Africa’s infrastructure inroads despite the challenges

INFRASTRUCTURE

AFRICA’S INFRASTRUCTURE INROADS

despite the challenges

Infrastructure is critical for the development of countries, economies and industries globally. As a continent consisting primarily of underdeveloped nations, Africa still has a long way to go in terms of infrastructure development.

By Vuyo Ntoi*

Africa’s infrastructure requirements are significant, with significant shortfalls across both social and economic infrastructure. Social infrastructure shortfalls – such as the lack of clean water supply, functional sanitation, education and health – are those that most closely affect individuals and communities, having a direct impact on quality of life and human development measures. While economic infrastructure, which relates to transportation, power and communication, affects individuals and communities as well, it also has a significant impact on economic activity, logistical efficiency and increased competitiveness. The shortage of infrastructure across the board is responsible for Africa not being able to meet its full economic potential, which is required for the continent to deliver a better quality of life for its people. It has been estimated that the shortfall in infrastructure spending across the continent runs into tens of billions of US dollars per annum, and the challenge is to find the financing to provide this infrastructure.

Development challenges and African front runners

The biggest challenge to the development of infrastructure has been insufficient financing, which has mainly related to the poor fiscal position of many African nations; however, this is not the only challenge. Others include the lack of technical capability to deliver the required infrastructure, a deficit in planning and implementation skills across the continent, and insufficient maintenance – meaning that even the existing infrastructure is lost over time. Sometimes, there is also a lack of political will to provide the infrastructure that countries and communities require. All these challenges are made worse by many countries not implementing the reforms required to attract private capital to step in to mitigate the infrastructure shortfall. The African Development Bank has an Africa Infrastructure Development Index, which monitors and evaluates the status of infrastructure development across the continent. The country scores tend to correlate with per capita GDP numbers. Some of the leading countries include the Seychelles, Egypt, Libya, South Africa and Mauritius. The index looks at ease of transportation,

Vuyo has two decades of investment the scale and depth of electricity provision, and ICT experience and has been involved in private development. The correlation to per capita GDP infrastructure investment in Africa since 2003 highlights that these countries have potentially more fiscal resources to pursue infrastructure projects for their citizens. In addition, the countries in the lead are those that have had relatively higher infrastructure stock for many decades.

Enhancing infrastructure development

There are not many key continental infrastructure milestones to talk to, and many of those that do exist occurred quite some time ago. These include the likes of the Suez Canal in Egypt, the development of large water projects in Ethiopia and Lesotho, and large hydroelectric developments in Zambia, Zimbabwe and Mozambique. There have also been a significant number of resourcesrelated rail and port developments across the continent, but these have been mainly to support extractive industries. More recently, there has been significant investment into renewable energy – particularly in countries like South Africa, Morocco, Egypt, Kenya and Namibia – and this is a trend that we believe will continue and spread to more countries on the continent, into the future.

Building skills in project procurement, development and implementation is key for the development of infrastructure on the continent. In addition, the regulatory environment must be further developed to make investment in infrastructure assets attractive to local and foreign investors. These two initiatives will help to unlock private capital, which can invest in increasing the stock of infrastructure across the continent, while also alleviating the strain on government coffers.

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*Vuyo Ntoi is the joint MD of African Infrastructure Investment Managers (AIIM).

INFRASTRUCTURE

AIIM has been involved in various infrastructure projects in Africa such as the Amandi IPP in Ghana