African Infrastructure projects worth US$ 223 billion underway
06 December 2013
There are currently 322 infrastructure projects underway in Africa with an individual project value of over US$ 50 million and a combined value of US$ 223 billion, according to research from business adviser Deloitte.
These projects – all of which had broken ground by, but not yet been commissioned at, 1 June 2013 – highlight the continent’s huge potential in terms of development. The top sectors by investment value are energy and power, transport, mining, real estate and water, followed by oil and gas.
According to Deloitte, 36% of the total number of large projects under construction at 1 June, 2013, fell into the energy and power sector, and 25% were in transport.
In terms of geography, development is strongly concentrated in Southern and East Africa, with projects in Southern Africa representing 38% of the total, followed by East Africa with 29%. West Africa has 21% of the total number of projects while North Africa and Central Africa lag at 7% and 5% respectively.
Deloitte said 56% of the projects it identified were owned by governments, while 4% of total projects collected were jointly owned by governments and public private partnerships, while private investors owned 39% of the projects.
As far as private investors are concerned, 17% were European and US investors, while private domestic ownership represented 10%. Private companies from Brazil, Russia, India and China represented 2% of the ownership.
Development banks
Deloitte also found that development finance institutions such as the World Bank and the African Development Bank (AfDB) funded 36% of the projects.
Indeed, the AfDB and Made In Africa Foundation (MIAF) this year launched an infrastructure fund for the continent that aims to raise up to US$ 500 million by the first half of 2014. The AfDB has reported that investment of US$ 93 billion a year was needed to 2020 to close Africa’s infrastructure deficit.
Meanwhile, Deloitte said domestic governments funded 8% of projects in Africa, while European and US-based investors funded a further 15%, and Chinese investors funded 10% of projects.
Private domestic investors funded 11% of the projects collected and 7% of projects were funded by foreign institutional investors.
Across the continent, European and US contractors are building 37% of projects and Chinese construction corporations are building 12%. The balance of contracting parties came from private domestic companies and contractors from countries such as Japan, South Korea, Brazil, Australia and South Africa, according to Deloitte.
Challenges
But Deloitte warned that the infrastructure boom on the continent remained fragile. It said political instability and turmoil overshadow developments in Central and North Africa, making short- and medium-term outlooks for infrastructure development in these countries uncertain.
Nevertheless, this is not to say that the demand for development does not exist, according to Deloitte.
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