1

Africa Infrastructure Country Diagnostic:a multi-stakeholder effort

East Africa’s Infrastructure: A Regional Perspective

Methodology and approach

Methodology Data collection by local/international consultants and Bank staff

based on standardized methodology Baseline year for data is 2006, does not reflect subsequent

evolution Approach

Focus on benchmarking ECCAS’s infrastructure against other African RECs and benchmarking ECCAS member countries with each other

Key Message #1

Infrastructure has contributed almost one percentage point in per capita growth in East Africa

Infrastructure contributed almost one percentage point in East Africa’s recent growth spurt

Catching-up on infrastructure could boost growth by almost six percentage points

Key Message #2

East Africa consists of a number of midsized economies

Both typical and unique features of East Africa’s economic geography

Typical African characteristics2 countries have economies <$10 billion2 countries have populations <10 million4 countries are landlocked Transboundary river basins (e.g. Nile)

Unique geographic featuresNumber of mid-sized economiesSignificant contiguous areas of wealth-generationEconomic activity away from the coast

Topographical profile of East Africa

Spatial distribution of economic activity

Key Message #3

Northern corridor is by far most significant artery for the region

A middling performer on prices and delays associated with road freight

Corridor Length (kms)

Road in good condition (%)

Trade density

(US$m per km)

Implicit velocity(km

/hr)

Freight tariff ($US/tonne-km)

Central 3280 49 4.2 6.1 0.13

Western 2050 72 8.2 6.0 0.08

Eastern 2845 82 5.7 8.1 0.07

Southern 5000 100 27.9 11.6 0.05

Main northern corridor corridors paved and in good condition, but elsewhere not so

  Condition (%) Type (%)

  Good Fair Poor Paved

Mombasa to Nairobi to Kampala 50 34 13 97

Mombasa to Nairobi to Kampala to Kigali 40 36 11 94

Mombasa to Nairobi to Kampala to Juba 44 48 9 84

Dar Es Salaam to Bujumbura 45 36 6 57

Addis Ababa to Djibouti 37 17 16 23

The key sea corridors not always in good condition

Regional traffic largely concentrated on the northern corridor at present

 Percentage in traffic bands

(AADT)

  <300300-1000 >1000

Mombasa to Nairobi to Kampala 10 5 85

Mombasa to Nairobi to Kampala to Kigali 8 9 83

Mombasa to Nairobi to Kampala to Juba 28 8 64

Dar Es Salaam to Bujumbura 43 18 39

Addis Ababa to Djibouti 34 66 0

The key corridors vary hugely on traffic volumes

Key Message #4

Regional roads more developed in EAC area, no real connectivity

with broader East Africa

Regional road network in EAC, generally in better condition than in the broader East Africa

  Condition (%) Type (%)  Good Fair Poor PavedBurundi 42.4 27.9 24.2 94.4Kenya 40.5 38.4 21.1 79.5Rwanda 66.7 33.3 0.0 100.0Tanzania 44.9 35.7 3.7 60.0Uganda 13.5 47.4 4.3 69.9EAC 38.0 38.7 13.2 73.3         Ethiopia 43.5 10.9 11.3 69.9Sudan 0.0 15.3 9.1 11.6EAC Plus 29.8 26.5 11.7 57.2

Marked absence of connectivity between EAC, and broader East Africa

Relatively low traffic on regional roads

  Percentage of traffic bands

  <300 300-1000 >1000

Burundi 12 80 8

Kenya 42 14 44

Rwanda

Tanzania 38 21 41

Uganda 26 36 38

EAC 39 21 40

       

Ethiopia 29 61 10

Sudan

EAC Plus 52 25 23

Most traffic concentrated in EAC area

Key Message #5

East Africa’s railways do not constitute a regional network

and demand relatively low

East Africa has one binational railway, but otherwise networks are not interconnected

Rail productivity measures generally poor

Traffic volumes on East African railways particularly low even by African standards

