The Impact of Road Infrastructure on Poverty Reduction in Africa pp. 1-40
Authors: (Professor John C. Anyanwu, Chief Research Economist, Andrew E.O. Erhijakpor, Lecturer, Development Research Department, African Development Bank, Temporary Relocation Agency, Tunis, Tunisia, and others)
Abstract: There is general acceptance that economic infrastructure is critical for economic growth and poverty reduction, given its pivotal role in improving competitiveness, facilitating both domestic and international trade, and integration of the continent to the global economy. However, there is a large infrastructure deficit, both in terms of access and quality, to be filled in all the sectors (transport, energy, ICT and water). For instance, the level of access to electricity in Africa is only about 30 percent, compared to over 75 percent for other Less Developed Countries (LDCs). Access to water and sanitation is about 65 percent compared to 80 percent for other LDCs; the penetration rate for telecommunication is less than 13 percent compared to 40 percent in other LDCs; while access to roads is 34 percent compared to 50 percent for other LDCs. This situation has resulted, among others, in Africa’s low rates of economic growth, low poverty reduction, reduced share of world trade and lack of international competitiveness. The high transaction costs arising from poor road infrastructure, for example, adversely affects development of African economies, hinders private sector development, and the flow of foreign direct investment (FDI). However, studies on the impact of road infrastructure had been confined mostly to developed economies and other developing economies, where road infrastructure developments swamp those in Africa. Indeed, few studies have examined the impact of road infrastructure on poverty in a broad panel of African (Sub- Saharan and North African) countries. This paper tries to fill this lacuna by constructing a panel data set on poverty and road infrastructure for African countries. It essentially examines the impact of road infrastructure on poverty reduction in African countries using panel data of 33 countries over the period 1990-2005.