Expenditure on infrastructure in Africa is set to reach US$180bn per annum in 2025, according to a report by professional services firm Pricewaterhouse Coopers (PwC)
The report titled Capital Projects & Infrastructure in East Africa, Southern Africa and West Africa,was drafted after a survey was conducted among 95 players in the infrastructure sector such as government bodies, private financiers, development finance institutions and construction companies across East, West and southern Africa. The sectors that were part of the survey included water, transport and logistics, energy, mining, telecoms and real estate, with the main focus being on economic infrastructure.
Jonathan Cawood, leader of Capital Projects & Infrastructure at PwC Africa, said, “The shallow economic recovery in most developed markets has shifted the focus to faster-growing regions. This is also true for the infrastructure development sector. With an abundance of natural resources and recent mineral, oil and gas discoveries, demographic and political shifts and an investor-friendly environment, the spotlight shines brightly on Africa.”
According to more than 50 per cent of the respondents, their expenditure on new projects and refurbishment of assets would increase by 25 per cent from the previous year. Much of the funds would be directed towards new projects. In particular, 58 per cent respondents from West Africa were positive of spending a quarter of their funds on new projects, while 53 per cent in East Africa and 40 per cent in southern Africa confirmed the same.
In addition to throwing light on the general investment climate in Africa, the report also showed the nations that excelled in infrastructure facilities, and conditions in every country that determined manner of carrying out operations. South Africa remains the “powerhouse” of sub-Saharan Africa with the most sophisticated, state-of-the-art infrastructure, financial services, telecommunications and industrial sector capacity.
Along with South Africa, Nigeria has the most ambitious infrastructure programme. The two countries make up almost 60 per cent of the spend across sub-Saharan Africa. Kenya follows as the third largest in planned spend. Transport and utilities (including power/energy and water) would account for approximately 70 per cent of spend in southern Africa.
“While respondents are clearly committed and optimistic about the continent’s infrastructure development, there are a number of obstacles they recognise must be dealt with. Resolving these quickly and creatively will not only positively affect their current projects, but more importantly, will attract other project developers, owners and investors to enter the African market,” added Cawood.
Many projects across sub-Saharan Africa have been affected by the lack of funding or insufficient funding. Funding from sources such as sovereign wealth funds, bonds and pensions funds is becoming increasingly important, but these types of investors are typically more interested in projects that are fully operational and tend to shy away from greenfield projects and their construction risks, revealed the report.
Despite funds from China, Japan and India, funding models are changing in the continent and respondents are expecting public-private partnerships (PPPs) to become more prevalent.
