How Africa’s Infrastructure Gaps Are Holding Back Regional Value Chains

Introduction

The African Continental Free Trade Area (AfCFTA) represents a landmark achievement in the continent’s quest for economic integration. With the potential to create a single market of over 1.4 billion people and a combined GDP exceeding $3.4 trillion, AfCFTA offers African economies the opportunity to shift away from commodity dependence and toward value-added, intra-African trade. Yet despite the legal and policy framework now in place, Africa’s actual trade flow remains starkly limited. Intra-African trade accounts for less than 15% of total African exports, compared to around 60% in the European Union and 40% in ASEAN. One of the most underappreciated yet structurally decisive reasons for this underperformance is infrastructure or more precisely, the lack of interconnected, production-supportive infrastructure across the continent.

While the discourse around AfCFTA has rightly focused on tariff harmonisation, non-tariff barriers, and trade facilitation, far less attention has been given to the physical and digital infrastructure required to sustain regional value chains (RVCs). This oversight is not trivial. In the 21st-century global economy, value chains are not merely dependent on market access, but on the speed, cost, reliability, and predictability of cross-border movement of goods, services, people, and data. Infrastructure is what makes this movement possible. In its absence, even the most well-crafted trade agreements remain operationally hollow.

This article argues that Africa’s inability to build, finance, and coordinate infrastructure as a regional public good is a critical bottleneck to RVC development. It offers a rigorous examination of how transport, energy, digital, and logistics infrastructure systems or their absence are inhibiting production linkages across borders. It further analyses how institutions such as the African Union (AU), Regional Economic Communities (RECs), and development partners must rethink infrastructure not as a standalone development priority, but as a strategic enabler of integrated industrialisation.

Infrastructure and Regional Value Chains

In economic development literature, infrastructure has traditionally been conceptualised as a domestic public good road to connect rural areas to urban markets, electricity to power homes and firms, broadband to enable digital services. While these are essential objectives, they fall short of what is required to enable regional value chains. RVCs, by definition, require the physical integration of multiple national economies through coordinated production and logistics systems. Infrastructure that stops at national borders, or that is designed without regard for cross-border compatibility, actively fragments rather than integrates production potential.

This has been well understood in other parts of the world. In Europe, the Trans-European Networks (TEN-T and TEN-E) were created specifically to support the European Single Market. These networks are not just transport and energy corridors, they are instruments of production integration. They allow a component manufactured in Poland to arrive on time for assembly in Germany, which is then exported from the Netherlands. Crucially, the EU has ensured interoperability technical standards, customs procedures, data platforms across borders to make these chains function seamlessly. Similarly, ASEAN’s Master Plan on ASEAN Connectivity (MPAC) has targeted the construction of multimodal transport corridors, harmonised power grid integration, and digital infrastructure as prerequisites for strengthening Southeast Asia’s production base.

Africa lacks any equivalent level of functional integration. Roads between neighbouring countries often do not align; customs systems are not synchronised; electricity networks are nationally siloed; and broadband coverage is concentrated in urban centres, leaving vast production zones disconnected. Moreover, regional infrastructure projects are often underfunded, poorly governed, and subject to conflicting national priorities. Without strategic coordination of infrastructure as a continental production platform, the structural conditions necessary for AfCFTA to translate into integrated trade remain elusive.

The Multidimensional Nature of Africa’s Infrastructure Deficit

Africa’s infrastructure gap is not a singular shortfall; it is a complex system of interrelated deficits that collectively undermine economic integration. Each dimension: transport, energy, digital, and trade logistics has its own characteristics, but they converge in one outcome: the fragmentation of Africa’s production geography.

