Current investment in African infra tops $220bn

Energy and transport account for 61% of the 322 large infra projects Deloitte examined for its second African Construction Trends Report 2013.

A growing middle class and an increase in urbanisation are among the key drivers of infrastructure development in Africa, which can be seen in the form of 322 large projects currently underway across the continent and a total investment of $222.7 billion, according to business consulting firm Deloitte.

Energy/power and transportation feature prominently, accounting for 36 percent and 25 percent of the total number of projects, “indicating that there is a solid step being taken forward in these sectors,” according to the annual African Construction Trends Report 2013, the second in a series produced by Deloitte South Africa in collaboration with other Deloitte member firms.

“New energy generation hubs are being forged, transport and logistics corridors are being built and basic social infrastructure is being invested in,” Deloitte’s infrastructure and capital projects leader for Africa, Andre Pottas, said in a statement announcing the findings of the report.

To qualify for inclusion in the study, projects needed  a value of at least $50 million and had to have broken ground, but not been commissioned, by June 1, 2013.

According to Deloitte’s findings, development is concentrated in Southern and East Africa, accounting for 38 percent and 29 percent of the total number of projects. West Africa was a close third representing 21 percent of project volume, while North and Central Africa lagged at 7 percent and 5 percent, respectively.

The report also looked at ownership and found that the majority of projects – 56 percent – are owned by governments and only 4 percent are jointly owned through public-private partnership (PPP; P3) schemes.

While European and US contractors are building 37 percent of these projects, investors from these regions are funding 15 percent of the project total. China is third, building 12 percent and funding 10 percent of the projects.

But intra-African investors account for just 2 percent of the funding, “confirming sustained low levels of intra-African trade and investment,” Deloitte said.

Intra-African trade is low at 10 percent compared with 60 percent for Europe.

“To raise intra-African trade levels it is imperative to get infrastructure to work synergistically, with regional port-rail-road corridors needing to be rapidly developed,” Deloitte stated in the report.

“There is, on all fronts, opportunity to sculpt African growth in such a way that the continent becomes more self-serving for its people,” Deloitte asserted.