The African economy could grow faster and even match China’s growth rate of 8 percent if the continent followed the Asian country’s example of heavy and sustained investment in infrastructure and productive industrial capacity.
That’s the word from Sim Tshabalala, chief executive of Standard Bank, who was speaking at the African Renaissance Conference in Durban yesterday.
He was among a long list of speakers advocating massive investment in infrastructure as the best way to bolster Africa’s economic growth.
“The latest World Bank global estimate is that if a country can increase its infrastructure investment by 10 percent, it will grow 1 percentage point faster each year. The returns on infrastructure investment in Africa may be even larger,” said Tshabalala.
“The World Bank argues that if all sub-Saharan African countries could upgrade their infrastructure to the level of the best in Africa (Mauritius), the continent as a whole would grow around 2 percent faster each year.
“It is encouraging that Africa is now able to spend around $72 billion (R600bn) a year on infrastructure.
“But I believe we need to invest even more, even faster, and a lot more efficiently, so that the developmental im-pact of every dollar is maxi-mised.”
Tshabalala said “heavy and sustained investment” was needed in infrastructure and productive industrial capacity.
“This is to allow us to export our commodities quickly and efficiently. Even more important, it will enable us to transform our commodity endowments into higher value-added products and services to trade in Africa and globally.”
Tshabalala said that according to the IMF, sub-Saharan Africa would grow at nearly 6 percent this year and would have seven out of the world’s 10 fastest-growing economies over the next five years.
“There is every reason to be optimistic that Africa’s economic take-off will continue for decades.”
Andre Pottas, a corporate finance advisory director at Deloitte, said that infrastructure improvements had contributed to more than half of Africa’s economic growth performance in the past decade.
However, Africa’s infrastructure lagged behind that of other developing regions, he said.
“Although the difficult economic geography presents a challenge for infrastructure development in Africa, sub-Saharan Africa’s infrastructure services are twice as expensive as elsewhere, with road-freight tariffs up to 350 percent more expensive,” Pottas said.
“The result is that African infrastructure spending of as much as $93bn a year is required to reverse the backlog.”
Minister of Public Enterprises Malusi Gigaba said in celebrating Africa Day, it should be noted that the time had come for Africa “to pursue a fundamental, comprehensive and all-encompassing economic agenda”.
Massive investment in infrastructure to integrate Africa was an intrinsic part of the plan. “In contrast to the economic outlook for much of the developed world, sub-Saharan Africa is projected to grow by more than 5 percent,” he said. “The market size will grow by 30 percent to $1.7 trillion. The SADC already accounts for 22 percent of South African manufactured exports, just behind the European Union.
“Regional economic integration is an immediate necessity, a core element of not just securing our growth for the future, but managing the turbulence of the present.”
Gigaba said state-owned companies such as Transnet and Eskom had developed world-class infrastructure.
“We need to leverage these capabilities in our engagement with African countries… A prosperous economic future for South Africa is intrinsically bound up with a prosperous future for the continent.”