Transport Infrastructure:

According to the African Union, only 7% of Africa’s trade is carried by rail, compared to over 40% in Europe. The vast majority of intra-African transport relies on road networks that are unevenly distributed, poorly maintained, and often disconnected across borders. In many regions, there is no continuity of road quality, signage, or safety standards once a border is crossed. The result is prohibitively high logistics costs: the African Development Bank estimates that transport costs in Africa are 75% higher than the global average. In landlocked countries like Malawi, South Sudan, or Niger, the costs can exceed 300% of the world average for similar distances. These inefficiencies negate the price advantages that African producers might otherwise have in labour-intensive manufacturing or agro-processing.

Energy Infrastructure:

Reliable electricity is a non-negotiable input for any industrial value chain. Yet over 600 million Africans lack access to electricity, and those with access face high costs and frequent outages. Africa’s power generation capacity is fragmented across more than 50 national utilities, with very limited cross-border trade in electricity. Power pools such as the Southern African Power Pool (SAPP) exist, but interconnectivity remains shallow. For manufacturers, this creates a dual burden: unreliable public supply and the added cost of private generators, which often run on expensive diesel. This is particularly damaging for industries with high energy intensity, such as metals processing, textiles, or pharmaceuticals, all of which are crucial for RVC development.

Digital and ICT Infrastructure:

The digital layer of value chain integration is increasingly critical. Customs automation, e-logistics, digital certification, and data sharing are now baseline requirements for efficient regional trade. Yet Africa’s digital divide remains stark. According to the World Bank, only 24% of sub-Saharan Africa’s population has access to mobile internet. Most border posts still rely on manual documentation, and few RECs have achieved mutual recognition of electronic standards. This leads to delays, corruption opportunities, and lack of transparency in trade flows, all of which disincentivise formal trade and weaken trust in regional supply systems.

Trade Logistics and Border Infrastructure:

Even where roads and ports exist, the institutional infrastructure that governs border crossings such as customs clearance, phytosanitary inspections, and transport licensing is often outdated or misaligned. The World Bank’s Logistics Performance Index (LPI) consistently ranks most African countries in the bottom third globally. For instance, it takes over 30 days to clear a container in some West African ports, compared to 2–4 days in Singapore or Rotterdam. These delays undermine just-in-time production systems and discourage firms from investing in regional sourcing.

Sectoral Impact: How Infrastructure Failures Disrupt Africa’s Most Strategic Value Chains

The economic consequences of fragmented infrastructure are not theoretical they manifest directly in the underperformance of Africa’s most promising sectors. Sectors such as agro-processing, light manufacturing, pharmaceuticals, and automotive assembly are all constrained not by lack of demand or skills, but by the absence of integrated infrastructure.

In agro-processing, for example, Africa produces nearly 75% of the world’s cocoa but processes less than 10% of it. This is not merely a problem of market access, it is a problem of transport and energy. Cocoa beans harvested in Côte d’Ivoire often cannot be processed in neighbouring Ghana due to non-tariff barriers, poor road connectivity, and misaligned certification systems. Without cold storage or reliable electricity, perishables such as dairy, fruits, and vegetables lose value before reaching regional markets.

In light manufacturing, firms in Ethiopia, Kenya, or Nigeria often find it cheaper to import intermediate inputs from China or Turkey than from neighbouring African countries. This is due to the lack of reliable regional logistics, harmonised standards, and pooled production zones. As a result, Africa is missing opportunities to build backward linkages that would raise local content, create jobs, and enhance regional resilience.

The pharmaceutical sector is perhaps the most critical example. During the COVID-19 pandemic, Africa’s inability to produce, store, and distribute vaccines and medical supplies was laid bare. Even when production capacity exists as in South Africa or Senegal it cannot scale regionally without distribution corridors, harmonised drug approval systems, and cold chain infrastructure. Without this, Africa remains vulnerable to external supply shocks and unable to build endogenous health resilience.

Institutional Coordination: Why Infrastructure Remains Politically Disconnected from Trade Integration

Africa’s infrastructure deficit is not solely a technical or financial problem; it is fundamentally an institutional one. The persistent failure to plan, finance, and execute regional infrastructure projects on a scale reflects the disjunction between trade policy aspirations and governance realities. Despite the formal existence of frameworks such as the African Union’s Programme for Infrastructure Development in Africa (PIDA), implementation lags due to political fragmentation, financing constraints, and weak inter-agency coordination at national and continental levels.

