A report from Standard Bank says Africa requires at least $100 billion to upgrade its infrastructure over the next decade in order to effectively tap its natural resources and boost economic growth.
“If Africa’s problem of inadequate and antiquated infrastructure is resolved, there is a strong chance that GDP [gross domestic product] levels could be way higher than current projections,” said Ntlai Mosiah, head of power, infrastructure and TMT in the corporate banking division at South Africa’s Standard Bank, in a statement.
Africa is expected to deliver $2.6 trillion of collective GDP in 2015, compared with $1.6 trillion in 2010, on the back of 5.5 percent economic growth over that period.
But a recent World Bank study found that poor electricity, water, port, road, rail and communications infrastructure – especially in sub-Saharan Africa – was reducing economic growth by 2 percent a year and slashing productivity by as much as 40 percent.
Mosiah proposes that the infrastructure gap could be tackled by the new BRICS development bank. At the G20 Summit in St Petersburg in September, $100 billion of funding was agreed for the bank – $41 billion from China, $18 billion each from Brazil, India and Russia, and $5 billion from South Africa (which joined the original BRIC grouping in 2010).
Mosiah predicted that the BRICS bank could act as a catalyst for other forms of capital investment in “large-scale infrastructure” including sovereign wealth funds, private equity, development finance institutions and commercial banks.
He added that infrastructure development would also be helped if the bank were to be headquartered in Africa – something which has been the subject of lobbying efforts by the South African government.
The BRICS bank is expected to be up and running by 2015.