South Africa 10.10.2018 09:18 am

SA spearheads Africa’s efforts to rebuild creaking infrastructure

Picture: ANA

Picture: ANA

President Cyril Ramaphosa says significant levels of public investment in infrastructure in the run-up to the World Cup kept the economy afloat.

South African bank worker Sanele Dlamini has never felt as optimistic about the country’s future as he did in the run-up to 2010 when the country hosted the soccer World Cup, the first African country to do so.

Dlamini had just started a new job after finishing college, and all around him there was a buzz as the country built new football stadiums, boosted telecommunications infrastructure, expanded its main highway between the capital Pretoria and the economic hub of Johannesburg, and built a partially underground rail line for the world-class Gautrain commuter service to ferry visitors from the airport for one of sport’s biggest extravaganzas.

“It was an exciting time then, and I felt the country was going somewhere then,” the 30-year-old said.

“Now, not so much,” he added gloomily, even while acknowledging that he was lucky to have a job in a country with more than 27% unemployment.

President Cyril Ramaphosa said significant levels of public investment in infrastructure in the run-up to the World Cup kept the economy afloat following the 2008 global financial crisis, but that this had tapered off drastically since, hampering efforts to create jobs.

There is the hope that new initiatives will galvanise renewed efforts, not just in South Africa but throughout the continent, to repair its rickety infrastructure, often a deterrent to foreign investment. In many countries, this means building non-existing structures from scratch.

Close to 60% of firms operating in Africa consider infrastructure handicaps such as power shortages and costs and transport bottlenecks as a major challenge.

In its 2018 economic outlook, the African Development Bank (AfDB) says the continent’s infrastructure requirements run to $130–170 billion a year, far higher than earlier estimates of $93 billion.

And yet, Africa urgently needs to industrialise if it is to end poverty and generate employment for the 12 million young people who join its labour force every year.

“One of the key factors retarding industrialisation has been the insufficient stock of productive infrastructure in power, water, and transport services that would allow firms to thrive in industries with strong comparative advantages,” the AfDB said.

Of the 25 countries with the lowest infrastructure scores in the World Economic Forum’s latest Global Competitiveness Index, 19 are in Africa.

More than 640 million Africans have no access to energy, giving an electricity access rate for countries at just over 40%, the world’s lowest.

“There is a wide variation among African countries in their infrastructure gap, with a range of more than 90% between the country at the top of having good infrastructure (Seychelles) and the country at the bottom (Somalia),” said the AfDB.

In the conflict-ravaged Democratic Republic of Congo, for example, half the infrastructure is in urgent need of rehabilitation.

South Africa is leading the way in trying to revive its stalled infrastructure programme and breathe life into an economy struggling to grow meaningfully since the global recession a decade ago.

The AfDB has approved a R2.886 billion loan to the country’s state-owned power utility Eskom to upgrade and expand transmission facilities.

This supports the Eskom Transmission Improvement Project which will see the construction of 555 km of transmission lines in KwaZulu-Natal and Mpumalanga and the upgrading of substation equipment and improvement of various substation earth mats in Mpumalanga.

The power projects are expected to enhance regional energy trade, end-user energy access for industrial development, and address the potential addition of 130 million on-grid connections by 2025.

Ramaphosa’s government also plans to establish an infrastructure fund in which the state will contribute over R400 billion over the next three years, with developmental finance institutions, multilateral development banks, private lenders and investors hopefully also chipping in.

“Our experience is that infrastructure development can draw many unemployed people into economic activity relatively quickly,” Ramaphosa told a jobs summit recently.

The October 9-10 Infrastructure Africa summit in Johannesburg will bring together prominent infrastructure experts, government officials, and business leaders to discuss how to accelerate development.

In general, African governments are starting to take infrastructure more seriously, investing an estimated $324 billion in 286 projects in 2016 involving water, power, sanitation, ICT, roads, and railways.

The United States has launched Power Africa – an ambitious five-year infrastructure development plan which envisages doubling electricity access in sub-Saharan Africa, providing access to 50 million people by 2020.

Power Africa is behind the Nigeria Electrification Project which aims to leverage private sector investments in solar mini-grids and standalone solar systems to provide electricity to 2.5 million people and 70,000 micro, small, and medium enterprises. It will also provide publicly-funded reliable electricity to seven universities and two teaching hospitals.

Chinese banks EXIM and CDB have spearheaded investments in large African infrastructure projects, lending around US$100 billion to governments and state-owned enterprises, said Standard Bank China economist Jeremy Stevens. In 2017 alone, the newly signed value of Chinese contracted projects in Africa was $76.5 billion.

A consortium of Chinese companies is behind the construction of the new Aeroporto Internacional de Angola in Luanda as the southern African country’s new President Joao Lourenco tries to rebuild the economy after decades of mismanagement.

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