By Mike Peo, Head of Infrastructure, Energy and Telecommunications: Nedbank Corporate and Investment Banking
One of the major hurdles Africa continues to experience in terms of achieving its full potential is the continent’s lack of large-scale infrastructure development. While many could (and do) argue about what aspects of infrastructure development in Africa require the most urgent attention, the reality is they all do.
The truth of the matter, however, is that even if Africa were to receive an injection of the financial and human resources it requires to develop its much-needed energy, telecoms, transport, utilities and other infrastructure, this would not, of itself, guarantee the socio-economic growth so desperately needed by the continent.
In fact, simply investing in African infrastructure, on a project or country-by-country basis – as has been the case with much infrastructure investment over the years – will do little, if anything to change the future for the continent and its people. Rather, for investment in infrastructure development to truly unlock Africa’s full potential, it has to be highly integrated across countries and regions and, as importantly, have the highest possible potential of delivering inclusive benefits that enable all Africans to build sustainable futures.
A good example of an integrated approach to infrastructure development exists right here in South Africa in the form of the Bakwena Platinum Tollroad. The road was intentionally designed and built to dovetail with the Maputo development corridor and, as a result, has delivered significant success since it became operational in 2004, particularly in terms of stimulating agriculture, manufacturing, mining and tourism for the regions and countries it connects.
Of course, while such integrated infrastructure investment and development is vital, it’s not without its obstacles. For one, it requires that investors be willing to exchange competitiveness for collaboration. The investment required to build, for example, a transport network that links numerous African countries to each other and to global distribution points, is beyond the ability of any single investor. But, in this instance, there can be no doubt that collaboration between investors to achieve this would be far more beneficial – for them and for Africa – than would a patchwork of smaller, largely unconnected infrastructure projects.
And the collaboration imperative extends beyond potential infrastructure investors. Africa is already considered by most to be one of the least integrated continents in the world, with little to no inter-region or inter-country trade and cooperation taking place as it is. Governments of individual African countries will therefore need to embrace the importance of putting aside silo mentalities and competition for investment budgets, and instead work together to leverage the immense shared benefits that an integrated approach to utilising those budgets could deliver in the long term.
However, such an integrated approach, while vital, will be still deliver less than optimal long-term results if it isn’t accompanied by a real commitment from all infrastructure stakeholders to embrace and promote inclusivity.
If history is anything to go by, this may unfortunately be even more complex to achieve than the integration mentioned above. While Africa can lay claim to some of the fastest-growing economies in the world, it remains plagued by high levels of economic inequality. And when you consider that around three-quarters of the people who call Africa home are under the age of 25, the urgent need to achieve inclusive economic growth, particularly of the kind that generates employment opportunities, becomes patently clear.
While, on the face of it, the challenges of inclusive and integrated infrastructure development may seem overwhelming; the situation presents untold opportunities for investors around the world. Africa is waiting to take its place as a leading role-player on the global economic stage.
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