Business
Examining the opportunities to invest in Africa’s infrastructure
By Kate Douglas
Infrastructure development in Kenya: Nairobi-Thika -Road. PHOTO/File
“This growing infrastructure demand presents a critical challenge for Africa as the continent seeks to compete in global and regional trade markets that rely on just-in-time production and flexible, speedy and reliable delivery. Closing the infrastructure deficit is vital for economic prosperity and sustainable development.”
So says Shem Simuyemba, chief infrastructure economist at the African Development Bank (AfDB). In the Commonwealth Business Council’s 2013 Africa Infrastructure Investment Report, Simuyemba introduces the initiatives covered by the Programme for Infrastructure Development in Africa (PIDA) and highlights some investment opportunities presented by Africa’s infrastructure deficit.
“Numerous studies, analysis and forums, conducted by the AfDB and others, have brought out the fact that one of the biggest constraints to Africa’s growth and competitiveness has been fragmented, inadequate and underperforming infrastructure systems in terms of transport, ICT, energy and water,” stated Simuyemba. “The key to unlocking Africa’s growth potential is investment in its infrastructure.”
PIDA was recently formulated by a number of partners – including the African Union Commission, AfDB, the NEPAD Planning and Coordinating Agency, the UN Economic Commission for Africa (UNECA), the Regional Economic Communities in Africa, with contributions from African countries. In January 2012, PIDA was approved by the African governments and heads of state at their 18th Summit in Addis Ababa.
“PIDA provides a strategic framework for African stakeholders and partners to build the infrastructure necessary for more integrated transport, energy, ICT and trans-boundary water networks to boost trade, spark growth and create jobs,” explained Simuyemba.
Africa’s infrastructure demands and opportunities for investment
PIDA estimates that the average economic growth rate for African countries will be around 6% per year between 2010 and 2040. According to Simuyemba, this growth will be driven in part by a rapidly growing population, rising levels of education, and improving technology absorption. “This growth implies that, over the 30 years to 2040, the GDP of African countries will multiply six-fold, and the average per capita income will rise above US$10,000 for all countries.”
