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REP2000/02

Challenges of Infrastructure Rehabilitation and

Reconstruction in War-affected Economies

by Anke Hoeffler

Background paper prepared for the African Development Bank Report 1999.

This report is available in full as a pdf file (286KB). The sections highlighted below are available on-line.

Abstract
Acknowledgements
1. Introduction
2. The State of the Economies
3. Infrastructure and Economic Reconstruction
4. The State of Infrastructure and the Challenges Ahead

4.1 Access to Safe Water and Sanitation
4.2 Transport
4.3 Energy
4.4 Telecommunications
5. Private Investment in Infrastructure
6. Summary and some Conclusions
7. Appendix
8. References

Abstract

This paper considers the challenges of infrastructure rehabilitation and reconstruction in twelve war-affected economies in Africa. Direct war damage, the neglect of infrastructure maintenance investments during the war and poor public policies have left most of the countries with deteriorated water, transport, energy and telecommunication infrastructure. Access to safe water and sanitation is low, contributing to poor health and high mortality rates. Many of the roads, in particular in rural areas, are intransitable. Access to efficient energy sources is low, even in the energy-rich countries. The average number of main telephone lines per 100 inhabitants is also very low, but cellular phone networks already exist in a number of countries. As a consequence of the often prolonged conflicts all of the war-affected countries are very poor and the challenges of infrastructure rehabilitation and reconstruction are beyond the financial capacity of the governments. However, private investment in infrastructure can only be attracted if the countries are at peace and the reconstruction programme is paralleled by policy reforms.

1. Introduction

This paper examines the state of infrastructure and the challenges of rehabilitation and reconstruction in war-affected economies in Africa. For the purpose of this study we concentrate on the following war-affected economies: Angola, Burundi, Democratic Republic of Congo (formerly Zaire), Djibouti, Eritrea, Ethiopia, Liberia, Mozambique, Rwanda, Sierra Leone, Somalia and Sudan.

Some wars were very protracted, like in Mozambique and Angola, who plunged into civil wars after their wars of independence. Thus, both countries emerge from war situations which lasted over 30 years.  The Eritrean war of independence was also very long, it lasted over 20 years and left the economy in ruins. Although other wars were shorter, such as the conflicts in Rwanda and Burundi, the effects were nevertheless devastating. Due to the political violence in Burundi at least 100,000 people lost their lives and about 1 million were displaced.

As of November 1998 conflict was still ongoing in Somalia and Sudan. The peace agreements in Liberia and Sierra Leone are fragile and  the UNITA rebels control large parts of Northern Angola. There is also considerable tension between Eritrea and Ethiopia due to a border dispute which erupted in May 1998.

During the war both opponents, the government and the rebels, target physical infrastructure as a part of their strategy. The main targets are the enemy’s communication and support lines, such as telecommunications, airports, ports, roads and bridges. In addition to this strategic destruction of key infrastructure, rebels and government soldiers looted and destroyed housing, schools and hospitals.

In some countries, like in Mozambique, fighting took place in all parts of the country and infrastructure was destroyed throughout the country. On the other hand, in some countries the war was relatively localized, such as in Sudan and Ethiopia. However, although some parts of the country may not be directly affected by war, maintenance of infrastructure is neglected due to the war, because capital expenditure is cut back in favour of increased military spending.

This paper is structured in the following way. First we give a brief overview of the economies of the war-affected countries. The third section provides a discussion of the link between infrastructure reconstruction and economic rehabilitation. In the fourth section we discuss the state of the infrastructure in the twelve countries and the challenges of  reconstruction and
rehabilitation. Section five presents a discussion of private investment in infrastructure. The last? section provides a summary and some conclusions.

6. Summary and Some Conclusions

In this paper we considered the challenges of infrastructure rehabilitation and reconstruction in twelve war-affected economies in Africa. Our survey of the water, transport, energy and telecommunication sector showed that the standard of infrastructure provision is very low in all of the twelve countries. On average only about 30 per cent of the population have access to safe water and only about 20 per cent of the population have access to sanitation. As a result the incidence of water-borne and water-related  diseases is high. Due to the influx of refugees to the major cities the existing water and sanitation facilities are now used by more people, i.e. one result of the conflicts was a deterioration of the water and sanitation access for the urban population.

Access to transport is also low in most countries. With the exception of Djibouti all countries are characterized by a high per centage of the population living in rural areas (about 70 per cent on average) and most practise subsistence agriculture. Road transport is the most important form of transport, but only a small proportion of the roads are paved. Much of the road network was either damaged and/or the maintenance was neglected during the war. In either case, the state of the road network is dilapidated in many countries. A large percentage of the roads are now intransitable, in particular rural feeder roads. Access to transport would encourage farmers to produce marketable surplus and to transport it to the market. Thus, among other things the rehabilitation of the road network would provide the rural population with opportunities to earn
cash incomes and therefore improve their standard of living.

Access to efficient energy is low, too. A high proportion of the energy consumed by the rural population is generated by biofuels, such as animal dung, crop residues and wood. While in principle forests, woodlands and farmlands can supply biomass in a sustainable way; in particular densely populated areas are experiencing immense ecological damage. Although there are a number of alternatives to electricity grid extension, for example the installation of photo-voltaic systems, the cost of acquiring the system is high for very low income rural households. The lack of credit facilities in particular constitutes a significant barrier to the widespread adaptation of renewable energy sources.

While the number of telephone main lines per 100 inhabitants is low, in a number of countries cellular networks are already in operation. The telecommunications sector is the most likely infrastructure sector to benefit from private investment, mainly because expenditures per line are high and high demand and revenue during build-out mean that payback periods are relatively short. Due to the low average incomes widespread individual ownership of telephones is not feasible. However, universal access could be achieved by shared access and the availability of public telephones is the key to universal access policy.

Since war-affected countries are very poor economies the task of infrastructure rehabilitation and reconstruction is beyond the financial capacity of the governments. The paper therefore discussed private investment in infrastructure as an alternative to public investment. However, investors perceive countries in Sub-Saharan Africa on the whole as high risk countries and risk ratings show that investors rank the risk in war-affected economies as even higher.

As long as countries are not at peace and guerilla activities and banditry make the countries unsafe, private investors are unlikely to invest in infrastructure projects. Once the countries are at peace economic reconstruction has to be paralleled by economic reform. Without an adequate legal and regulatory framework countries are unlikely to attract private investment. However, despite their high risk rankings some war-affected economies have been able to attract private investors for cellular telephone networks. As the paper shows, the willingness to pay for safe water and energy is high and thus the water and energy could in principle be attractive to private investors.


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SFS 13 April 2000