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Home Africa

Ten African nations face $1 trillion infrastructure funding gap

FurtherAfrica by FurtherAfrica
July 5, 2018
in Africa, Construction, Development, Finance, Infrastructure, Port, Rail, Road, Telecom
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Ten African nations face $1 trillion infrastructure funding gap
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A group of 10 African nations, including some of the continent’s rising economic stars, will fall $1 trillion short of the infrastructure financing required to meet U.N. development goals by 2040, a study released on Tuesday found.

The report by the Global Infrastructure Hub (GIH) of the G20 wealthy and developing nations exposes the challenges facing one of the world’s least developed regions. But it also highlights the opportunities for investors willing to take the plunge.

“Africa is a fascinating continent for investors,” GIH Chief Executive Chris Heathcote told Reuters. “They’re not saying ‘Am I going to Africa?’. They’re saying ‘I am going to Africa. I want to go to Africa. Which country should I go to?’”

The GIH report focuses on Morocco, Ethiopia, Ivory Coast, Senegal, Egypt, Ghana, Tunisia, Benin, Guinea and Rwanda – all participants in the G20’s ‘Compact with Africa’ initiative, which aims to channel investment to the continent.

To keep pace with success stories such as Vietnam in terms of developing roads, railways, airports, sea ports, electricity, water and physical telecommunications infrastructure these nations will require investments of $2 trillion through 2040.

Meeting the U.N. Sustainable Development Goals, which call for universal access to power and water by 2030, would require $383 billion in additional investment, the study found, bringing the total to around $2.4 trillion.

If they maintain their current average investment level of 4.9 percent of gross domestic product, that would leave the 10 countries with a 42 percent funding gap to fill.

African nations do not have the resources to ramp up infrastructure spending on their own, even with backing from aid agencies and multilateral donor institutions, Heathcote said, and so attracting private sector investment is essential.

Major international conglomerates including Bouygues , Bollore, China Railway Construction Corp and General Electric are already active in African power, transportation and construction.

A pool of potential infrastructure financing was now poised to enter Africa under the right conditions, Heathcote said.

“There is a wall of money being held by the pension funds. They are looking more and more at emerging market infrastructure,” he said.

Unleashing that money, however, will require clamping down on the corruption and inefficiencies that have long hindered large-scale investment in Africa.

Heathcote points to Rwanda, where private investment represents two thirds of infrastructure spending, as an example of how it can be done right.

“They worked out that if you run transparent processes, if you have clear regulation that allows you to understand what your outcomes are likely to be in the long-term in your contracts, then investors will look very seriously at you.”

Source: Reuters

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Tags: AirportsBeninChina Railway Construction CorpChris HeathcoteEgyptElectricityEthiopiaFeatureGeneral ElectricGhanaGIHGlobal Infrastructure HubGuineaIvory CoastMoroccorailwaysroadsRwandasea portsSenegaltelecommunicationsTunisiaUNUnited Nationswater
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Founded in 2015 FurtherAfrica is an online platform centralising news and content focusing on the development and growth story of the African continent.

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