Chapter 7:
Policy Challenges for Infrastructure
Development in Africa - The way forward forJapan’s Official Development Assistance(ODA)
Yasuo Fujita, Ippei Tsuruga and Asami Takeda

This chapter examines how Japan’s ODA can more effectively assist
Africa’s infrastructure development in consideration of acomprehensive study by the donor consortium. It recommends thatJapan should consider, as short-term measures, sectoral reallocation of
its assistance, financial assistance for maintenance, and management
reform of public utilities, while supporting various reforms from a longterm perspective.

1. Introduction
Infrastructure1 development in Africa is generally lagging behind otherparts of the world, though there are variations between countries andsectors (see Section 2), hampering economic growth2 and poverty
reduction (for example, Calderón and Servén 2010). One of the serious
problems was that the real picture of infrastructure in African countries
could not be seen due to lack of data, preventing policy interventions
and investment.
The Infrastructure Consortium for Africa (ICA)3 conducted Africa
infrastructure country diagnostic studies and published a flagshipreport titled Africa’s Infrastructure: A Time for Transformation in late 2009
1. In this chapter, infrastructure includes: power; transport (roads, seaports, airports, andrailways; water supply and sanitation; information and communication technology (ICT);and irrigation.
2. As pointed out in Chapter 6, infrastructure development would promote economic growththrough industrial development while removing the cost penalties of economic activities.
3. ICA was established in 2005, following the G8 Gleneagles summit at which assistance for
Africa was one of the main agenda topics. For details of ICA, see http://www.icafrica.org/
en/

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Chapter 7(hereinafter referred to as AFD-WB 2009). The values of this report
include that current status and problems are analyzed throughquantitative data; that infrastructure needs and funding gaps are
estimated by sector and country type; and that policy interventions areprioritized through cost-benefit analyses. At the same time, however, it
reveals that Africa’s infrastructure challenges are overwhelming andcomplex, and require sustained and concerted efforts by Africancountries, regional organizations, and development partners.4
This chapter aims to discuss what Japan’s ODA should place its
emphasis among recommendations of AFD-WB 2009 in donor
community’s concerted efforts, in order to effectively contribute toaddress Africa’s infrastructure challenges.5 This exercise is useful
because infrastructure has always been one of the priority areas forJapan’s assistance for Africa to boost the region’s economic growth as in
the TICAD IV Yokohama Action Plan 2008, and Japan has provided
financial resources and technical assistance.
This chapter is organized as follows: Section 2 summarizes the current
status of infrastructure development through available statistics; Section
3 reviews Japan’s recent ODA for infrastructure in Africa; Section 4
discusses the future direction of Japan’s ODA; and Section 5 is theconclusion.

2. Overview of Infrastructure Development in Africa

2.1 Current infrastructure in Africa
Table 1 shows the current status of infrastructure development in Africa
based on available statistics such as World Development Indicators(WDI) of the World Bank, and the Global Competitive Index (GCI) of theWorld Economic Forum (WEF). The countries are categorized into fivegroups6 – North Africa, middle income countries, oil exporting
4. Development partners here include non-traditional funders such as China, Korea. Figure 2
shows their great contribution to infrastructure development.
5. Therefore, this chapter focuses only on how Japan’s ODA can better meet Africa’s
infrastructure development needs; and does not directly consider the interests of Japaneseindustries in infrastructure business in Africa.
6. This chapter adopts the categorization of countries of IMF 2011, 80, which is a little different
from AFD-WB 2009, 51. Fragile countries are low-income countries that face particularly
severe development challenges, such as weak governance, limited administrative capacity,
violence, or the legacy of conflict (AFD-WB 2009, 51).

