BY Fraser Tennant
Investment in infrastructure projects in Sub-Saharan Africa is expected to be $180bn a year over the next 10 years, according to a new PwC report.
The 'Capital Projects & infrastructure in East Africa, Southern Africa and West Africa' report suggests that, despite slow growth overall, multiple investment opportunities await global investors, developers and operators.
The 95 influential figures in the infrastructure sector surveyed by PwC indicated that they planned to spend 25 percent more on infrastructure projects this year than last. Fifty-one percent said that they planned to spend more than half of their budgets on new assets.
At present, South Africa and Nigeria have the most ambitious infrastructure programs and together make up almost 60 percent of the spend across Sub-Saharan Africa.
"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,” said Jonathan Cawood, capital projects & infrastructure leader for PwC Africa. "With an abundance of natural resources and recent mineral, oil and gas discoveries, demographic and political shifts and a more investor-friendly environment, the investor spotlight shines brightly on Africa."
Despite Cawood’s optimistic outlook, a number of key challenges face those looking to invest in the continent, including: (i) the limited availability of skills; (ii) a lack of internal capacity among state organisations to plan, procure, manage and implement capital infrastructure projects; (iii) the impact of political risk and government interference during project lifecycles; (iv) access to funding; and (v) an inhibiting regulatory environment.
Mr Cawood continued: "Infrastructure plays a key role in economic growth and reducing poverty having a 5-25 percent per annum return on investment as an economic multiplier. Those countries that have been most successful in developing and maintaining infrastructure have established programmes of prioritised investment opportunities with a number of features, including clear political support, a proper legal and regulatory structure, a procurement framework that can be understood by both procurers and bidders, and credible project timetables.”
As a relatively unexplored region with large natural resources, Sub-Saharan Africa is a hot spot of infrastructure investment potential.