Nearly 47 percent of infrastructure investment was between South and East Africa, while about 44 percent of investment was in East and West Africa.
There is a funding gap of $60aa-160 billion for infrastructure development in Africa, and room for further investment in multiple areas, says Afcon’s MD
Indian infrastructure companies are looking at an annual investment of USD 130-176 billion in Africa for infrastructure development, Afcon’s Managing Director S Paramasivan said Wednesday. Speaking at the 18th CII-EXIM Bank Conclave on India-Africa Growth Partnership, Paramasivan pointed out that there is a funding gap of $60-160 billion for infrastructure development in Africa, and that there is room for further investment in multiple areas.
“Most of us haven’t noticed, for the past decade practically Africa has had constant investment of an average of $80 billion a year, which I consider to be very, very significant,” he noted. He pointed out that nearly 47 percent of infrastructure investment was between South and East Africa, while about 44 percent of investment was in East and West Africa. About 8 percent of the investments were made in Central Africa, he added.
“If you look at the sectoral distribution (of investments), energy comes out on top. Next comes transportation and infrastructure. The third (position) is for water infrastructure and others. That’s how investment patterns have played out over the past decade,” Paramasivan said. Going forward, we (Indian companies) are looking at an annual investment need of between $130 and $176 billion, he said. On the huge need for infrastructure development in Africa, he stated that the world average is 944 km of roads per thousand square kilometers, against the African subsistence of 204 km per thousand square kilometers.
“Because of this poor transportation infrastructure, logistics costs increase by 50 percent to 175 percent, making the products less competitive in the market,” he said. About the railways in Africa, he said that there is only 84,000 km of railway tracks covering almost 30 million square kilometers (in Africa). The average container movement is less than 20 compared to 30 in other parts of the world, he stressed. India’s EXIM bank has contributed $11 billion in recent years and several companies from India have contributed to the growth of infrastructure in Africa.
“There are political risks in some countries (in Africa). Government and policy change. There is an increased national debt due to COVID restrictions. There are debt restructuring and related areas. There are institutional challenges in some countries in terms of PPP (public-private partnership) and other related projects,” Paramasivan said. On the transformation of infrastructure in Africa, he suggested that in addition to conventional multi-level financing, there is a need to look at alternative business models such as the debtor purchase model and the barter system.
Tunji Lawson, Executive Director and CFO, LandAfrique (Nigeria) said: “Africa is the most underserved region from an infrastructure perspective. Two-thirds of people do not have access to energy. It is also the continent with infrastructure that is least resilient to the issue of climate change”. He believed the infrastructure gap will continue to widen as Africa’s population grows faster and urbanization continues at a rapid pace.
(This story has not been edited by News18 staff and was published from a syndicated news agency feed – PTI)
