Africa selling itself short
JOHANNESBURG – Africa is selling itself short because it is not investing enough in "softer infrastructure" and there are not enough bankable projects to assist the continent to meet the requirements.
This was the consensus among panel members discussing the "Africa Agenda 2063" at the first day of the Infrastructure Africa Business Investment Forum in Johannesburg.
Brigette Baillie, partner in the project development and finance sector at global law firm Herbert Smith Freehills, said that the figure for the "sexy infrastructure" that needed to be developed in Africa as a whole – such as roads, rail, ports and hydro-power facilities – was growing every year and leaving a huge gap between it and the softer infrastructure.
"What we are not focusing on are those softer infrastructure and the utility infrastructure: sewage, water, schools, reticulation of electricity, and that is a huge gap in the African infrastructure story. Unless it is addressed, I don't think we are going to see real development in the sexy infrastructure," Baillie said.
"There is lots of money available but there are not enough bankable projects. There are too many projects with big funding gaps in them. Projects get mired in delays and they take very long time to reach financial close. There are not enough local players or regional players involved in infrastructure projects in Africa, and we need to develop those."
Stanley Subramoney, chief executive at black-owned investment firm Menston Holdings, agreed with this assessment and said that these challenges were making it expensive to do business in Africa.
Subramoney said that the CEO-Initiative had agreed a few weeks ago that infrastructure development was one of the ways of getting South Africa's growth path going, but said it was worrying that a number of infrastructure projects were not at commencement stages.
"Of the number of projects that are sitting at concept, pre-feasibility or feasibility stages, we have too few projects that are what we call 'shovel-ready' projects. So we need to get these projects up and running and the commitment from the government of South Africa is to fast-track infrastructure development," Subramoney said.
"Fundamentally, Africa is rich and endowed with all the mineral resources but Africans are poor. There are two reasons for this: It's too expensive to do business in Africa because we have poor infrastructure. So we cannot compete globally or even locally if you have poor infrastructure. We are certainly not investing in skills development. We are still training our people for the 19th Century economy. We are all talking about the 4th Industrial Revolution but is our education preparing us, to be brutally honest?
"Secondly, we export wealth and we import poverty. All roads in the continent lead to the ports. We are exporting low-value commodities and importing finished products."
The two-day gathering brings together business, government and other stakeholders to explore new trading opportunities, and discuss how to build the infrastructure the continent needs to support growth and meet development goals as it is estimated that Africa will have to spend about U.S.$93 billion a year for a decade to meet the demand.