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countries, low-income nonfragile countries, and low-income fragile
countries7 - because they are different in infrastructure development andchallenges. This section basically focuses on sub-Saharan African (SSA)
countries because the quality and quantity of infrastructure in North
Africa and small, middle-income island countries, including Mauritius
and Seychelles, are relatively higher in almost all the sectors. As shownin Figures A1 to A6, there is generally a positive correlation between
infrastructure development and GDP per capita, but, the degree ofcorrelations is different across infrastructure sectors.8 This suggests thatthe countries can improve some infrastructure regardless their income
levels. The current situation of Africa’s infrastructure by sector is asfollows:
Power: Power is by far Africa’s largest infrastructure challenge, with 30
countries facing regular power shortages (AFD-WB 2009, 5) and morethan half of the population having no access to electricity except inNorth Africa, Mauritius and South Africa. SSA countries have low ratesof electrification – the average rate for SSA countries is only 32%,
compared to the average of low and middle income countries (LMIC)
throughout the world, which is 74%. As for electricity consumption percapita, the average of SSA countries is only 517kWh, which issubstantially lower than the world LMIC average (1,527kWh), with the
exception of South Africa (4,532kWh) and Libya (4,170kWh).
Furthermore, SSA countries’ rate of electric power transmission anddistribution loss9 (11.2%) is almost the same as the world LMIC average(11.1%). The loss is higher in the whole of the African region particularly
in middle-income (35%) and oil-exporting countries (24%), indicating
operating inefficiency of power utilities.
Transport: The average roads pavement ratio in SSA countries is only
19% compared with the world LMIC average of 45%. The road pavement
ratio in oil-exporting countries is very low. In addition, regarding roaddensity (total road length per land area), the figures in many Africancountries are lower than the world LIMC average (21.5 km/100km2). It
is urgent that African governments should address the poor condition
7. Sub-Saharan African (SSA) countries are subdivided to the latter four groups.
8. The road pavement ratio and the electricity power consumption per capita are morecorrelated with per capita income. The electricity power consumption and distribution
losses, improved access to water sources, agriculture irrigation land, and mobile
subscription per 100 are less correlated with per capita income. (Figures A1 to A6)
9. Measured in percentage of electricity power output (World Bank.2012a)

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and low density of their road networks. In addition, to keep the road
network in good condition, maintenance is another challenging task inAfrica since it requires huge investment. Infrastructure development ofother transport modes such as airports, seaports and railways in Africa
face same challenges and ineffective linkage between different transportmodes, declining air connectivity, poorly equipped ports and aging rail
networks are key problems facing Africa’s transport system (AFD-WB
2009, 233).
Water supply and sanitation (WSS): Only 61% of SSA countries’
population has access to safe drinking water, which is below the world
LMIC average of 86% and MDG’s target rate of 75% by 2015. The rates
are below 50% in Somalia, Ethiopia, the Democratic Republic of theCongo, Madagascar, Mozambique and Niger. Urban and ruraldisparities are also prominent – more than half of the rural population
has no access to safe water in SSA countries. Access to adequate
sanitation is even worse. Only 30% of the population in SSA countries
lives in households with access to adequate sanitation and the rate islower in rural areas. There are 12 low-income countries where more than
90% of the population has no access to adequate sanitation in rural areas.
Irrigation: While more than two-thirds of Africans rely on agriculture fora living, the average amount of arable land developed for irrigation is
only 6% for a selected 28 African countries, compared with 39% in Asiaand nearly 30% in Latin American countries (Bluffstone and Kohlin 2011,6). Low levels of irrigation mean that few SSA countries can sustain yield
increases, even with abundant rainfall (UNDP 2012). The amount in
Egypt is exceptionally high (99.7%) since Egypt’s agriculture depends
entirely on irrigation. Further improvement is an urgent requirement forsustainable food production in Africa.
Information and communication technology (ICT): Approximately
three-quarters of the world’s inhabitants have access to mobile phones(World Bank 2012b, 23). The number of mobile subscriptions in use
worldwide has grown from 1 billion in 2000 to over 6 billion in 2012, of
which nearly 5 billion are in developing countries (ibid.). This trend isalso true for some African countries. The number of mobile
subscriptions per 100 people has increased dramatically since 2000; in
2010, North Africa (111 subscriptions) and some middle-income
countries exceeded the world average (78 subscriptions). As for the
penetration of telephone lines and the Internet, Africa still has low rates
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especially in oil-exporting countries and low-income countries,
suggesting the digital divide is a critical issue. It is still essential for
African governments to develop the telecommunications sector.
2.2 Infrastructure by country groups
The infrastructure challenge differs among country type (Table 1). North
Africa showed the highest level of infrastructure in quality and quantity
in all the sectors. However, its electricity consumption per capita is stillinsufficient (average 1,751kWh per capita) compared with the world
average (2,807kWh), though it exceeds the world LMIC average (1,527
kWh). As for the middle income countries in Africa, further
improvement in both quality and quantity in the energy sector isnecessary; and particularly, the rate of electric power transmission andloss is the highest among all the country groups (35%), due to the highfigure for Botswana (79%).
Recent economic growth in Africa is attributed to price hike in energy
and mineral resources10 and oil exporting countries play a great role ineconomic growth of Africa. However, infrastructure development in oil
exporting countries is stagnant, despite their higher GDP per capita andabundant natural resources revenue.11 In particular, the level ofinfrastructure stock and quality in the transport sector are lower than
low income countries. In addition, oil-exporting countries significantly
lag in terms of quantity and quality in electricity services. Therefore,
considering how to allocate additional fiscal resources from natural
resources to infrastructure effectively (particularly in transport andenergy sector) is urgent.
The low income African countries are facing a severe situation in all thesectors of infrastructure. The available data shows that there is no
significant difference in infrastructure between fragile and non-fragile
countries. In particular, power is the largest infrastructure challenge,
especially in non-fragile countries (average rate of access to electricity is
only 23% and electricity consumption per capita is the lowest, 240kWh),and both quantity expansion and quality improvement are urgent
requirements.

