1
Zambia’s Infrastructure:
A Continental Perspective
Africa Infrastructure Country Diagnostic:
a multi-stakeholder effort
Banque Africaine de
Developpement
African Union
Agence Française de
Développement
Development Bank of Southern
Africa
Department for International
Development
European Union
The Infrastructure Consortium for Africa
Kreditanstalt für Wiederaufbau
The New Partnership for Africa’s
Development
Public-Private Infrastructure Advisory
Facility
Sub-Saharan Africa Transport Project
The World Bank
Water and Sanitation Program
Methodology and approach
 Methodology
 Data collection by local/international consultants and Bank staff
based on standardized methodology
 Baseline year for data is 2006, does not reflect subsequent
evolution
 Approach
 Focus on benchmarking Zambia’s infrastructure against African
neighbors
 Benchmarking group includes Resource Rich Countries (RR),
Middle Income Countries (MIC), South African neighbors, and
regional outliers
Why infrastructure matters?
Despite Zambia’s strong economic growth,
infrastructure’s contribution has been relatively low
Changes in growth per capita due to changes in infrastructure
(2001-5 vs. 1991-5)
2.5
2.0
1.5
1.0
0.5
Telecom
Electricity
Roads
Guinea-Bissau
Zimbabwe
Angola
Zambia
South Africa
Madagascar
Malawi
Botswana
Mauritius
-0.5
Sudan
0.0
Raising Zambia’s infrastructure to level of African
leader could add 2.2 points to per capita growth rate
Potential changes in growth per capita from improving infrastructure to
level of African regional leader (Mauritius)
5
4
3
2
Main Telephone Lines
Mauritius
Botswana
Zambia
Zimbabwe
Angola
Electricity Generating Capacity
South Africa
-2
Madagascar
Malawi
-1
Niger
0
Togo
1
Length of Road Network
Key Message #1
Infrastructure has the
potential to contribute more
to Zambia’s infrastructure
than it has in the past
The State of
Zambia’s Infrastructure
Zambia’s power network
Benchmarking highlights exceptionally low power
tariffs and levels of electrification
Unit
Installed power generation capacity
Power consumption
Power outages
Firms’ reliance on own generator
Firms’ value lost due to power outages
Access to electricity
Urban access to electricity
Rural access to electricity
Growth access to electricity
Revenue collection
System losses
Cost recovery
Total hidden costs as % of revenue
US cents
Effective power tariff (residential at 100 kWh)
Effective power tariff (commercial at 100 kWh/mo)
Effective power tariff (industrial at 50,000 kWh)
Resource Rich
Zambia
MIC
MW/mil. people
kWH/capita
Day/year
% consumption
% sales
% population
% population
% population
% population/year
43.17
205.68
14.52
44.92
6.99
46.05
79.41
28.03
154.9
771.0
49.8
19.5
3.7
20.1
50.0
3.5
798.6
4,479.3
5.9
10.9
1.6
59.9
85.2
31.8
2.38
0.3
1.5
% billings
% production
% total cost
% of revenue
81.07
25.80
53.94
168.29
96.5
12.0
39.1
93.3
100.0
10.1
100.0
0.1
Zambia
Predominantly
Hydro Generation
2.9
10.27
4.4
11.73
2.9
11.39
Other
Developing
Regions
5.0 – 10.0
Zambia’s power prices are the lowest in Africa,
and also look low by global standards
30
25
US$ cents
20
15
10
5
Power tariffs in other
developing countries:
lower bound
Zambia
Nigeria
Malawi
Congo
Ethiopia
Mozambique
South Africa
Lesotho
Ghana
Tanzania
Namibia
Côte d'Ivoire
Benin
Niger
Cameroon
Rwanda
Kenya
Senegal
Uganda
Madagascar
Cape Verde
Chad
0
Power tariffs in other
developing countries:
upper bound
Zambia’s power tariffs appear in line with operating
costs but far from long-run capital costs
Hidden costs of power utilities are high due to
underpricing
Unaccounted losses
Under-pricing
Collection inefficiencies
DRC Congo
Malawi
Chad
Niger
Nigeria
Tanzania
Rwanda
Botswana
Ghana
Uganda
Zambia
Cameroon
Senegal
Lesotho
Ethiopia
Mozambique
Congo, Rep.