Key Message #6

Performance and capacity at Mombasa and Dar Es Salaam

drive the regional story

Regional ports story is about relative roles of Mombasa and Dar Es Salaam

East Southern West/ Central

Global Best Practice

Container Dwell Time (Days) 5-28 4-8 11-30 <7

Truck Processing Time (hours) 4-24 2-12 6-24 1

Crane Productivity (containers/hour)

8-20 8-22 7-20 20-30

Crane Productivity (tons/hour)

8-25 10-25 7-15 >30

Charges

Container handling ($/TEU) 135-275 110-243 100-320 80-150

General cargo handling charge ($/ton)

6-15 11-15 8-15 7-9

East African ports are in the middle of the African range, well behind global best practice

Performance relatively good in general, except for Port Sudan

 

Djibouti Mombasa Port Sudan

Dar Es Salaam

  Djibouti Kenya Sudan Tanzania

Container dwell time (days) 8 5 28 7

Truck processing time (hours) 12 5 24 5

Container crane productivity (container per hour) 17 10 8 20

Container cargo handling charge (USD per TEU) 135 68 150 275

General cargo handling charge (USD per ton) 8 7 10 14

Capacity is a significant issue at both Mombasa and Dar Es Salaam

(a) General Cargo (b) Containers

Key Message #7

Vibrant internal air transport market across East Africa

One area where connectivity is strong between EAC and broader East Africa

A medium-sized market with strong levels of connectivity (thanks to Addis and Nairobi)

East Africa features among Africa’s top 60 air transport routes

Strong growth in intra-regional air transport capacity

Strong connectivity with all countries having regular service to both hubs

Dramatic modernization of aircraft fleet

East Africa about half way along with respect to market liberalization

Community General status of YD implementation Status of air services liberalization

Overall implementation score

AMU No implementation. No liberalization within the AMU initiated, but need is recognized. 1

BAG Principles of the YD agreed upon in a multilateral air services agreement.

Up to fifth freedom granted, tariffs are free, and capacity/frequency is open. 4

CEMACPrinciples of the YD agreed upon in an air transport program. Some minor restrictions remain.

Up to fifth freedom granted, tariffs are free, and capacity/frequency is open. Maximum two carriers per state may take part.

5

COMESA

Full liberalization agreed upon (“legal Notice No. 2”), but application and implementation remain pending until a joint competition authority is established.

Pending. Operators will be able to serve any destination (all freedoms), and tariffs and capacity/frequency will be free.

3

EACEAC council issued a directive to amend bilaterals among the EAC states to conform with the YD.

Air services are not liberalized, as the amendments of bilaterals remain pending. 3

SADC

No steps taken toward implementation, although the civil aviation policy includes gradual liberalization of air services within the SADC.

No liberalization has been initiated. 2

WAEMU The YD is fully implemented. All freedoms, including cabotage, granted. Tariffs have been liberalized. 5

Kenya and Ethiopia still dominant, shifting market shares among smaller players

Market share (%) 2001 2004 2007Kenya Airways 42 51 47Ethiopian Airlines Enterprise 11 17 19Rwandair Express   8 11African Star Airways Ltd.     8Precision Air Services Ltd. <1 3 4Emirates 5 3 3Air Tanzania Company Ltd. 6 9 1East African Safari Air   5  East African Airlines Limited 12    FlyGlobeSpan 6    British Airways P.L.C. 5    

Air safety standards improving in East Africa

Key Message #8

Regional power trading saves over 10 percent of costs and almost 4 million tons of CO2

Interconnections limited as of today but ambitious plans exist for EAPP/NB

Low access and limited availability of power, relatively good utility performance

Demand for power mostly being met at power pool level but with country variation

Total net demand in

2005

% suppressed demand as a share of net

demand (2005)

Market demand

2015*

Social demand with

national targets 2015

Total net demand

2015Burundi 0.2 13 0.3 0.5 0.7Djibouti 0.2 6 0.3 0.1 0.4Egypt 84.4 0 119.9 3.4 123.3