10. Refer to Introduction of this report.
11. This is because they used most of their revenue from oil exports for debt repayment (AFDWB 2009, 76).

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Table 1. Infrastructure in African countries

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2.3 Infrastructure and a country’s competitiveness
It is useful to see the perception of private businesses regarding
infrastructure as one of the key components to a country’s
competitiveness. WEF 201112 shows that almost all African countries areassessed as inferior to the world average in terms of quality except
Tunisia, Mauritius, Namibia, South Africa, Gambia and Rwanda (Figure1). Poor infrastructure quality in oil-exporting countries is noticeable
mainly due to the poor reliability of the electricity supply. The
infrastructure index ranking shows 24 out of 33 African countries areranked below 100 out of 142 surveyed countries. It is obvious that thepoor infrastructure quality of SSA countries negatively affects acountry’s global competitiveness.
Figure 1. Infrastructure quality of selected African countries

12. WEF 2011 covers 33 African countries.

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2.4 Infrastructure spending needs and funding and efficiency gaps
Infrastructure of all sectors is substantially underdeveloped in Africa,
though variations exist between countries and sectors. Special attention
should be paid to the power sector (by sector), and to the low income
countries (by country groups). According to AFD-WB 2009, the cost ofaddressing Africa’s infrastructure needs for 2006 through 2015 amounts
to US$93 billion a year, about one third of which is for maintenance(Table 2).
Africa’s annual infrastructure spending (2001 to 2006)13 is estimated at
US$45.3 billion. 66% of the overall spending is financed by the domestic
public sector, and the rest, 34%, (US$15.5 billion) is from externalsources, where the share of ODA is 7.9%, non-OECD financiers 5.5% andprivate sector 20.7% (AFD-WB 2009, 8-9).
Given infrastructure annual spending needs (US$93.3 billion) and theannual existing spending (US$45.3 billion), the annual financial gap isestimated at US$48 billion, comprising of an efficiency gap (US$17
billion) and funding gap (US$31 billion). Electricity is the sector most in
need of additional funding, followed by WSS and irrigation. These havean aggregate need of US$23 billion while ICT and transport receive morethan their needs (Table 2).
Table 2. Africa’s infrastructure spending needs, and funding andefficiency gaps, 2006-1514

13. The study identifies four major financial sources including: domestic public sector, ODA
from OECD member countries, non-OECD countries like China, India and the Arab states,and private sector; and sum up their spending on the capital investment and O&M inelectricity, ICT, irrigation, transport, water supply and sanitation and cross-sector projects(AFD-WB 2009, 66-67).
14. AFD-WB 2009 (66-67) identifies four major financial sources including: domestic public
sector, ODA from OECD member countries, non-OECD countries like China, India and theArab states, and private sector; and sum up their spending on the capital investment andO&M in electricity, ICT, irrigation, transport, water supply and sanitation and cross-sector
projects.

