Africa must focus on infrastructure despite crisis

By Tsegaye Tadesse and Daniel Wallis

ADDIS ABABA (Reuters) - Africa risks a "lost decade" of under-development if it neglects projects to boost energy and transport infrastructure because of the global financial crisis, the World Bank said on Wednesday.

The theme of next week's African Union (AU) summit in Ethiopia is infrastructure, and technocrats have been meeting for days ahead of the arrival of the continent's heads of state.

Inger Andersen, a senior World Bank infrastructure official, said initial hopes that Africa might be spared the worst of the global credit crunch were premature. Governments would be hit by falling demand for commodities, reduced revenues from remittances, tourism and domestic taxes.

But African nations must not make the same mistake as Asian states that neglected to fund infrastructure projects during the 1990s -- a period she said they now mourned as a "lost decade".

"There will be a budget squeeze ... it is going to be real and we don't know the duration of it," she told reporters at AU headquarters, adding that African leaders should follow the lead of President Barack Obama's new U.S. administration.

"They are proposing infrastructure projects precisely so that jobs and investment will come along too," Andersen said.

The February 1-3 summit aims to gather commitments from leaders to concrete transport and energy plans, AU officials said, as well as improving cross-border cooperation and identifying big "flagship" infrastructure projects for promotion.

It was not clear how these schemes would be funded, although China has been active in infrastructure projects in Africa in recent years as it seeks to expand its influence in the resource-rich continent.