Right across the great continent, we are witnessing rapid rates of urbanization and population growth which, in turn, is creating one of the fastest growing labor forces and consumer markets in the world. As a result, most African governments are now keenly focused on fostering economic growth and activity in order to drive down unemployment, raise prosperity and increase national GDPs. The pressure on African cities (already more than 50 cities with a population in excess of 1 million) to develop sustainable infrastructure will only escalate.
Infrastructure is at the heart of this African revival. The African Development Bank estimates that the continent will require USD93 billion in basic infrastructure investment every year in order to meet demand. Recognizing the massive opportunity that Africa presents, foreign direct investment (FDI) has also boomed. In fact, with some USD55 billion in annual foreign capital inflows into the continent, Africa now represents around 12 percent of total FDI globally.
At the same time, many of Africa’s age-old challenges are starting to shrink away. Across most of the continent – and with only a handful of notable exceptions – rule of law is on the rise, corruption is being stamped out, incidents of war and violence are waning and stable regulation is being introduced and enforced.
To be sure, much of the infrastructure development currently underway is closely tied to resources. As the world’s most resource-rich continent, Africa has already become the resource bread-basket of emerging markets such as China, Brazil and India.
But Africa is no longer just a resource story. With her working age population of 500 million set to double over the next 20 years, Africa is rapidly becoming a consumer market leading to increased demand for all types of infrastructure. One only need look at the most recent edition of the Infrastructure 100 for proof. New metro lines in Nigeria, hospitals in Lesotho, energy projects in South Africa and continent-wide communications initiatives loom large on the list of top global projects.
It is not surprising, therefore, that the world’s infrastructure developers and investors are now piling into Africa, recognizing the opportunity for stable returns and attractive contract terms. Many global investors are revising their sovereign risk profile assessments for the continent to a more positive rating. Indeed, any infrastructure player not currently assessing the opportunities presented by Africa are likely missing a trick and – in short order – may find that many of the richest pickings have already been plucked away by competitors. As this special report on Africa clearly illustrates, opportunity abounds across the hills and savannahs of Africa and all evidence indicates that Africa’s ascendency is only just getting started. If you listen carefully, you can start to hear the lion’s roar.
By DeBuys Scott, KPMG in South Africa