How COVID-19 has impacted infrastructure investment across East Africa

East African countries faced a significant setback in infrastructure investment last year, with a cut of about $68.3 billion in spending on projects, marking the largest decline in project numbers and value in sub-Saharan Africa. The impact of the COVID-19 pandemic has reshaped government priorities, leading to a shift in where funds are being allocated. In a recent interview on CNBC Africa, economic analyst Ted Kaberuka discussed the repercussions of this decline and the challenges ahead for the region's infrastructure development. Kaberuka emphasized that infrastructure plays a crucial role in the region's economic growth and development, serving as the backbone for a fast-moving economy. However, the pandemic prompted governments to redirect investments towards healthcare and other urgent needs, disrupting the flow of funds into infrastructure projects. The ripple effects of this shift extend beyond just the immediate financial losses from delayed projects. Social consequences are also significant, as infrastructure projects provide essential services to the population. For instance, a delayed water supply system means fewer people have access to clean water, impacting their quality of life. Additionally, infrastructure projects act as catalysts for other sectors, such as transportation and agriculture. A postponed road construction project, for example, can hinder the movement of goods and services, affecting farmers' ability to access markets and leading to economic losses. The combination of direct income losses from delayed projects and indirect costs on social welfare and service delivery amplifies the challenges faced by governments in the region. To address the funding deficit for infrastructure projects, Kaberuka highlighted the need for increased private sector participation. Historically, governments in the region have shouldered the burden of financing infrastructure projects, leading to funding gaps and delays in project implementation. Moving forward, a shift towards public-private partnerships is crucial to leverage private sector resources and expertise. However, Kaberuka cautioned that effective regulation is essential to ensure the success of these partnerships and prevent potential pitfalls. Well-structured public-private partnerships have demonstrated their efficiency in other countries, providing a roadmap for East African nations to follow. Creating a conducive investment climate, fostering transparency, and combatting corruption are key factors in attracting private sector investment. A trustworthy and stable business environment is essential to instill confidence in investors and drive economic growth in the region. As East African countries navigate the challenges posed by the pandemic and seek to revitalize their infrastructure development efforts, strategic partnerships between the public and private sectors will be instrumental in driving progress and building a more resilient and sustainable future for the region.