Community

Share knowledge. Find answers. Ask questions.

Community blog

Read our latest news and views and get to know us better

Infrastructure investment is a key to Africa’s economic success
Super Contributor
Read more blogs in

African nations need to invest at least US$100-billion over the next 10 years to upgrade their infrastructure if they want to sufficiently tap their vast natural resource wealth and boost their economic growth. So says Standard Bank Group’s Ntlai Mosiah who is currently attending the Africa Infrastructure and Power Forum Conference being held in Beijing.


Inadequate infrastructure is responsible for holding back potentially higher levels of economic growth. If Africa’s problem of inadequate and antiquated infrastructure is resolved, there is a strong chance that GDP levels could be way higher than current projections. As Africans we should not wait. The continent needs to take advantage of global demand for its commodities to build the economic infrastructure that facilitates raw material and beneficiated export and enables intra-Africa trade”

A recent World Bank study found that the poor state of electricity, water, port, road, rail and communications infrastructure - especially in sub-Saharan Africa - reduced economic growth by 0,2% a year and cut productivity by as much as 40%. While Africa’s collective GDP is expected to increase from US$1,6-trillion in 2010 to US$2,6-trillion in 2015 on the back of average annual economic growth of 5.5% over that period, we at Standard Bank Group believe sufficient investment in infrastructure could boost GDP by more than that estimate.

An example is the vast quantity of iron ore discovered in West Africa that could attract as much as US$25-billion of infrastructure investment over the next decade. In Mozambique, which has high quality coal reserves of more than 35-billion tons in reasonably close proximity to large Asian markets, rail and port infrastructure is likely to attract investments of more than US$20-billion over the same period. Africa as a whole will need to spend more than US$50-billion over the next 10 years to build an additional 4000km of rail infrastructure to unlock the bulk mineral resource potential that the continent holds.

South Africa should leverage its membership of the powerful BRICS (Brazil, Russia, India, China, South Africa) group of nations to facilitate greater investments in the development of Africa’s infrastructure.

Africa’s GDP will not grow at levels that it could unless countries move faster in investing in and implementing infrastructure plans. Current macro-economic indicators together with political stability throughout sub-Saharan Africa are pointing towards a unique wind of opportunity to kick-start Africa’s century.

It is therefore important that the BRICS Bank be established as a catalyst of other forms of capital including sovereign wealth funds, private equity, DFIs and commercial bank funding, for both large-scale infrastructure and small-to-medium size enterprise development.

The South African government has lobbied its BRICS partners to have the BRICS Bank headquartered in Africa and if approved, this will have a positive effect on infrastructure development and job creation in the region. Jobs and infrastructure, together, are the ingredients that will be needed for further investment in education and healthcare that will bring sustainable development.


More on our specialist services at www.standardbank.com/cib.
Read more blogs in