Explanation

(a)

Poor and substandard transport systems raise the transaction costs of doing business in African countries, which impedes the growth of economic activities. Despite the wealth and abundance of resources with which Africa is endowed, the serious deficits in Africa’s transport infrastructure place enormous strains on domestic economic productivity and limit the development of economic regional integration.

African states with inadequate transport systems suffer the consequences of the high transaction costs of doing business, as well as the huge inefficiencies created by poor transport systems that severely curtail economic development. As a result, intra-Africa trade still remains a challenge on the continent due to sub-standard transport networks. Given that intra-Africa trade is only 12% of all trade on the continent, Africa needs to improve transport infrastructure in order to increase the volume of trade amongst African countries. This in turn will facilitate the growth of key sectors of African economies.

Effective transport systems are key to Africa’s economic integration. By ensuring that transport systems between countries are designed in such a way that production centres are linked with distribution hubs across the continent, greater efficiencies will be created. Such integrated transport networks will allow African countries to compete effectively and, importantly, tap into regional markets.

Productivity, growth and economic competitiveness are higher in countries with effective transport infrastructure services. Effective and efficient transport infrastructure (road, rail, air, etc.) is a pre-requisite for opening up production zones in landlocked countries. Reliable road and rail transport allows companies to import and export goods. This is the case in South Africa where most of the bulk commodities for export are carried by Transnet Freight rail, and 70% of consumer goods going to various destinations are transported by road.

Inadequate infrastructure in sea ports in Africa compromises the competitiveness of market centres given the fact that about 80% of the world’s trade is facilitated by sea ports linked to road and rail infrastructure. Despite the high volumes of goods that require transport, most African countries priorities road infrastructure investments over rail transport investment due to the enormous capital investment needed for rail infrastructure and rolling stock. As such, the inadequacy of transport systems cuts rural areas and marginalized communities off from market centres and makes it difficult to stimulate economic activities. 

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