africa

Africa at a Fork in the Road: Taking Off or Disappointment Once Again?
Spatial industrial policies offer a third, complementary, area of public action. Governments
can foster industrial agglomerations by concentrating investments in high
quality institutions, social services, and infrastructure in a limited physical area such
as a special economic zone (SEZ). In Latin America and Asia, governments have
linked the development of SEZs to an export push by creating export processing
zones. Spatial policies can also play a role in the transfer and diffusion of firm capabilities.
To date, Africa’s experience with spatial industrial policy has been largely
unsuccessful. Most African SEZs have failed to reach the critical threshold levels of
physical, institutional, and human capital needed to attract global investors (Farole,
2011). Clearly, the first order of business is to upgrade the performance of Africa’s
SEZs to international standards.
8.5 A new role for aid?
Aid plays an outsized role in Africa. Most low-income African countries receive
between 10 and 30 percent of their gross national income in development assistance
and, not surprisingly, donor priorities are important. A new approach to aid—one that
supports job creation—is urgently needed. A first step is to focus greater attention
on Africa’s infrastructure and skills constraints. Infrastructure financing as a share
of total donor assistance from the OECD countries has declined dramatically since
the 1990s (Page, 2012a). Closing Africa’s infrastructure gap will require around
US$93 billion a year, equivalent to about 15 percent of the region’s GDP (World
Bank, 2009). While it is clearly unrealistic in the current fiscal environment to count
on aid to fill the financing gap, new approaches and products are needed. For
example, guarantee instruments could leverage limited donor financing by reducing
the perceived risk of private debt financing for infrastructure.
Financing an expansion of post-primary education presents at least as daunting
a challenge as closing the infrastructure gap. The current funding gap for education
across Africa has been estimated to be anywhere between US$6 and US$29
billion (World Bank, 2007). Donor commitments to all levels of education in Africa
only approach US$4 billion. Confronted with rising unit costs of primary education
and limited prospects of external finance, it is time to replace the primary educa-
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