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3. Trend of Financial Resources for Infrastructure and Japan’s Aid

3.1 Infrastructure financing source and gap
In response to financial needs, the financial commitment of externalsources rapidly increased from 2005 to 2010 (ICA 2011, 20). In addition,
the share of the power sector, whose financial gap is the largest among
the sectors (Table 2), accounted for 44% in 2010 (ICA2011, 22). The shareof Japan’s ODA in 2010 was 5% of total commitments by externalsources, or 10% of commitments by ICA members (Figure 2). This
increasing trend regarding Japan’s commitment is a recent phenomenon
because the high indebtedness of African countries prevented loan
assistance until 2005, and political instability and conflicts hampered
new infrastructure investment. Japan has waived debt repayments for
African countries under the international debt relieve initiatives,15 andcommenced the Enhanced Private Sector Assistance for Africa (EPSA)
initiative in 2005, pledging US$1 billion in ODA loans to Africa for five
years. TICAD IV in 2008 has also contributed to speed up infrastructureassistance.
Figure 2. ICA Members Financial Support for African Infrastructure

3.2 Japan’s infrastructure assistance
A more detailed picture of Japan’s ODA for Africa’s infrastructure isreviewed through the original database of yen loans and grants for 2005
15. For Africa, Japan waived debt repayments amounting to JPY 765.3 billion (ODA debt JPY
440.2 billion and non-ODA JPY 325.1 billion) from 2003 to 2011 (MOFAJ 2011).

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to 2011, and technical cooperation (TC) for 2005 to 2010 constructed fromthe JICA project database.16 The data for grants or loans is based oncommitments in the period (as of the signing of the Exchange of Notes),
while that of TC is on an actual disbursement basis.17 The loans andgrants assistance is usually provided for new capital investment or
rehabilitation projects; in addition, the loan projects often include thecapacity building components of executing agencies. Japan’s TC is
provided as grants, and includes project formulation studies, thedispatch of experts, training of recipient government officials, andprovision of equipment.
3.2.1 Japan’s loans and grants assistanceJapan’s ODA loans/grants average annual commitment (2005-2011) for
Africa’s infrastructure amounts to Yen 77.8 billion (65%) out of the total
annual commitment of Yen 119.0 billion18 (Table 3). Out of this annual
average commitment for infrastructure, North Africa receives Yen 30.2
billion (39%) and SSA countries receive Yen 47.5 billion (61%). As for the
proportion between loans and grants, while loans accounts for 96% inNorth Africa, in SSA countries the loan/grant proportion is almost equal(loans 52% and grants 48%), reflecting the different income levels andborrowing capacity of the two groups (Table A2, Figure 3).
Regarding the sectoral breakdown (Africa total), transport has thelargest share (38%), followed by power (32%) and WSS (23%). In North
Africa, power is the largest (37%), followed by WSS (31%) and transport(24%). In SSA countries, transport represents a much higher share (46%),
followed by power (29%) and WSS (19%) (Table A2, Figure 4).

16. Although the JICA project database covers all ODA loan projects, it does not cover all
grants and TC projects. Nevertheless, it is sufficient to review the overall picture of Japan’s
grants and TC assistance because of the substantial coverage of the JICA database.
17. The data is on a calendar year basis. The sectoral category is in accordance with that ofOECD-DAC. Since TC projects are basically on a shorter implementation period, the time lagof commitment and disbursement is generally small.
18. The total commitments include ODA loans amounting to JPY 7.4 billion (annual average
2005-2011) to African Development Bank (AfDB) for private sector -lending programs, whichcannot be broken down to individual infrastructure sectors.

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Table 3. Japan’s Financial Commitment Regarding Africa’s Infrastructure

Figure 3. Modality Share of Japan’s Financial Commitment Regarding Africa’s
Infrastructure

Source: Compiled by author from JICA project database

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Figure 4. Sectoral Share of Japan’s Financial Commitment Regarding Africa’s
Infrastructure

Source: Compiled by author from JICA project database

Figure 5. Sectoral Trend of Japan’s Financial Commitment Regarding
Infrastructure in Sub-Saharan Africa