Cape Verde
Burkina Faso
Kenya
Benin
Madagascar
0
100
200
300
400
Percentage of revenues
500
600
700
Access to power highly inequitable making any
subsidies to sector highly regressive
No affordability problems for those with
access, nor even many of those without
% of households spending less
than 5% of their monthly budget
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
1
2
3
4
5
6
7
8
9
10
11
12
USD/month
Lower/Upper bound cost of household consumption of electricity
Zambia
LIC
Key Message #2
Meeting future power
demands and raising
electrification will be difficult
without higher power tariffs
Road network traffic concentrated between
Lusaka and Copper belt
Main trunk network in good
condition except in outlying areas
Benchmarking indicates possible over-engineering of
paved network in contrast to poor unpaved network
Paved road density
Unit
Resource Rich
Zambia
MIC
km/1000 km2
97.6
56.3
146.8
128.2
95.0
257.8
19.7
16.8
22.9
Total road network km/1000 km2 of arable
density
land
GIS Rural
% of rural pop within 2
accessibility
km from all-season road
Over-engineering
% of main road network
paved relatively to low traffic
15.0
65.0
20
Paved road traffic
Average Annual Daily Traffic
1408.2
736.6
2558.3
54.2
45.2
14.9
67.9
83
82.0
61.4
21
57.6
27.4
10.6
4.8
Unpaved road
Average Annual Daily Traffic
traffic
Paved network
% in good or fair
condition
condition
Unpaved classified
% in good or fair
network condition
condition
% firms identifying as
Perceived transport
major business
quality
constraint
Maintenance norm
Maintenance&Rehabilitation norm
200
150
100
50
Zambia
Namibia
Malawi
Lesotho
-100
Madagascar
-50
South Africa
0
Mozambique
percentage deviation from
norm
Zambia has secured resources to cover road maintenance
and rehabilitation needs of main road network
Levels of road sector spending are high in
absolute terms and relative to GDP
4.5
As % GDP
35
US$ per capita
4.0
30
2.5
20
2.0
15
1.5
10
1.0
5
0.5
South Africa
Namibia
Lesotho
Madagascar
Zambia
0
Mozambique
0.0
US$/cap
25
3.0
Malawi
% of GDP
3.5
Key Message #3
Strong budget envelope and
apparent over-engineering of
main roads suggests
potential to shift resources
to under-served rural roads
Zambia’s rail sector is a critical input
for a minerals based economy
Staff: 1000 UT per Staff
Coaches: 1000 passenger-km per
coach
Cars: 1000 ton-km per wagon
Locomotive Availability in %
TARIFFS:
Average Unit Tariff, Freight, US
cents/ton-km
Aver. Unit Tariff, Passenger, US
cents/passenger-km
Zimbabwe
S. Africa
ZR
Spoornet
CEAR
Malawi
Botswana
BRC
CFM
TransNami
b
Namibia
Railway
Concessioned (1)/ State run (0)
Traffic Density, Freight, 1000 tonkm/km
EFFICIENCY:
Angola
Zambia
RSZ
Country
TAZARA
Zambia
Benchmarking indicates low traffic density and
relatively poor performance in terms of efficiency
1
0
0
0
1
0
0
0
406
461
469
827
662
475
2427
902
502
339
121
105
281
358
57
36
3286
nav
4045
2391
750
nav
nav
nav
377
nav
950
987
476
805
913
195
25
nav
30
41
13
25
33
8
4.9
nav
3
2.4
5.8
nav
nav
nav
3.9
nav
1
1.3
1
nav
nav
nav
Railway institutional reform scores relatively low
indicating need to further develop supervision
Institutional Reform Score
35%
30%
25%
20%
15%
10%
5%
Governance
Regulation
Reform
Benin
Rwanda
Congo DRC
Namibia
South Africa
Zambia
Madagascar
Tanzania
Burkina Faso
Cameroon
Mozambique
Cote d'Ivoire
Malawi
Senegal
Uganda
Kenya
0%
Key Message #4
Improving supervisory
framework could help to boost
performance of rail concession
Concentrated potential for large
scale irrigation with modest returns
Simulated location
of potential
LARGE scale
irrigation schemes
Scattered potential for small scale
irrigation with higher returns
Simulated location
of potential
SMALL scale
irrigation schemes
Benchmarking indicates tendency to focus on
higher end solutions and poor utility performance
Access to piped water
Access to stand posts
Access to wells/boreholes
Access to surface water
Access to flush toilets
Access to improved latrines
Access to traditional latrines
Open defecation
Domestic water consumption
Urban water assets in need of
rehabilitation
