By: Siyanda Pali
First published: 24 June 2015
“If you don’t invest when your economy is growing, you may find yourself very quickly at a point where your runways and roads and ports and rail lines are choked”. These are the words of Jonathan Cawood, Head of Capital Projects and Infrastructure for Africa at PWC. In their report, PWC cite strong infrastructure spending in Sub-Saharan Africa, amongst others, as star performers over the next decade.
Overall infrastructure spending in the Sub-Saharan Africa region is forecast to expand by some 10% per annum over the next 10 years- exceeding $180 billion US by 2025. South Africa and Nigeria are key players in the infrastructure market, but other countries such as Ethiopia, Ghana, Kenya, Mozambique and Tanzania are also well-poised for growth. Prospects in most regions’ economies are promising, since they were not as severely affected by the 2008 global financial crisis.
A substantial increase in spending in the basic manufacturing sector is expected in the region. Annual spending in the chemical, metals and fuels sector is forecasted to increase across the 7 major African economies to $16 billion US, an increase from the approximate $6 billion US of 2012, a more than 100% change. This is due to, inter alia, a Biofuels Industrial Strategy approved by the South African government, which directs fuel producers to begin mandatory blending of petrol and diesel with Biofuels as from 1 October 2015.
The PwC report also highlights that spending on utility infrastructure is likely to be stronger in countries which need to upgrade deficient energy, water and sanitation services and in economies which are rapidly urbanising. The greatest spending growth for utilities is expected in Sub-Saharan Africa where an annual rate of 10.4% over the next decade is projected. Electricity production expenditure and distribution is expected to rise from $15 billion US in 2012 to $55 billion US, growth of more than 200%, with expenditure for improvements in water and sanitation forecasted to grow from $3.3 billion US in 2012 to approximately $10 billion US by 2025, which also constitutes a more than 200% change.
Social infrastructure is also expected to grow at an annual rate of 12% due to high demand for schools and healthcare. The popularity and adoption of innovations such as M-PESA are not only an indicator of the growth of the ICT sector set to take place in the region, but is also a precursor of how influential technology in general will become. In the words of Dr. Randal Pinkett, a Rhodes Scholar, the winner of season 4 of Donald Trump’s reality TV show The Apprentice and current Chairman and CEO of BCT Partners,” You have to be able to anticipate where technology is going, and what the implications are for your industry. Those who do not take the time to do so may very quickly find themselves obsolete.” We have already seen glimpses of where technology has taken and is taking some sectors. The automotive industry, for example, now features competitors with cars that possess a Park Assist feature. This is likely to culminate in self-driven cars in the not too distant future. These products are already available in the Sub-Saharan African market, demand for which will certainly increase as investments in infrastructure improve and personal incomes of the general population grow.
Infrastructure is one of the foundations of strong and prosperous economies. Unfortunately, some countries do not prioritise infrastructure spending. However, for those that do, the massive expenditure which is set to take place in the region will unlock clear opportunities for further investment and growth prospects will certainly be on an upward trajectory.
References
Temkin, S. (3 June 2015) PwC Report, Infrastructure Spending to more than Double to $9 trillion Dollars US Annually by 2025 [Online] Available from: http://www.pwc.co.za/en/press-room/spend-infrastructure.jhtml. [Accessed: 3 June 2015]
No comments:
Post a Comment