African Infrastructure on the rise
African Infrastructure on the rise
Introduction to Africa’s Economic Growth
The rapid growth of African Infrastructure is underscored by the IMF’s recognition , of Africa as home to 5 of the top 10 fastest growing economies globally. Domestic and foreign infrastructure investments respond to the growth potential of the world’s second largest continent.in order to achieve self-sufficiency and global competitiveness. The latest African Construction Trends Report by Deloitte records a total investment of over $222 Billion in more than 322 projects.
The study focuses on infrastructure construction projects. with a value of over $50 million, that are in progress but not been commissioned yet. These projects exclude private mining ventures and social infrastructure such as housing, roads, schools, clinics, water, and sewage systems.
Geographical Distribution of Construction Projects
Until June 2013, over 322 different collected construction projects were underway throughout the whole continent. The African continent exhibits a vivid example of heavy infrastructure investments; especially in the southern region with over $83 Billion invested in 124 projects. Development is strongly concentrated in Southern and East Africa with 38% and 29% of the total projects respectively. West Africa held 21% of the projects, whereas North and Central Africa are left behind with 7% and 5% respectively.
Financing of African Infrastructure Projects
Estimates place the total investment in underway infrastructure construction projects at more than $222.77 Billion. 36% of all funding is provided by Development Finance Institutions; International Development Finance Institutions contributed by 16% and Africa’s DFIs by 13%. Other notable financing sources are domestic governments, accounting for 8%; European and US-based stakeholders with 15%; Chinese stakeholders with 10%; private domestic investors with 11%, and foreign institutional investors who account for 7% of the total investments.
Ownership Patterns in African Infrastructure Development
In terms of ownership, Governments own 56% of the projects, and Public-Private Partnerships (PPPs) account for 4%. Foreign investors from Europe and US hold 17% of the projects’ ownership.
Contracting Dynamics in African Construction Projects
Foreign actors mainly dominate contracting. 37% of the projects being built in Africa are held by Europe/US based contractors; while 12% are held by the Chinese. The remaining projects are handled by private domestic companies and contractors from countries such as Japan, South Korea, Brazil, Australia and South Africa.
Key Sectors in African Infrastructure Development
The report highlights energy and power as the top sectors in African infrastructure development, accounting for 36%, followed by transport at 25%. This is followed by mining, real estate, water, oil and gas.
The Future of Infrastructure Investments in Africa
Given Africa’s infrastructure needs, infrastructure investments will continue to drive the continent’s economy growth for many years to come. Hence; more investments should be attracted in order to keep up with the rapidly growing construction site that is Africa.
Sources:
• International Monetary Fund data and statistics
• Deloitte –African Construction Trends 2013 Report (http://deloitteblog.co.za/wp-content/uploads/downloads/2013/11/African-ConstructionTrends-2013.pdf)