Revenue collection
Distribution losses
Cost recovery
Labor Costs
Total hidden costs as % of revenue
US cents per m3
Residential tariff
Non-residential tariff
(*) Average of 3 providers
Unit
% pop
% pop
% pop
% pop
% pop
% pop
% pop
% pop
liter/capita/day per population served
Resource Rich
Zambia
MIC
12.0
12.6
49.0
23.7
1.6
6.4
54.8
27.6
90.3
18.3
15.6
46.9
19.0
18.1
1.6
53.1
27.0
80.7
52.1
18.9
6.0
13.0
40.8
1.4
30.4
14.3
187.6
%
42.0
42.0
25.0
% sales
% production
69.7
43.6
55.6
95.7
286.7
68(*)
44.9
65.4
98.8
311.4
100
27.4
80.6
210.8
1854.2
% total costs
connections per employee
%
Zambia
Scarce water
resources
Other
Developing
Regions
48
59
60
120
3.00 – 60.00
Dramatic urban – rural gaps and apparent declining
coverage of piped water with increases elsewhere
Urban
70%
Rural
60%
50%
40%
30%
20%
10%
Piped water
Standpost
Well/boreholes
2001-2005
1996-2000
1990-95
2001-2005
1996-2000
1990-95
2001-2005
1996-2000
1990-95
2001-2005
1996-2000
1990-95
0%
Surface water
Strong expansion of wells and boreholes, but
worrisome increase in use of surface water
Expansion of sanitation options below the SSA average
and troublesome expansion of open defecation
Hidden costs of Zambia’s water utilities are the
highest in the region
Hidden costs (% of the revenues)
Zambia
Mozambique
Malawi
Namibia
Lesotho
South Africa
Madagascar
0%
50%
Unaccounted losses
As of 2005
100%
Under-pricing
150%
Collection inefficiencies
200%
250%
Key Message #5
Greater attention to sanitation
and rural services needed,
opportunity to harness new
resources by improving efficiency
Zambia’s ICT network very tightly
clustered around economic centers
Benchmarking indicates relatively low GSM
coverage and relatively high price of calls
Unit
GSM coverage
International bandwidth
Internet
Landline
Mobile phone
Labor productivity
Quality of service
% population
Mbps/capita
subscribers/100 people
subscribers/100 people
subscribers/100 people
Subscribers/employee
Faults per 100 main lines
Zambia
Resource
Rich
66.9
4.0
0.1
19.3
11.4
405.1
82.4
Zambia
MIC
53.0
4.4
0.2
8.5
20.9
505.8
90.8
85.1
104.0
3.0
34.8
30.0
756.8
50.8
Price of monthly mobile basket
14.6
Without Submarine
Cable
11.1
Other Developing
Regions
9.9
Price of monthly fixed line basket
8.9
13.6
nav
Price of 20-hour Internet package
Price of a 3-min call to US
Price of inter-Africa tel. calls, mean
81.5
5.5
1.19
68.0
2.6
0.7
11.0
2.0
Source: Preliminary results AICD 2008
High international call charges driven both by
technology and market power
US$
Percent
cases
Call within
SSA
Call to
USA
Internet
dial-up
Internet
ADSL
Without submarine cable
67%
1.34
0.86
68
283
With submarine cable
33%
0.57
0.48
47
111
 monopoly on
international gateway
16%
0.70
0.72
37
120
 competitive
international gateway
16%
0.48
0.23
37
98
Some potential for private expansion of GSM
coverage and only minimal need for subsidy
Percent of population
Existing access
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Efficient Market Gap
Coverage gap
Key Message #6
Further competition across the
board is needed to drive down
prices and expand access
The AICD Financial
Framework
100%
80%
Spending needs
Funding gap
60%
Efficiency gap
40%
20%
Existing spending
0%
Improving operational
efficiency $7.5
Increasing
cost recovery
Prioritizing
public spending $3.3
All figures in US$ billion a year
Spending budgeted
resources $1.9
Key Message #7
Zambia needs to spend around
US$16 billion over the next
decade to catch-up with the
rest of the developing world
Illustrative infrastructure targets over
next ten years
Economic target
Social target
ICT
Fiber optic links to neighboring
capitals and submarine cable
Universal access to GSM signal and
public broadband facilities
Power
1,700MW refurbished capacity,
1,700 MW new generation OR,
7,500 MW inter-connectors
Electricity coverage of 24%
(50% urban and 15% rural)
Regional connectivity by good
quality 2 lane paved road
National connectivity by good
quality 1 lane paved road
Rural Accessibility Index 100% for
high value agricultural land,
Urban popn within 500m paved road
Na.