Siloed Planning and Budgeting Structures

Most African countries approach infrastructure planning as a national development agenda, often prioritised in five-year economic plans or national budgets. Ministries of work or transport, rather than trade or industrial development, typically oversee such projects. This institutional separation means that infrastructure is rarely designed with regional trade or value chain integration in mind. As a result, highways may connect political capitals, but not industrial corridors; ports may be expanded for extractive exports rather than diversified cargo; and energy investments may focus on urban electrification over industrial load centres.

Even at the continental level, coordination is thin. PIDA, launched in 2012 by the AU, NEPAD, and the African Development Bank, outlines over 400 regional infrastructure projects. But progress has been slow: as of 2023, fewer than 20% of priority PIDA projects had reached financial closure. Many are stuck in the pre-feasibility or planning stages. Reasons include lack of harmonised technical standards, weak institutional capacity in project preparation, and disputes over cost-benefit sharing among member states.

Regional Economic Communities (RECs) as Underleveraged Platforms

Africa’s RECs such as ECOWAS, EAC, and SADC are legally mandated to drive regional integration, yet their role in infrastructure governance is often underdeveloped. Unlike the European Commission, which has direct budgetary and regulatory powers to execute cross-border infrastructure under the EU’s cohesion policy, African RECs lack both the financing authority and political leverage to compel joint investment or enforcement. This results in disjointed corridor development, with some countries moving ahead while others lag, creating asymmetrical benefits and political friction.

Moreover, donor-funded projects are frequently negotiated bilaterally, reinforcing fragmentation. A Chinese-financed railway in Kenya may not connect with Tanzania’s infrastructure, because the negotiations, design standards, and operational models are not regionally synchronised. The result is infrastructural dead-ends rather than connected corridors. Without stronger supranational governance, even well-intentioned investments will continue to operate in silos.

Learning from Global Models: What the EU, ASEAN, and MERCOSUR Did Right

Africa is not the first region to grapple with the challenge of aligning infrastructure with economic integration. Across the Global South and North, successful regional blocs have used coordinated infrastructure investment as a deliberate tool to build production linkages and economic cohesion.

The European Union – Infrastructure as Integration Architecture

The EU’s experience offers perhaps the most comprehensive model of infrastructure-driven integration. Recognising early on that market unification required physical unification, the EU invested heavily in the Trans-European Networks (TEN-T for transport, TEN-E for energy). These are not just funding instruments, they are governed by strict technical standards, timeline commitments, and conditionality mechanisms. Projects are prioritised based on their capacity to reduce bottlenecks and enhance interoperability across member states.

The EU also created dedicated institutions such as the Innovation and Networks Executive Agency (INEA) to manage the technical, financial, and political coordination of cross-border infrastructure. Importantly, funding is not left to national discretion. The EU’s Connecting Europe Facility (CEF) provides direct grants to transnational infrastructure, especially in lower-income member states, correcting for internal asymmetries. This model could be instructive for how the African Union and Afreximbank co-finance infrastructure under AfCFTA.

ASEAN – Aligning Corridors with Production Zones

In Southeast Asia, ASEAN’s Master Plan on ASEAN Connectivity (MPAC) has focused on developing multimodal transport corridors that connect special economic zones (SEZs), industrial parks, and logistics hubs across borders. The East-West Economic Corridor, for instance, links Myanmar, Thailand, Laos, and Vietnam through a unified transport and customs framework, enabling the movement of goods from inland factories to coastal ports.

A key success factor has been ASEAN’s soft infrastructure alignment harmonised customs protocols, mutual recognition of standards, and shared digital platforms for trade documentation. This reduces non-tariff barriers and enhances trust in the system. While ASEAN does not have the supranational authority of the EU, it has used consensus-based decision-making and regional working groups to foster gradual, bottom-up harmonisation.

