gE Blog Series: Global Infrastructure Development Part 5 - Inadequate Infrastructure Holding Africa Back From Economic Growth

As Africa has moved itself into the investment spotlight, its lack of infrastructure has held the continent back from reaching its full potential. The unstable physical infrastructure in Africa, such as its transportation, communication, power, and water supply, is halting the growth that the country should be obtaining during this time, with its increased economic activity and competitiveness. With the proper investment and planning, Africa should be able to overcome this challenge and improve the now inadequate infrastructure it has long possessed.

Africa possesses large commodity resources such as iron ore, platinum, coal, and copper. In recent years, investment has been pouring in to help recover these commodities and transport them to global markets. It is estimated that poor infrastructure in Africa adds around 30-40% to the costs of trade in African countries. The inadequate infrastructure opens a lot of doors for investors to finance the construction of assets such as railways and power stations, with potentially very high returns. Governments as well as private investors will be easily drawn to the growth opportunity, while Western and North American markets are down.

Africa will need to come up with financial strategies of its own in order to provide a more appealing nature to investors. Once this is achieved, governments and public and private investors will likely be providing major investments in Africa and helping this continent reach its full economic potential. Public-Private partnerships will be able to deliver efficient and cost-effective services, and allow both sides to combine knowledge, experience, and assets for long term infrastructure investments. African countries will need to spend a small percentage of their GDP on infrastructure, as it is estimated that it will take close to $90 billion a year for the next ten years to fix the challenges that are encountered today. Do you think Africa will be able to improve their infrastructure to create better opportunities for investors?