Source: Compiled by author from JICA project database207

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We will review Japan’s ODA loans/grants regarding infrastructure in
SSA countries in more detail. While the annual commitments of loans/grants noticeably fluctuate, the commitment to the power sector in 2010
was quite high (Figure 5). This increase was because several projectloans, which had been under preparation, were provided in this single
year. Within the transport sector, road and bridge projects account for
75%, while seaports receive 25%. As for the proportion of loans andgrants, it is almost equal in transport; 77% of the commitment in power
is by loans; and WSS is mostly funded by grants (89%). This difference ofloan/grant proportion by sector is mainly due to the different economic
and financial returns of these sectors because both African countries andJapan prefer using grants to lower return projects.
Within SSA countries, the eastern Africa region (11 countries) accounts
for 61%, followed by the southern African region comprising 15
countries (22%). This is because the western and central Africancountries include more fragile states and oil producing countries. As tothe country’s income categories, the low-income non-fragile countries(15 countries) received 77%, and the shares of the other three categories
are between 7% and 8%. The low income non-fragile states are the main
target of infrastructure assistance because of their income levels andabsorption capacity. Low-income fragile states received a small share of
infrastructure assistance (7%), which is for transport and WSS funded
only by grants, because of serious constraints owing to peace and orderissues, debt sustainability, and aid absorption capacity.
3.2.2 Japan’s technical cooperation (TC)The annual average disbursement of TC (2005-2010) amounts to Yen 30.4
billion, of which 20% is for infrastructure, and 80% is for noninfrastructure (Table 4). This is in sharp contrast to the loan/grantassistance which is used for upfront infrastructure investment. The
sectoral breakdown of TC for infrastructure shows another contrast withthe loan/grant assistance. WSS has the largest share (36%), followed bytransport (27%) and irrigation (18%); and far less input into power (9%).
Geographically, 84% of TC goes to SSA countries, so, the sectoral
breakdown of SSA countries is almost the same as that of the African
total as mentioned above. Within SSA countries, the share for western
Africa is higher in TC (21%) than in loans/grants (14%) (Table A3).
Distribution among the income groups is dominated by the low income
non-fragile states (75%), and the other groups’ shares are between 6 and208

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10%, which is almost the same pattern as that for loan/grant assistance.
Table 4. Japan’s Technical Cooperation Regarding Africa’s Infrastructure

Figure 6. Sectoral Share of Japan’s Technical Cooperation Regarding Africa’s
Infrastructure

Source: Compiled by author from JICA project database

It is natural that the sectoral breakdown of TC does not coincide withthat of loan/grant assistance, because there are TC projects which areclosely related to investment projects and those which are not, as
follows:➢➢ TC is closely related to capital investment supported by loans/grants: pre-investment studies, capacity building of executing
agencies, dispatch of experts, etc.
➢➢ When it is premature or difficult to implement investment projects
due to economic and/or capacity constraints of countries, TC is
provided mainly for efficiency improvement, for training ofgovernment officials, project identification, master planning,209

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provision of equipment, etc.
However, it may be reasonable to reallocate the TC resources to fulfill theefficiency gaps of Africa, which is one of the targets of assistance throughTC, since the efficiency gaps of infrastructure is clearly estimated by
AFD-WB 2009. As Table 2 shows, the efficiency gap is the largest in the
power sector (US$6 billion annually), followed by transport and WSS,
while the allocation of Japan’s TC is weighted on WSS, transport andirrigation in order.
Figure 7. Sectoral Trend of Japan’s Technical Cooperation Regarding
Infrastructure in Sub-Saharan Africa

