Regional transport infrastructure integration and its contribution to Foreign Direct Investments (FDI) flow within Africa

Economic competitiveness, trade and integration initiatives realised through favourable cross-border movement of people and their activities between regions and countries; are greatly rooted in an integrated transport infrastructure system. Previous researches have recognised that investments in transport infrastructure among countries advances the productivity and foreign investment potential of a region; as functional transport infrastructure enhances connectivity, and promotes ease of movement while lowering trade costs. In addition, several authors propound that economically competitive regions attribute their success to regional connectivity since it boosts transfer of FDI. This study therefore attempts to explain how regional transport infrastructure integration influences the flow of FDI within regional geographical blocs in Africa. The research quests to highlight how the four modes of transport infrastructure (road, rail, air and water) compare and contribute to the competitiveness of East, West, North and Southern geographical blocs; and to identify the shortcomings within the continent regarding cross-border infrastructure integration that slow economic development. To tackle the request, four different panel regression analyses for the period between 2006 and 2016 were carried out to analyse the effect of each transport mode on FDI over the 11-year time interval. Apart from the twelve pillars of competitiveness, review of literature identified the implementation of liberalised transport policies; socio-political stability; transport infrastructure investments and availability and extent of transport infrastructure as some of the enabling factors that influence the development of transport infrastructure. The aforementioned factors form the conceptual framework of this research. From the study, it emerged that economic competitiveness of regional blocs in Africa is indeed founded on well-integrated transport infrastructure that connects a bloc’s member countries; as those that ranked highly on the different modes of transport over the years, recorded improvements in their inward FDI. This however was not the case for North Africa, as the trend of FDI development for the region dropped from the years 2007 to 2016 with minimal improvements; but still managed to be the best performing region in terms of transport infrastructure development throughout the years. This is because North Africa as identified from the literatures of the African Development Bank (AfDB, 2010, AfDB, 2016) ranked first among the regional blocs in Africa in transport development; as almost all the countries in the bloc have made tremendous initiatives to upgrade their transport infrastructure network. Also, as observed from this research, the region is seen to demonstrate average to great performances in just about all four transport modes under study. It follows that some of the shortcomings regarding transport infrastructure integration in Africa that were identified from this study include low density and connectivity of roads; insufficient regional railway network; inequality in air transport growth and weak cooperation between air carriers; and underdeveloped inland water and sea port transportation. This research therefore argues that besides focussing on the best performing transport mode in a region, there should be a balanced development of all four modes of transport considered in this study in order to bring harmony and complementarity of cross-border infrastructure development that enhances transfer of FDI and economic competitiveness of the blocs.