Africa's Infrastructure Pivot: Three Nations Chart Divergent Paths on Economic Control
Kenya reverses port privatisation while Ethiopia loosens foreign exchange restrictions and South Africa adjusts toll rates, revealing competing philosophies on state control versus market liberalisation across the continent.
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Three major African economies have announced policy shifts affecting critical infrastructure within days of each other, exposing the continent's ongoing struggle to balance state control with market efficiency. The decisions—Kenya's abandonment of port privatisation, Ethiopia's relaxation of stringent foreign exchange rules, and South Africa's modest toll fee adjustments—reflect divergent approaches to managing infrastructure assets that serve as economic arteries.
Kenya's government has abandoned plans to privatise the Kenya Ports Authority, opting instead to convert the strategic asset into a Public Limited Company, according to The East African. The reversal marks a significant retreat from market-oriented reforms that had been positioned as essential to improving efficiency at the Port of Mombasa, East Africa's largest maritime gateway. The decision to retain state control while restructuring the entity as a PLC suggests Nairobi is seeking a middle path—introducing corporate governance standards without surrendering strategic control of infrastructure that handles approximately 30 million tonnes of cargo annually for Kenya, Uganda, Rwanda, Burundi, and eastern Democratic Republic of Congo.
The Kenyan reversal stands in sharp contrast to Ethiopia's simultaneous move toward liberalisation. After eighteen months of tight regulation, Addis Ababa is easing strict foreign exchange controls that had throttled investment flows into Africa's second-most populous nation, The East African reports. The policy adjustment aims to attract foreign capital, boost diminished reserves, and signal to international investors that Ethiopia is reopening for business following a period of economic isolation. The forex restrictions, implemented in mid-2024, had created parallel exchange rate markets and discouraged legitimate foreign investment while failing to stabilise the birr or prevent capital flight through informal channels.
Ethiopia's National Bank had imposed the controls amid a foreign currency crisis that threatened debt servicing obligations and import capacity. The restrictions required exporters to surrender hard currency earnings at official rates significantly below black market prices, creating perverse incentives that undermined the policy's stated objectives. By relaxing these rules, Ethiopian authorities are acknowledging that command-and-control approaches to currency management exact costs that outweigh their benefits, particularly when a country requires substantial external financing for infrastructure development and faces competition from neighbours offering more investor-friendly environments.
Meanwhile, South Africa's infrastructure policy adjustments reflect a more incremental approach to economic management. The South African National Roads Agency announced toll fees would rise by 3.12 percent from March 1, aligning with the Consumer Price Index, according to Sowetan Live. The increase, lower than last year's 4.85 percent adjustment, maintains the user-pays principle for road infrastructure while attempting to keep pace with inflation without imposing excessive burdens on motorists and transport operators already contending with elevated fuel costs and economic stagnation.
The South African toll adjustment, though modest, underscores the fiscal pressures facing governments attempting to maintain aging infrastructure networks without adequate budget allocations. Sanral's toll roads generate revenue essential for maintenance and debt servicing on bonds issued to finance construction, creating a self-funding model that insulates road infrastructure from competing budget priorities. Yet the model remains politically contentious, with critics arguing that tolls constitute double taxation when motorists already pay fuel levies theoretically earmarked for roads.
These three policy shifts illuminate fundamental questions about infrastructure governance that African governments continue to navigate without consensus. Kenya's decision to retain port ownership reflects concerns about surrendering control of strategic assets to private operators potentially more responsive to shareholder returns than national development objectives. The country's experience watching neighbouring Tanzania struggle with private concession agreements at the Port of Dar es Salaam likely influenced the calculation, as did domestic political opposition to privatisation from labour unions and nationalist constituencies.
Ethiopia's forex liberalisation, conversely, represents recognition that autarkic policies ultimately constrain growth more than they protect sovereignty. The country requires an estimated $10 billion annually in infrastructure investment to maintain economic expansion, financing that cannot be generated domestically given limited savings rates and shallow capital markets. By creating conditions more attractive to foreign investors, Ethiopian policymakers are betting that increased capital inflows will generate economic activity sufficient to offset risks associated with currency volatility and external dependence.
The divergent approaches reflect differing stages of economic development, political systems, and historical experiences with market reforms. Kenya's relatively open economy and experience with privatisation—both successful and problematic—has bred caution about wholesale asset transfers. Ethiopia, emerging from decades of state socialism followed by state-led developmentalism, is discovering that neither model generates sufficient capital for its infrastructure ambitions. South Africa, with the continent's most sophisticated financial markets and infrastructure networks, continues managing assets through parastatal entities while using market mechanisms like toll pricing to recover costs.
What remains consistent across all three cases is the centrality of infrastructure to economic strategy and the absence of ideological certainty about optimal governance models. African governments are experimenting with hybrid approaches that blend state ownership with market discipline, regulatory frameworks with operational autonomy, and national control with international capital. The outcomes of these experiments will shape infrastructure development patterns across the continent for decades, determining whether Africa can build the roads, ports, and utilities essential for industrialisation without surrendering economic sovereignty or perpetuating inefficient state monopolies that stifle growth.