Angola needs to invest US$20 billion in infrastructure to catch up with other developing countries

2 April 2012

Angola needs to invest US$20 billion in telecommunications, transport, energy, and water over the next decade in order to catch up with the level of infrastructure in other developing countries, according to a comparative study from the World Bank published in Washington.

In the study, “Angola’s Infrastructure: A Continental Perspective,” published by the World Bank, researchers Nataliya Pushak and Vivien Foster estimated that Angola has spent US$4.3 billion per year in infrastructure, which is the equivalent of 14 percent of its gross domestic product (GDP), most of which in transport.

The investment has been funded by the State Budget and by China, which is “by far the most significant source of external funding,” the researchers said.

“To meet its most pressing infrastructure needs and to catch up with developing countries in other parts of the world, Angola needs to expand its infrastructure assets in key areas,” they said.

In the area of telecommunications Pushak and Foster identified the most necessary projects as being linking up with neighbouring capital cities by fibre optic cable, an undersea cable, as well as universal access to the GSM signal and public broadband facilities.

In the transport sector the priorities are to have good quality two-lane national roads and to provide road access to agricultural areas.

Achieving these illustrative targets for infrastructure in Angola will cost around US$2 billion per year over a decade and the biggest slices will go to energy (US$785 million) and water (US$574 million).

The study shows that infrastructure inefficiency cost Angola close to US$1.3 billion per year, of 5 percent of GDP, which could largely be recovered by raising electricity tariffs and reducing the rate of investment in roads, the budget for which is usually excessive.

As well as a programme of roads that seems to exceed the execution capacity of the organisations involved, other decisions, “have not always been optimal,” such as a lack of investment in water and sanitation or in power distribution networks that take best advantage of greater generation capacity.

In the future, the study said, the Angolan authorities will still have the capacity to attract more private investment to these projects.

“Given the size and vibrancy of Angola’s economy it ought to be feasible in the medium term to attract a more significant volume of private finance, particularly in the energy sector, thereby helping to liberate public funds for other pressing social needs,” it said.(macauhub)