Premium Journalist
1 minute read
17 Apr 2015
10:45 am

Developing countries have to double infrastructure spending


Emerging markets and developing countries have to double infrastructure spending to $2 trillion by 2020 to lift growth rates and development.


This is according to a new research paper on infrastructure from commodities and metals trader Trafigura which was lunched in Johannesburg on Friday. The paper was prepared by economist Russell Jones.

The bulk of the spending is to be directed to Sub Saharan Africa, where infrastructure shortfalls cut across the power and energy, transport and logistics, and water and sanitation. Jones says developing countries like South Africa need to spend 15 percent of GDP which for SA would translate to more than R300 billion per year.

For other countries, the requirement is 25 percent of GDP, a figure which might prove prohibitive.

South Africa’s Transnet is currently spending R300 billion over seven years on its rail port and pipeline infrastructure, while Eskom is struggling to raise R 300 billion to modernise its power grid.

Jones says governed has to sponsor infrastructure but the private sector will have to fund the bulk of the spending. Other key funders are multi-national development banks, institutional investors and sovereign wealth funds.