"Logistics in Africa: Network effects"

Source: The Economist, October 16th 2008.

"African trade has not changed much since the end of the colonial era. Unprocessed raw materials go out; finished goods come in. The trade imbalance is vividly illustrated by the ships sent from Asia to pick up empty containers left at African ports. Within Africa, moreover, it is difficult and costly to move goods. The continent has only a few broken-down railways. It has nothing resembling a transcontinental motorway. Even the British colonial dream of a road connecting Cape Town with Cairo failed.

"Today, getting a container to the heart of Africa—from Douala in Cameroon to Bangassou in the Central African Republic, say—still means a wait of up to three weeks at the port on arrival; roadblocks, bribes, pot-holes and mud-drifts on the road along the way; malarial fevers, prostitutes and monkey-meat stews in the lorry cabin; hyenas and soldiers on the road at night. The costs of fuel and repairs make even the few arterial routes (beyond southern Africa) uneconomic. A study by America’s trade department found that it cost more to ship a ton of wheat from Mombasa in Kenya to Kampala in Uganda than it did to ship it from Chicago to Mombasa."

Comment: The map indicates that Uganda is relatively better served by transportation infrastructure than are other African nations. Maybe so, but when I was there a couple of years ago land and lake transportation costs were still very high. There was no oil pipeline, and oil products had to be trucked in from the coast at very high cost. Most of the colonial railroads no longer functioned, and the one that did was in bad shape and expensive. The port facilities on Lake Victoria had deteriorated badly. The secondary road system that would connect the largely rural population with markets was very inadequate. And of course the other aspects of physical infrastructure -- energy, communications, water, sanitation -- were similarly underdeveloped. The lack of an adequate physical infrastructure was very costly to extractive, manufacturing and service industries and was a major disincentive to investment in these sectors.

There was a huge need for professional engineers, and for an industry that would utilize professional engineering services to build and maintain the nations physical infrastructure. Of course, a poor African nation also needs sources of financing to make the investments in infrastructure. That fact in turn leads to difficult questions of political-economy which could not be addressed in this posting, even were I competent to address them. JAD