Sub-Saharan Africa has some of the world’s strongest potential returns from new infrastructure investment, particularly in transportation, but high borrowing costs and uneven infrastructure coverage continue to limit the region’s ability to turn those opportunities into economic growth, according to a new World Bank report.
The report, Infrastructure Foundations: From Current Assets to Future Growth, finds that 97% of Sub-Saharan African countries have higher infrastructure efficiency ratios for transportation than for energy, the highest share among the regions examined. It also says transportation investment in the region can generate social returns exceeding costs by a factor of more than 22.
The findings suggest that African governments facing tight fiscal conditions should focus not simply on increasing infrastructure spending but on directing scarce capital toward projects with the greatest economic and social returns.
The World Bank’s analysis covers about 150 countries and measures the social return from infrastructure against the cost of financing and depreciation. An efficiency ratio above one indicates that the potential social benefits of additional investment exceed its costs.
Globally, the report finds that 92% of countries have transportation efficiency ratios above one, while the share rises to 98% for energy, indicating substantial untapped opportunities for infrastructure investment. Sub-Saharan Africa stands out for particularly high efficiency ratios in both sectors.
Africa’s infrastructure gap
The report says Sub-Saharan Africa has accumulated less infrastructure capital than its level of economic development would imply. The region is one of four areas, alongside Latin America and the Caribbean, the Middle East and North Africa, and South Asia, where infrastructure capital stocks are below levels predicted by income.
The gap is particularly important in transportation. The report finds that transportation accounts for only about 27% of infrastructure capital in the poorest countries, compared with 75% in the richest countries, reflecting the accumulation of roads, railways and other transport infrastructure as economies develop.
For Africa, the implication is that better physical connectivity could deliver substantial gains by linking producers to markets, supporting regional trade and integrating economies into international value chains.
The report also highlights major differences within countries, meaning national infrastructure averages can obscure areas with severe shortages. It cites Nigeria as an example, saying power-generation capacity is heavily concentrated in the south while northern regions remain significantly underserved.
Transportation emerges as a priority
The World Bank’s analysis finds that transportation projects generally generate higher returns in developing economies because infrastructure networks remain relatively sparse and each additional connection can have a large economic impact. Returns tend to decline as countries accumulate more roads and railways.
In Sub-Saharan Africa, the imbalance is particularly pronounced. 35 of the 36 countries analysed in the region have higher transportation efficiency ratios than energy ratios, equivalent to 97.22%, according to the report.
The report’s modelling suggests that about half of Sub-Saharan African countries would have an optimal transportation allocation of more than 75% if 10% of GDP were devoted to infrastructure investment, although the authors stress that the optimal mix varies by country.
That does not mean governments should abandon energy investment. Rather, the report argues that most countries should maintain a balanced strategy, with the appropriate mix determined by existing infrastructure stocks, expected economic returns and country-specific conditions.
Financing remains a constraint
High potential returns do not automatically translate into viable projects. The report says countries with large infrastructure needs often face high borrowing costs and risk premiums that can make socially beneficial projects financially difficult to undertake. Concessional financing, guarantees and other risk-mitigation instruments can therefore be critical in converting high-return projects into investable opportunities.
For energy infrastructure in particular, low efficiency ratios are generally associated with high borrowing and replacement costs, suggesting that reforms aimed at lowering financing and construction costs could improve investment viability.
The report also warns that construction costs vary widely between countries and can significantly erode infrastructure returns. Some differences are driven by geography, conflict and natural disasters, but others reflect limited competition, weak procurement systems and governance problems.
Digital investment has a different payoff
Digital infrastructure does not follow exactly the same pattern as transportation. The report finds that digital investment tends to produce greater returns in higher-income and better-connected economies because network effects increase the value of digital services as more people and businesses join the network. Energy investment, meanwhile, generates relatively consistent returns across income levels, reflecting both expanding access in poorer economies and quality improvements and energy-transition needs in richer countries.
The authors caution, however, that the digital findings should be interpreted carefully because impact evaluations for the rapidly evolving sector remain limited. The interaction between digital and energy infrastructure also needs to be considered.
Infrastructure needs to work as a system
A central conclusion of the report is that governments should not assess infrastructure projects in isolation.
Complementary investments can produce returns greater than the sum of individual projects. Roads that connect communities to energy-powered logistics hubs, for example, can increase the value of both transport and energy infrastructure, while digital connectivity can raise the productivity of transportation networks.
The World Bank therefore argues for country-specific investment strategies rather than uniform spending targets. Infrastructure priorities should reflect existing capital stocks, financing conditions, construction costs and the development level of each economy.
For Sub-Saharan Africa, the report’s message is particularly stark: the region combines large infrastructure deficits with some of the highest potential returns from additional investment, especially in transportation. The challenge is to mobilize affordable finance, reduce construction costs and improve project selection so that those returns can be captured.
The report is based on a new World Bank dataset mapping physical infrastructure assets across energy, transportation and digital sectors in nearly every country, including geolocated information that in many cases can be disaggregated to local administrative levels.