Ethiopia 2.1 5 3.4 7.4 10.7Kenya 4.6 8 6.8 5.2 12

Rwanda 0.1 5 0.2 0.3 0.5Sudan 3.2 5 5.2 3.9 9.2

Tanzania 4.2 5 6.2 1.7 7.9Uganda 1.6 5 2.5 1.7 4.2EAPP 100.6 1 144.8 24.2 169SAPP 258.8 1 383 14 396.9WAPP 31.3 30 69.6 24.8 94.3CAPP 10.7 9 17.1 3.1 20.2

Regional power trade saves EAPP/NB US$1 billion a year

(US$ billion) Trade expansion Trade stagnation

Base growth Low growthNew Investment

-Generation 4.4 2.6 4.2 -Inter-connectors 0.1 0 0.1 -Distribution 1.1 1.1 1.0Refurbishment 0.5 0.5 0.5

Variable cost 6.8 9.7 5.6

Total cost 15.0 16.0 13.5

Note: Numbers include Egypt

Volume traded has potential to increase from 12 to 162 terra-watt hours a year

Trade expansion Trade stagnation

Many countries need to invest in cross-border interconnectors and a few in large hydro

(MW) Interconnectors Additional hydro

EAPP/NBI 27,755 10,968Burundi 78 0Egypt 10,000 0Ethiopia 2,997 6,766Kenya 266 0Rwanda 120 236Sudan 13,491 3,136Tanzania 266 279Uganda 537 551

Most countries have higher immediate spending needs under power trade

Two major exporters (Ethiopia, Sudan), and one major importer (Egypt)

Trade expansion Trade stagnation

Regional power trade increases reliance on hydro-power reducing CO2 emissions

Increasing hydro brings annual savings of 20 million tons of CO2

  WAPP SAPP EAPP CAPP Total WAPP SAPP EAPP CAPP Total

Production difference (TWh) Emissions savings (M ton)

Coal   -41.5 0.7   -40.8   -37.8 0.6   -37.2

Diesel -0.8 -0.3 0.3   -0.8 -0.6 -0.2 0.2   -0.6

Gas -9.2 -5.3 -42.4   -56.8 -4.7 -2.7 -21.5   -28.9

HFO 0.2   0.4 -4.9 -4.3 0.1   0.3 -3.6 -3.2

Hydro 11.5 47.5 43.4 5.1 107         0

Total 1.6 0.5 2.4 0.3 4.7 -5.2 -40.7 -20.4 -3.6 -69.9

Economic gains? Trade shaves less than a cent per kilowatt-hour from cost of power(US cents/kWh) Trade expansion Trade stagnation DifferenceCAPP 7 9 -2

EAPP/NB 12 12 0

SAPP 6 7 -1WAPP 18 19 -1

Burundi 11 15 -4

Egypt 9 9 0

Ethiopia 19 16 +3

Kenya 12 13 -1

Rwanda 12 12 0

Sudan 13 13 0

Tanzania 10 8 -2

Uganda 12 11 -1

  Unit benefit (US$/kWh)

Net power trade (TWh)

Annual benefits (US$m pa)

One time investment (US $m)

Rate of Return (%)

EXPORTERS          Ethiopia 0.19 26.2 5,974 1,001 60Rwanda 0.12 1 144 59 24Sudan 0.13 13 2,044 1,032 20Tanzania 0.1 2.4 288 44 66Uganda 0.12 2.8 403 145 28IMPORTERS          Burundi 0.03 1 210 10 210Djibouti <.01 <1   0Kenya 0.01 12 1,200 30 400Egypt <.01 123 6,165

Power trade could potentially lead to impressive returns

Model can be used to explore sensitivities to key environmental factors

Impact of oil price increases? For EAPP, increasing oil price from US$46 to US$75/bbl to

adds 600 MW of hydro and increases costs by 30%

Impact of climate change? For EAPP, 25% reduction in rainfall reduces reliance on

hydro by 4,000 MW and raises costs by 9%

Key Message #9

Most pressing issue for the region is to complete the fiber

optic backbone

Huge difference in GSM coverage between EAC and broader East Africa, no interconnection

