Infrastructure spend to grow $180bn per annum by 2025

Infrastructure spend across Africa will grow from $70 billion in 2014 to $180 billion per annum by 2025 on the back of demographic boom and fast-paced urbanisation among other growth drivers, a report by PricewaterhouseCoopers (PWC) has revealed.

 

According to the PWC report Africa has been identified as a greenfield and the continent’s infrastructure growth story tells of an opportunity-filled future for infrastructure development, especially in Sub-Saharan Africa.

“While the continent’s infrastructure currently lags well behind that of the rest of the world, with some in a 30 percent dilapidated condition”, the report notes, “there is widespread recognition of the vast business opportunities on the continent, as a growing consumer market, as well as the vast opportunities for infrastructure investment and development.”

At a media presentation of the report titled, ‘Capital Projects & infrastructure in East Africa, Southern Africa and West Africa: Trends, Challenges and Future Outlook’, Ian Aruofor, PwC’s Capital Projects and Infrastructure (CP&I) West Market leader, pointed out that West Africa was one of the most attractive destinations for investors in infrastructure.

“The region’s growing population and its wealth of natural resources are the foundation for sustainable economic growth. It is clearly evident that sustaining West Africa’s impressive economic growth profile requires vast investment in enabling infrastructure.

“Improving governance, institutional reforms, trade, technology and an empowered workforce lend credibility to West Africa’s growth story”, Aruofor said.

According to him, South Africa and Nigeria had the most ambitious infrastructure programmes and together made up almost 60 percent of the spend across Sub-Saharan Africa, while  Kenya followed as the third largest in planned spend. 

“As with most of Sub-Saharan Africa, energy is a focal area for investments in West Africa, as the region remains in the grip of a prolonged power crisis”, he added.

Jonathan Cawood, CP&I Leader for PwC Africa, explained at the media presentation that the shallow economic recovery in most developed markets had shifted focus to faster-growing regions.

“This is also true for the infrastructure development sector. 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,” Cawood noted.

While the recent shifts in oil price, currency and internal security challenges might impact in the short term, he argued, “the fundamentals for growth have not changed, hence we believe the outlook for infrastructure development and economic growth remains positive.”

In Nigeria, infrastructure challenges are enormous, and according to the PWC Report, these challenges were not Nigeria-specific. The report listed some of them as availability of funding, political risk and government interference, which account for about 59 percent of the challenges.

Aruofor hopes however, that “resolving these identified challenges quickly and creatively will not only positively affect the outcome of current projects, but more importantly, attract other project developers, owners and investors to enter the African market.”