Source: Compiled by author from JICA project database

3.3 Policy implications
Japan’s recent allocation of loan/grant assistance does not appear tomatch the spending needs or funding gap across the infrastructure
sectors as in Table 2. Japan’s loan and grant assistance for investment
purposes is dominated by the transport sector, which is estimated tohave a financial surplus by the AFD-WB 2009. Japan’s TC, which can
improve efficiency and facilitate infrastructure investment throughcapacity development and project preparation, is provided for the WSS(36%) and transport (27%) sectors in SSA countries. As seen in Table 2,
the power sector in Africa has the largest funding and efficiency gaps
among the sectors. Since private investment is playing a major role in the
power sector (ICA2011), it does not necessarily mean that public funds,
including Japan’s ODA, should be used for capital investment in power
projects. In addition, Japan’s ODA has strengths and emphasis in certain
sectors, including WSS (particularly in TC) and transport (both in loans/
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grants and TC). However, it would be appropriate to consider how
Japan’s ODA – loans, grants, and TC – can better contribute to improve
infrastructure investment in needy sectors such as power, and to more
effectively remove infrastructure inefficiencies.
4. Policy Challenges Regarding Infrastructure Development in Africa
and Future Direction of Japan’s ODA
It appears that there is room for Japan’s ODA to take more into accountthe recommendations of the AFD-WB 2009 (Box) for promoting
infrastructure development in Africa. The most important characteristicof the recommendations of AFD-WB 2009 is the emphasis on closing
efficiency gaps in Africa’s infrastructure, though most of therecommendations are common to other parts of the world.19 All of theserecommendations are essential for infrastructure development in Africa,and should be pursued in the long term. This section discusses three key
issues that Japan should urgently consider based on the analysis of
Section 3 in relation to the recommendations (Box). The three issues are
selected according to the following general criteria: they are areas where(i) African countries’ needs are unmet; (ii) higher development impact is
expected; and (iii) development impact is realized relatively in a shortperiod of time, though we do not underestimate the importance of longterm interventions.
Box: 10 recommendations by AFD-WB 2009
1. A
 ddress Africa’s infrastructure efficiency gap as a pressing policy
priority
2. Make greater efforts to safeguard maintenance-related spending
3. Tackle inefficiency through institutional reform
4. Include line ministries and budgetary processes in theinstitutional reform agenda
5. Use administrative and regulatory reforms to get full value fromexisting infrastructure
6. Pursue regional integration to reduce infrastructure costs
7. Take a spatial view of infrastructure development priorities
8. Rethink infrastructure social policy
9. Find practical ways to broaden access to infrastructure services
10. Close the infrastructure funding gap
Source: AFD-WB 2009

19. For example, see twelve recommendations of ADB-JBIC-WB 2005 ( xlvi – lvi) for East Asia.

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4.1 Rethinking of sectoral allocation of Japan’s ODA
The transport sector, especially roads, has received the largest share ofJapan’s ODA. While Japan’s country assistance strategies for Africancountries give emphasis on infrastructure development, there is no clear
policy on the allocation of funds between the sectors. Since Africa’s
infrastructure needs and funding gaps are estimated, it is time to rethink
the allocation of Japan’s ODA so that needy sectors can receive more
support for more investment and efficiency improvement. In fact, JICA
has recently been increasing loan/grant assistance to the power sector,
and project preparation in Africa’s power sector has been strengthened
as shown in the increase of TC in the power sector (Figures 5 and 7).
Nevertheless, we do not mean that Japan’s grant/loan assistance should
immediately and directly go to financing power sector investment
projects. It should be noted that the power sector (particularly power
generation) is one of the few sectors which can expect capital investmentby the private sector even in low-income countries (Leigland 2010).
Japan’s ODA to the power sector needs to be more carefully examined bysub-sector, as follows:➢➢ Power generation: The possibility of private sector capital
investment should always be explored in power generation
projects. For this purpose, JICA should assist with the preparationof bankable projects through TC, regardless of whether they will
be financed by the private or public sectors. When private capital
investment is not possible, JICA should provide loans/grants forcapital investment. Areas for Japan’s ODA financing forinvestment would include: thermal plants in which private
investors are not interested, renewable energy projects (e.g.,geothermal and wind-power) whose investment risk is usuallyhigher than conventional thermal plants; and hydropower
projects which require social and environmental considerations.
Some recent project examples include a geothermal project in
Kenya and a wind power project in Egypt.
➢➢ Transmission, distribution and rural electrification: These subsectors would qualify for public sector funding because theprivate sector is less interested due to generally low commercial
viability. Assistance both for project preparation and investment
would be necessary.
In a hydropower project in Uganda, while the power station is invested
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in by the private sector, the associated transmission lines are funded by
JICA and AfDB through concessional loans. This sort of division of labor
between private and public funds is common in power projects in Asia.
On the other hand, it is difficult to expect private sector capital
investment in the WSS and irrigation sectors due to low commercial
viability; and, therefore, public financing is expected to close the funding
gap. In WSS, while Japan’s ODA appears to place emphasis on efficiency
improvement through TC, the low access rate to WSS is a serious
problem (Section 2), suggesting room for Japan’s assistance for WSS
investment. Likewise, raising productivity in agriculture is essential for
Africa’s food security and economic transformation. Irrigation facilities
are a vital component, together with improved inputs including
fertilizers as shown in the green revolution in Asia. JICA should consider
the possibilities of supporting new investment through loan/grantassistance in these two sectors.
Lastly, there is an important caution to be placed on the reallocation ofJapan’s assistance among the sectors. The estimation of the funding gaps
is made on the assumption that current spending continues (Table 2). If
all development partners shift from the transport to other sectors at
once, there is the risk that the transport sector would be in deficit. In
addition, as in Section 2, there are variations in infrastructure between
sectors and countries and the infrastructure deficits of sub-sectors(particularly, roads, ports and railways) within the transport sector vary.
Therefore, sectoral reallocation needs coordination with recipient
countries and other development partners, and a careful review of
infrastructure needs and gaps in each country should be undertaken. (Ifthe current resource allocation to the transport sector is reconsidered, theprioritization of spending is necessary within the transport sector,
including emphasis on regional connectivity discussed in Chapter 8,
financial support for road maintenance in the next Sub-section 4.2, andreallocation between transport sub-sectors.)
4.2 Financial assistance for maintenanceJapan has always emphasized the importance of maintenance ofinfrastructure over the years through TC projects (e.g., roadmaintenance) and ex-post evaluation of projects. Japan’s ODA, however,
do not finance operation and maintenance expenditures, which shall beshouldered by recipient countries through their budget and user
charges. Japan’s assistance for strengthening infrastructure maintenance213

