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Challenges of Infrastructure Rehabilitation and
Reconstruction in War-affected Economies
by Anke HoefflerBackground 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.
4.1 Access to Safe Water and Sanitation5. Private Investment in Infrastructure
6. Summary and some Conclusions
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
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
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.
SFS 13 April 2000