the current optimistic view of “Africa’s rise”.
“Africa is not rising for ordinary citizens,” said Oxfam International’s Executive Director Winnie Byanyima.