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has been through capacity building of maintenance techniques, financial
management, etc., through technical assistance and overseas training.
Japan only provides budget support, which possibly finances
maintenance expenditures, on a limited basis in Africa, almost all in
Tanzania.
JICA’s ex-post evaluations found financial weaknesses in JICA-assisted
infrastructure projects at the operation and maintenance stage in
Africa.20 JICA 2011 and 2012 include post-evaluations of fourteen (14)infrastructure projects funded by loans or grants in Africa. Out of 8
projects whose sustainability is rated “medium,” six (6) projects (43%),
which are rated “medium,” have problems related to insufficient budget
allocation or low cost recovery at the operation and maintenance stage.21
Ultimately, there are only two financing sources for infrastructure
investment, operation and maintenance: tax and user charges.22
Therefore, in order to have the financial resources for infrastructure,
governments, developers and service providers need to adopt costreflective tariffs when service charges are collected, and exert tax
collection efforts to cover the cost in the case of non-revenue generating
projects. Careful attention should be paid to affordability by poorer
sections of society, for example, through designing targeted subsidy
schemes and adopting more cost effective technologies. In the long run,
Japan’s ODA should help developing countries in Africa take the selfhelp approach
In the short run, however, Japan should reconsider its approach tostrengthening maintenance in Africa. The finding that insufficientbudget and cost recovery caused insufficient maintenance in JICAfunded projects means that non-financial capacity building alone cannot
address insufficient maintenance. Japan’s financial assistance formaintenance, through (sector) budget support or sector program loans,
20. Insufficient maintenance due to insufficient budget and low cost-recovery is a problem
common for most developing countries (JICA 2012).
21. In JICA post-evaluation, the rating of “sustainability” is in three grades: high, medium
and low. Out of the 14 evaluated projects, 6 projects get high ratings and 8 projects get
medium ratings regarding sustainability. There are no low-rated projects regarding
sustainability in JICA 2011 and 2012.
22. “Financiers – whether the private sector, or official lenders and donors - can change therequisite time profile of taxes or user charges by providing financing in the form of loans orequity, but eventually those loans need to be repaid or remunerated.” (ADB-JBIC-WB 2005,
30)