Region stands out for high cost and low penetration of internet services

  CEMAC ECOWAS COMESA EAC SADC Broadband subscribers (per 100 inhabitants) 0.01 0.03 0.04 0.02 0.36International Internet bandwidth (per capita) 11 16 9 11 19Internet subscribers (per 100 inhabitants) 0.06 0.24 0.09 0.05 0.53Main telephone lines outside largest city (per 100 inhabitants) 0.2 0.39 0.53 0.24 1.89

Mobile telephone subscribers (per 100 inhabitants) 22 25 12 21 31Prices (US$)          Prepaid mobile monthly price basket 15.11 14.04 9.09 12.18 11.32Price of a 3 minute call to USA 5.68 0.83 2.2 1.37 1.5Price of the 20 hour Internet basket 67.97 79.98 50.91 95.7 75.6Price of the fixed telephone monthly price basket 12.59 9.35 6.85 13.33 13.27

Ethiopia stands out for its low mobile coverage and penetration

Marked price differential between EAC versus Ethiopia and Sudan

Cost of international calls within EAC substantially exceeds that of calls to US

Some progress with intra-regional roaming particularly Kenya, Uganda

Roaming possible

No single operator dominates region, but several have important multi-country presence

As of 2006, none of the EAC countries enjoyed access to submarine cables

Several undersea cables planned for East Africa by 2012

Countries with submarine access benefit, and those with competitive access even more so

Share of countries

(%)

Price per minute for a call within

Sub-Saharan ($)

Price per minute for a call to US ($)

Price for 20 hours per month of dial-up Internet access ($)

No access to submarine cable

67 1.34 0.86 67.95

Access to submarine cable 32 0.57 0.48 47.28

Monopoly international gateway

16 0.70 0.72 37.36

Competitiveinternationalgateways

16 0.48 0.23 36.62

At least 3,500 kilometers missing to complete regional fiber optic backbone network

(kilometers) Gap (kms)Investment

(US$m

Eastern 3,565 96Burundi 90 2Ethiopia 408 11Kenya 894 24Rwanda 198 5Sudan 670 18Tanzania 1,220 33 Uganda 85 2

Completing regional fiber optic network promises high rates of return

 Broadband price

(US$/mo.)Broadband

Subscriptions (‘000s)

Benefts (US$mn/yr)

Costs (US$mn)

Rate of Return

(%) Baseline

2008 InducedBaseline

2008 InducedBurundi 0.2     2Ethiopia 304.1 0.4 5.5 6 11 59Kenya 24.9 3.3 120.9 11 24 46Rwanda 55.0 4.2 6.5 2 5 42Sudan 14.5 44.6 354.3 21 18 116Tanzania 39.7 6.4 43.5 7 33 22Uganda 121.5 4.8 9.1 6 2 304

Key Message #10

Spending needs for regional integration look much more affordable for EAC than for

East Africa as a whole

 (US$mn)

Transport Power ICT Total Total

Needs Inv O&M Inv O&M Inv O&M Inv O&M

Burundi 1 3 1 0 1   3 3 7Kenya 17 27 3   2 0 22 27 49Rwanda 1 2 59   1 0 60 2 62Tanzania 29 32 44 104 3 0 76 136 212Uganda 14 16 145 9 0 0 159 25 183EAC 61 80 252 113 7 0 320 193 513                   Ethiopia 23 34 1,008 98 1 0 1,032 132 1,164Sudan 65 42 1,032 52 2 0 1,099 94 1,192EAC Plus 149 155 2,292 263 10 0 2,451 418 2,870

Bulk of spending needs in Ethiopia, Sudan power sector to develop hydro for export

Burden of regional spending high in many countries – notably Ethiopia, Sudan

Regional integration needs represent substantial share of infrastructure spending