Achievement of MDG for
water and sanitation
Transport
WSS
To meet these targets, Zambia would need to spend
US$1,609 million a year for the next decade
US$ bn pa
Capital
O&M
Total
Percentage
ICT
132
86
218
14%
Power
532
99
631
39%
Transport
145
144
289
18%
WSS
317
154
471
29%
Total
1,126
483
1,609
100%
Trade expansion: 472
Burden of financing needs is substantial
for Zambia at 15 percent of GDP
Key Message #8
Zambia already spends
US$0.7 billion a year on
infrastructure
Zambia’s spending mainly domestically financed
though with significant contributions of ODA, PPI
Existing financing flows to Zambia, US$ million per year
O&M
Investment
Public
Total
Public ODA Non-OECD PPI*
Investment
Total
ICT
Na.
Na.
1
0
89
90
90
Power
99
70
2
8
0
81
180
Transport
99
85
52
6
3
145
245
WSS
35
67
47
1
9
123
158
233
224
99
15
101
439
673
Total
(*) Includes household self-financed investments in sanitation
Existing infrastructure spending in addressing
needs is moderate at 6 percent of GDP
Key Message #9
Zambia faces an ‘efficiency
gap’ worth US$0.3 billion a year
Efficiency gap of US$315 million a year, much of it
associated with under-pricing of power
Key Message #10
Zambia faces a ‘funding gap’
worth US$0.5 billion a year
Funding gap of US$500 million a year,
mainly in power and water
There is a funding gap of US$500 million a
year mainly in power and WSS
US$ mn pa
ICT
Power
Transport
WSS
Total
Needs
(218)
(631)
(289)
(471)
(1,609)
Spending
90++
180
245
158
673
Efficiency Gap
Na.
160
59
96
315
(GAP) or surplus
Na.
(291)
15
(217)
(493)
What approaches can be taken to close the
funding gap?
 Greater reliance on low cost technologies
 Costs of reaching MDGs could be reduced by US$218 million pa
 Power from DRC could (eventually) lower costs by US$160mn pa
 More appropriate road standards could lower costs by US$80mn pa
 Otherwise it may simply be a question of taking more
time to reach the targets
 Holding spending constant but capturing efficiency gains, targets
could be reached within 15 years
 Holding spending constant but NOT capturing efficiency gains,
targets would take more than 30 years to reach
Final Conclusions
Policy measures
 Certain cross-cutting themes emerge
 Relatively little attention paid to the rural sector
 Need to focus on ‘soft’ (policy, institutional) issues
 Key issues in each sector
 Power – financing expansion through greater cost recovery
 Roads – shifting emphasis towards unpaved network
 Rail – strengthening regulation to improve performance
 WSS – capturing inefficiencies and remembering sanitation
 ICT – boosting competition to raise access and lower prices
Final Message
Zambia’s infrastructure situation
is far more hopeful than that of
many other African countries