MERCOSUR and the Importance of Political Will

In South America, MERCOSUR illustrates a different lesson: without strong political will and institutional enforcement, infrastructure integration stalls. Despite formal agreements, investment in cross-border corridors between Brazil, Argentina, Paraguay, and Uruguay remains limited, due to domestic political instability and shifting priorities. This is a cautionary tale for Africa: policy declarations alone are insufficient. What matters is the sustained commitment to regional vision over national short-termism.

Strategic Policy Recommendations: Making Infrastructure a Cornerstone of AfCFTA Implementation

To unlock the full potential of AfCFTA, Africa must reconceptualise infrastructure as a production enabler and a regional public good. This requires not just more investment, but smarter coordination, stronger institutions, and strategic prioritisation. Below are four transformative policy directions:

1. Establish an African Infrastructure Integration Authority (AIIA)

Rather than relying on fragmented project implementation across different AU agencies, Africa should create a specialised supranational body similar to the EU’s INEA that is tasked with designing, coordinating, and overseeing transnational infrastructure projects. This body should have cross-sectoral mandate (transport, energy, digital, logistics) and work closely with RECs, national governments, and financiers. It must also house technical experts capable of preparing bankable projects and structuring blended financing.

2. Prioritise and Fast-Track Strategic Value Chain Corridors

AfCFTA implementation should be anchored on a limited number of high-impact value chain corridors, rather than a diffuse portfolio of projects. For instance, a West African agro-industrial corridor (linking Ghana, Côte d’Ivoire, Togo, and Nigeria) could focus on shared storage, rail logistics, and processing zones for cocoa and cashew. Similarly, an East African light manufacturing corridor (connecting Ethiopia, Kenya, Uganda, and Rwanda) could enable shared textile inputs and regional branding. These corridors should be fast-tracked with pooled investment and time-bound implementation plans.

3. Leverage Afreximbank and Pan-African Capital for Blended Finance

Financing remains a major constraint. Multilateral development banks (MDBs) are often risk-averse and slow. Africa must leverage its own financial institutions especially Afreximbank, Africa50, and the African Development Bank to de-risk infrastructure through blended finance. Sovereign wealth funds and pension funds should also be mobilised through green and industrial bonds. Financing mechanisms should reward cross-border projects with concessional terms.

4. Embed Infrastructure in AfCFTA’s Implementation Protocols

Currently, AfCFTA’s legal texts focus on trade in goods, services, and investment. But without explicit integration of infrastructure provisions such as corridor governance, joint investment, and logistics harmonisation the agreement risks remaining disconnected from operational reality. The upcoming AfCFTA Phase II negotiations on competition, investment, and digital trade must embed infrastructure coordination as a binding, enforceable priority.

Conclusion: Infrastructure as the Lifeline of African Integration

The legal foundations of a unified market have been laid, but without the connective tissue of infrastructure, the edifice remains inert. Regional value chains are not a natural outcome of trade liberalisation they are built, brick by brick, through coordinated planning, strategic investment, and hard-nosed political will. Infrastructure is the bloodstream through which goods, services, data, and people flow. Without it, integration is not just delayed, it is denied.

Policymakers across the African Union, RECs, and national governments must stop treating infrastructure as a background variable and start seeing it as the main stage of economic transformation. Development partners must align their funding to regional priorities, not just national projects. And African financial institutions must become bolder in taking the risks that global lenders shy away from. Most importantly, infrastructure must cease to be an afterthought in trade policy, it must become its engine.

In the global economy of fragmented supply chains and geo-economic competition, Africa’s margin for error is narrow. If the continent fails to build infrastructure at the speed of its ambition, it risks locking itself out of the next wave of industrialisation. But if it succeeds, Africa can become more than a market, it can become a hub.

Maryjane Eze is a resident fellow of the African Program of the 16th Council.