Justin Brown
THE opportunity to fund Africa’s infrastructure was huge and wise investors should move and get involved in financing this development, President Jacob Zuma said last week.
“Africa will never go back. Africa is moving forward. The opportunities are huge. They are in the area of trillions. Any wise investor will realise that this is the moment to invest in the continent, therefore all the financial institutions should do the same,” Zuma added, speaking during a session entitled, “Meeting the infrastructure challenge”, at the World Economic Forum on Africa.
Viswanathan Shankar, Standard Chartered head of Europe, Middle East, Africa and the Americas, said that Africa needed to spend about $100 billion (R1.255 trillion) each year for the next 20 to 30 years to remove its infrastructure deficit.
Instead, $50bn was being spent at present on African infrastructure each year, he added. “So there is roughly a financing gap of about $50bn. The real question is, is the $50bn going to be available?” Shankar said.
The bank established by Brazil, Russia, India, China and South Africa – the Brics – was one of the possibilities for financing infrastructure on the continent, Zuma said.
The Brics had agreed to set up a $50bn development bank to rival the International Monetary Fund and the World Bank at last year’s summit in Brazil, as well as a $100bn currency exchange reserve.
Programme
“The Brics bank is a developmental bank and it is going to have a branch here in South Africa. That is done precisely to participate in the massive African infrastructure programme and other economic activities that are going to take place. It adds to the sources that have been there all the time, like the World Bank, the International Monetary Fund and the development finance institutions,” he added.
“I’m sure the Brics bank will be able to prove itself whether it can walk the talk,” Zuma said.
He said that one of the critical things that Africa needed was in the area of energy infrastructure.
Standard Chartered’s Shankar said the problem in Africa was that the continent had a savings rate of 15 percent compared to 30 to 40 percent in Asia. “Financing is going to be more challenging.”
Patrick Dlamini, the Development Bank of Southern Africa chief executive, said in the 1990s the collective gross domestic product of the African continent was $500bn and that had risen to $2.7 trillion.
“In the next 30 years, I can confidently say to you that you will see a completely different African continent,” he said.