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can play an important role in the sustainability of infrastructure.
In addition, the financing of maintenance would have some advantages
over new investments given the current situation in Africa: higher returnand quicker impact. While a new investment project takes time fromproject preparation to completion, maintenance investment generally
requires a shorter time because of minimal environmental
considerations, a shorter time for contractor selection, less technicalcomplexities, etc. Particularly, the economic return for road maintenancein SSA countries is quite high (138.8%) according to AFD-WB 2009 (7071). If this statement is combined with the argument in Sub-section 4.1 –sectoral reallocation of resources – the policy implication is that a portionof the funds for new road investment should be shifted to roadmaintenance.
Before embarking on financial assistance for maintenance in Africa, there
are two important considerations. First, it can and should be selective interms of recipient countries and sectors. As in JICA 2011 and 2012, itshould be noted that 57% of projects still have no problem with budget
allocation or cost recovery. In addition, capacity constraints on the Japanside and fiduciary risks of recipient countries should also be taken into
account. Countries and sectors for financial assistance regarding
maintenance should be carefully selected in consideration of capital
investment projects in the past and if there are on-going projects. Second,
Japan should have a phase-out policy from this type of assistance sincemaintenance cannot be supported forever. It has to be undertaken
together with capacity development TC for budget management,
infrastructure asset management, and maintenance techniques.
4.3 Assistance regarding management reform of public utilities
Three recommendations of AFD-WB 2009 (Nos. 3 to 5 of the Box) are
regarding institutional and regulatory reforms. AFD-WB 2009 also findsthat governance reform of public utilities is more successful in countries
where broader governance reforms are in progress, and that somecountries do well despite broader governance reform being delayed(106-108). The latter finding is consistent with the argument of pockets ofeffective agencies in weak governance states – “it is well established thateven in countries that have poor governance and a weak public sector,
exceptional well-functioning government and government supported
agencies do exist”(Leonard 2010).
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While there is no doubt that broader governance reform should be
pursued, it would take time to produce results due to the political
economy of African countries. Therefore, a realistic approach would bethat while broader governance reform is executed, efforts should bemade to create effective organizations which are expected to produce
positive results through organizational reforms in the short run.23 Japan
should identify government agencies and public utilities of past,ongoing, and/or future Japan ODA projects, and should consider
support for internal management and organizational reforms, and cost
recovery mechanisms.

5. Conclusions
This chapter has reviewed the current status of infrastructure, and recent
Japan ODA projects, and discussed three issues that Japan’s
infrastructure assistance should consider in light of the findings andrecommendations of AFD-WB 2009. We have suggested rethinking
resource allocation between sectors, financial assistance for
infrastructure maintenance, and the organizational reform of executing
agencies.
One of the strengths of Japan’s ODA is that it can contribute both toaddress efficiency gaps and to close funding gaps through the threemodalities: loans, grants and TC. These three modalities can beeffectively used for various types of countries and sectors, depending on
the stages of infrastructure development and the country’s needs. One
important note is that loan assistance is indispensable to increase Japan’s
financial support to Africa’s infrastructure. In view of the fact that thehigh indebtedness of some African countries hampered Japan’s
infrastructure assistance, it is essential to pay careful attention to debt
sustainability issues to sustain Japan’s infrastructure assistance. In close
coordination with other development partners, it would be more
effective to reconsider Japan’s infrastructure assistance strategy in Africawith new data and findings, and to take one step further by setting up an
infrastructure assistance strategy for individual countries.
23. Some pockets of effective organizations in weak governance states were created throughlong-term management practices and strong organizational culture. This sort of effective
organization cannot be created over a short period of time (Fujita 2011).

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References
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saimukyusaisochi (Koutekisaimu menjogaku) (Gaisanchi). [InJapanese.] http://www.mofa.go.jp/mofaj/ gaiko/oda/seisaku/
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Annex Tables and Figures
Table A1. Classification of countries219

Table A2. Modality Share of Japan’s Financial Commitment on Africa’s Infrastructure by Sector

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Table A3. Japan’s Technical Cooperation on Africa’s Infrastructure

Policy Challenges for Infrastructure Development in Africa - The way
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Figure A1. Log of roads, paved (% of total roads)

Source: World Bank 2012a

Figure A2. Log of Electricity power consumption (kWh per capita)

Source: World Bank 2012a222

Policy Challenges for Infrastructure Development in Africa - The way
forward for Japan’s Official Development Assistance (ODA)

Figure A3. Log of electric power transmission and distribution losses (% ofoutput)Source: World Bank 2012a

Figure A4. Log of Improved access to water sources (% of population withaccess)

Source: World Bank 2012a223

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Figure A5. Log of Agriculture irrigated land (% of total arable land)

Source: ICID2010

Figure A6. Log of Mobile subscription per 100 people

Source: World Bank 2012a224