ABSTRACT
Modern infrastructure is the backbone of any country and without it economic growth is severely inhibited. It is established that African countries have a considerable infrastructure deficit and lag behind all other developing regions in relation to transportation, energy, water and sanitation. Reducing this deficit will help to grow Africa’s competitiveness to levels like those observed in Asia and the Middle East. Increasing urbanization, growing populations and consumer markets, and broader ties to the global economy are making the need for African economies to invest more in new growth poles imperative. Because infrastructure underpins the basic services in any country, it offers both great opportunities for business, employment and the general competitiveness of an economy, while also presenting intensely political challenges. Developing adequate and efficient infrastructure will enable African economies to increase productivity, especially in manufacturing and service delivery. This in turn will create more jobs, attract investment opportunities and encourage the efficient use of natural resources. Improved and efficient infrastructure has contributed to social development in healthcare and education, and reduced societal inequalities through a more equitable distribution of wealth. Money alone is not the answer – but with good planning, the necessary finance can be attracted to fund infrastructure. To fix infrastructure, policy makers must have the end in mind – creating new growth poles, housing and industrial centres, and moving away from the preponderance of highly informal to formal systems – such that the desired funds are attracted from not only insurance, pension and micro-finance sources but also land financing, credit systems and rising incomes from increased job creation. Very little money can be attracted into an economy that is overly dominated by informal systems. To bridge Africa’s infrastructure gap, investments must be driven by increasing urbanization and agglomeration trends across the continent, creating the scope for exceptional growth in infrastructure projects, real estate and other sub-sectors. This potential, which is still largely unknown to African governments, is one of the most economically feasible ways of advancing infrastructure, as has been demonstrated in the Middle East and Asia. Key issues relating to infrastructure delivery are established: that infrastructure is evolutionary, based on time, inherently spatial and a long-term fix and therefore requires a considerable amount of trust; and prosperity and density of urban space go together. A number of options for financing infrastructure are addressed.
