African governments are reaching out to the private sector in their search for capital needed to upgrade basic infrastructures, from roads and rail to electricity and water supply.

The vice president for public sector development at the World Bank and the International Finance Corporation, Michael Klein, told VOA that investment in Africa's roads, water supplies, telecommunications and other infrastructure is a key element of growth.

"The fundamental equation is: if business has high cost of doing business coming from bad infrastructure, it will reflect in low wages," he said. "Competitiveness requires that, to be able to export, to be able to sell even at home, wages have to be much lower than they need to be if infrastructure is better."

Mr. Klein said that big businesses located in African countries can afford to generate their own electricity and tap their own water sources. However, he added that local small businesses often cannot afford such costs and suffer most from interruptions in electricity, water and telephone services.

He said that one of the problems in supplying utilities and basic services in Africa is that tariffs are not set high enough to recoup the cost of producing them.

Mr. Klein is one of the delegates at a two-day investment conference underway in Nairobi aimed mainly at finding ways to stimulate foreign investment in Africa's basic infrastructure.

Kenyan Roads, Public Works and Housing Minister Raila Odinga told VOA Kenya needs about $1.25 billion to rehabilitate and construct its road network. Of this, he said, only $120 million can be raised through taxes.

He hopes the rest will come from the World Bank and private sector investment.

"It has now become very clear that public investment alone is inadequate for development of infrastructure in our country," he stated. "We have therefore decided, as a government, to go the route of partnering with the private sector in infrastructure development."

In his opening speech, Kenya's President Mwai Kibaki said his government has taken steps to encourage the private sector to invest in water and phone services.

He added that private sector investment will allow the government to spend tax money on other much needed services, such as health and education.

"These commitments require increased expenditures and the government is not in a position to meet all these demands from its own resources," he said. "We are, therefore, emphasizing partnerships with the private sector."

Kenya's Finance Minister David Mwiraria said overall foreign direct investment in Africa stood at $11 billion in 2002, accounting for less than two-percent of global foreign investment. To improve on those figures, he said African countries have taken steps to make their economies more attractive for foreign investors.