Africa's infrastructure deficit creates economic opportunity

| Friday October 22, 2010 00:00

Speaking at the Gordon Institute of Business Science Business of Africa conference in Johannesburg, Maia said that some $93-billion a year was needed to build infrastructure in sub-Saharan Africa alone.

With the region expected to show economic growth of 5,5% a year over the next five years, the development of infrastructure creates a wealth of opportunity.

'As the region and Africa keeps on growing, this infrastructure gap will just become more evident,' said Maia.There are several limiting factors that come into play in the development of infrastructure on the continent, the most significant of which is a large funding gap.

However, AngloGold Ashanti CEO Mark Cutifani said at the conference that private companies could, to a large extent, assist in bridging some of these funding gaps.

'If African governments and private enterprises are able to work together, and form public-private partnerships, this can fill the gap to some extent.'

Cutifani emphasised that infrastructure cooperation and an enabling environment created by governments across the continent were imperative for the future development of Africa.

'The time has come to develop infrastructure beyond colonial borders in Africa, from east to west and from north to south.'

Maia agreed, but added that Africa also had to rethink the pricing of its existing infrastructure and services. He pointed out that Africa was the most expensive continent to transport goods.

'This is something that can easily be readjusted.'

Further, Cutifani identified infrastructure as key to the future growth of the mining industry on the continent that has been contracting, specifically in South Africa, during the past few years.

Even though there have been calls for diversification of Africa's economy, mineral resources still account for around 32% of the continent's income and are therefore integral to its economy and growth.

In South Africa alone, around ten-million people are dependent on the income generated by the industry.

Maia said that the continent's great abundance of mineral wealth also created an opportunity to develop a lucrative value-adding and beneficiation business sector.

The Development Bank of Southern Africa executive coordinator Lesetsa Matshekga said that the continent's biggest infrastructure deficit existed within the power generation sector. He noted that around 22, 000 MW of crossborder transmission lines would be needed within the next couple of years.

Maia said that while sub-Saharan Africa was home to 800-million people, it generated the same quantum of power as Spain.

Matshekga said that while the water would be rocky, investors should 'not miss the boat, as the rewards will be huge'.

Meanwhile, McKinsey principal Arend van Wamelen noted that Africa's productivity had risen by 2,7 percent. 'This is mainly owing to governments stepping out of the way of economic development. Even though the continent still has a long way to go, this at least shows that it is moving in the right direction.'

Harith investment director Orville Cachia was in agreement, saying that he believed that the degradation of Africa had now come to an end, and that the general feeling was that the continent's pulse had quickened.-(Engineeringnews)