African nations should target spending on infrastructure to boost regional trade and revive economic growth, African Development Bank’s Vice-President of Operations Mandla Gantsho said.

The volume of Africa’s exports, primarily commodities, to markets abroad has dropped by about 20 percent since the start of the global economic decline, while regional trade has fallen by less, Gantsho said in an interview in the Zambian capital, Lusaka, yesterday.

“We must focus on railways, roads and energy infrastructure designed for regional trade, which will then help us to trade with the rest of the world,” he said. “It will be the foundation for growth.”

Southern and central African nations on April 6 received more than $1 billion in pledges from the U.K., World Bank, European Commission and African Development Bank to rehabilitate roads, railways and ports. The money will be used for the North- South Corridor project, which aims to cut the cost of moving goods in the region by $50 million a year and halve waiting times at border posts.

Growth in export volumes in Africa is expected to decline to 3.6 percent in 2009 from 10.6 percent in 2008, according to African Development Bank estimates. Global trade will plunge 9 percent this year as the recession deepens, the World Trade Organization said in an annual assessment on March 23.

Improving Africa’s infrastructure would help reduce transport costs, which account for more than 20 percent of the price of goods on store shelves, said Gantsho.

Access to trade financing will also help keep shipments moving on the continent, he added. The Tunis-based bank has set- up a $500 million trade financing facility, which may double to $1 billion if extra credit is needed, said Gantsho.

The World Bank yesterday pledged to invest at least $670 million to help countries in southern and eastern Africa to develop regional power grids to ease electricity shortages.

PUBLICATION: Bloomberg.com
AUTHOR: Sarah McGregor
DATED: 8th April 2009