14
May
The shallow economic recovery in most developed markets has shifted the focus to faster-growing markets. This is also true for the infrastructure development sector. While the largest infrastructure spend will take place in Asia, led by China, the expected growth in infrastructure spend in sub-Saharan Africa is significant at around 10% per annum to 2025. With an abundance of natural resources and recent mineral, oil and gas discoveries, demographic, social and political shifts and a more investorfriendly environment, the investor spotlight shines brightly on Africa.
One of the CEOs of a large state-owned enterprise in Africa summed it up as follows:
Among the emerging markets, we think that Africa, for the first time in many centuries, is going to contribute quite significantly to global economic growth. While it’s coming from a low base, the continent’s economy is growing at about 5%, making it the fastest-growing region in the world.
Project bankability/viability and access to funding are the most common challenges emerging from our survey. In order to address this issue, African countries must overcome the obstacles of inadequate regulatory frameworks, internal capacity limitations, political instability, policy incoherence, reported corruption, and a debilitating shortage of capacity and skills.
Some of our key findings include:
• 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% from the previous year. They said much of their spending would be focused on new development, with 51% of all respondents planning to spend more than half of their budgets on new assets.
• Respondents from West Africa were especially bullish, with 58% planning an increase of more than 25% in spending, followed by those in East Africa (53%) and Southern Africa (40%).
• All regions are expected to be major beneficiaries of infrastructural development, with 44% of respondents indicating they would be targeting their capital project and infrastructure spending in East Africa over the next 12 months. Next is Western Africa (25%), followed by Southern Africa (22%).
Access and download the full PWC report at: http://www.pwc.co.za/en_ZA/za/assets/pdf/capital-projects-and-infrastructure.pdf