Building sustainable and reliable infrastructure is critical for meeting the rising aspirations of billions of people around the globe. Infrastructure investment helps raise economic growth rates, offers new economic opportunities, and facilitates investment in human capital. PPPs can be a tool to deliver much needed infrastructure services.
There are currently 26 African countries finalising a free trade agreement that will be vital in the development of all transport infrastructure – road, rail, shipping and air cargo. Greater infrastructure investment has the potential to increase Africa’s GDP by up to 2% and could be the initiator of industrialisation across the continent.
The Preferential Trade agreement, entered into by the Southern African Development Community, the East African Community and the Common Market for Eastern and Southern Africa aims to boost intra-African trade, which is presently very low compared to other world regions. The initial agreement was recently signed in Uganda.
The state of roads in Africa is already a priority. The World Road Association, a non-profit organisation established in 1909 as the Permanent International Association of Road Congresses (PIARC), is presently focusing on African highway networks as well as updating design standards for rural roads. These will be vital in boosting intra-regional trade among the member countries, which have a combined population of 625 million and a total GDP of $1.6 trillion.
East Africa’s poor infrastructure is a significant impediment to doing business in the region and is creating bottlenecks.
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It has been estimated that development of Africa’s infrastructure will require investment of USD 93 billion per year for the next decade. As noted in the World Bank’s report, to date less than half that amount is being invested annually, with only 50% of the amount invested being provided by regional governments. This leaves a funding gap of USD 48 billion a year and an increasing need for the private sector to play a significant role in PPP’s.
Country Focus | South Africa
The South African economy has hit a recession after several years of minimal growth and strain will be put on the fiscal framework due to even lower growth expected this year.
Country Focus | Nigeria
There is a much improved consumer outlook in the second part of 2017 due to the strengthening of the Naira and the possibility of a cut in interest rate within the next 12 months.
Pensions Focus | Africa
The Maersk family foundation has launched an Africa infrastructure fund. The fund, which was launched with pension funds PKA, PensionDanmark and Medical Doctors’ Pension Fund, has received commitments of $550-million and aims to raise $1-billion.
Infrastructure Focus| Africa
There has been a lot of talk concerning the China Belt and Road (B&R) initiative, which aims to connect countries in Africa, Asia and Europe through railway, road and maritime networks creating a seamless trading route. The Africa – China economic relations has seen major growth in the past few years and has brought more infrastructure capacity and technology to Africa.
Essar Ports, one of the largest private sector port companies in India, has announced it has signed a contract for its first overseas port project at Mozambique.
The Governments of Rwanda and Bugesera Airport Company Limited have signed the concession agreement for the development of the new international airport in Rwanda, known as the Bugesera International Airport using PPP structures.