Africa’s infrastructural expenditure to hit $180 billion by 2025

The African continent provides an opportunity-filled future for infrastructure development, and will be of interest to global investors, developers and operators, PricewaterhouseCoopers (PwC) report, has shown.

In the report, PwC predicts an estimated infrastructure spent in the region to reach $180 billion per annum by 2025, up from $70 billion in 2014.

Dubbed: ‘Capital Projects & infrastructure in East Africa, Southern Africa and West Africa,’ the PwC report identified sectors with the highest budget allocations as transport (36 per cent) and energy (30 per cent).

“While respondents are clearly committed and optimistic about the continent’s infrastructure development, there are a number of obstacles they identified to 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,” said Jonathan Cawood, Capital Projects & Infrastructure Leader for PwC Africa.

He said to attract all-important external funding, it would take a concerted effort by governments, private businesses and NGOs to overcome such nagging problems as political risk, regulatory and legal uncertainties, and the shortage of critical skills.

More than half of respondents indicated that their planned spending on infrastructure — both new projects and refurbishment of assets — would increase by more than 25 per cent from the previous year.

They said much of their spending would be focused on new developments, with 51 per cent of all respondents planning to spend more than half of their budgets on new assets.

Respondents from West Africa were especially bullish, with 58 per cent planning an increase of more than 25 per cent in spending, followed by those in East Africa (53 per cent) and Southern Africa (40 per cent).

“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.”

Interviews were conducted among key players in the infrastructure sector, including development finance institutions, donors, private financiers, government organisations and private construction and operations companies across East, West and Southern Africa.

The sectors surveyed included water, transport and logistics, energy, mining, telecoms, and real estate, with the main focus being on economic infrastructure.

Highlighting the different stages of development and uniqueness of each country, the report provided insights into the world of infrastructure delivery across African countries and regions in sub-Saharan Africa (SSA).

The report showed that South Africa and Nigeria have the most ambitious infrastructural programmes, making almost 60 per cent of infrastructure spending across the continent.

Overall, the top three challenges in delivering infrastructure projects are access to funding, the availability of skills, the impact of political risk and government interference during project life cycles and the regulatory environment.

“With a number of concessions having been cancelled by governments in the region, an improvement in transparency, regulation and procurement is needed to help restore the confidence of foreign investors in partnership models,” Mr. Cawood said.

Many projects across SSA 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.—GNA

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