Financing the Road Network in Sub-Saharan Africa: Deconstructing History and Exploring the Future

This paper attends to institutional challenges Sub-Saharan Africa (SSA) faces in its attempt to capture private finance for transport infrastructure management. The paper starts with an exposition of the state of the road network in SSA, identifying a major gap in investment. This gap is partly attributed to the worldwide notion that roads are a public good. This notion is not consistent with history, the paper argues. The first engineered roads were mainly private, and improvements in technology should allow roads to be treated as a private good that can be subjected to market forces of demand and supply. Where demand is high, road space should be packaged and taken to the marketplace. The domestic capital market in SSA is however dismally capitalised. Further, the international market considers the region too risky. An emerging wave of infrastructure sovereign bond is identified as a way to leverage international finance and lower the risk level of major projects in the region. The paper however cautions that engaging the international market, and infrastructure asset management entities, demands a transformation of transport institutions in the region. The requisite institutional transformation is discussed, guided by a model of institutional change, and using data on transport institutions of SSA in the last fifty years. In conclusion, the paper remarks that institutional change is a gradual process and the character of this change should inform any quest for private finance.