South Africa should use its BRICS membership to address Africa’s poor infrastructure

South Africa should leverage its position in BRICS to increase investments in the development and upgrade of Africa’s inadequate infrastructure, says David Humphrey, Global Head of Power and Infrastructure at Standard Bank Group.

He was speaking on the side-lines of the fifth BRICS summit taking place in Durban this week (March 26-27, 2013). South Africa joined BRICS in 2010, the powerful bloc of the world’s leading emerging economies, including Brazil, Russia, India and China.

It is estimated that Africa will need to invest at least US$100-billion in the next decade to upgrade its infrastructure, if it is to realize the economic growth potential presented by its existing newly found vast mineral and other natural resources, such as coal, iron ore, oil and gas, says Mr Humphrey.

His views come amid ongoing concerns about the poor state of Africa’s infrastructure and implications for the continent’s economic growth. A recent World Bank study found that the poor state of infrastructure in sub-Saharan Africa, including electricity, water, ports, roads, rail, ports and information and communications technology, reduced national economic growth by two percentage points every year and cut business productivity by as much as 40%.

Mr Humphrey says the need for rapid development of Africa’s physical infrastructure is now widely seen as key in unlocking the continent’s vast untapped potential and higher economic performance. He argues that with properly targeted infrastructure in place Africa’s GDP and associated economic and social multipliers could be much higher than it is at the moment. He says although some African countries have committed substantial investments in infrastructure, more people with the specialist skills needed to deliver enabling legislation, regulation and deal execution are needed now if Africa is to address its huge investment backlogs and to keep up with the growth momentum.

It has been estimated that Africa’s collective GDP will increase from $1,6-trillion in 2010 to $2,6-trillion in 2015 and that economic growth will expand by an annual average real rate of 5,5% during this period. Seven out of 10 of the world’s fastest growing economies in the next decade will be in Africa. The continent’s growth is being driven by a number of factors, particularly the discovery of new and unexploited mineral deposits across the continent.

Mr Humphrey says all these resources will require substantial investments in physical infrastructure if they are to be fully developed and the socio-economic spin-offs realised.

“Africa’s GDP will not grow at levels that it could unless countries move faster in investing in and implementing infrastructure plans. South Africa and its well developed infrastructure sector can act as the catalyst within the BRICS partnership to help the continent to help deliver the extensive development and upgrade of its road, rail, energy and port infrastructure that is needed. Inadequate infrastructure is responsible for holding back potentially higher levels of economic growth,” says Mr Humphrey.

His views also come amid efforts by the South African government to lobby its BRICS partners to have the bloc’s proposed development bank headquartered in Africa, and whose key purpose would be to fund various developmental projects in the regions where BRICS countries are located.

“South Africa needs to use its membership of the powerful BRICs bloc to ensure that development efforts directed at Africa are channelled more at addressing the debilitating challenge of infrastructure the continent faces. If Africa’s problem of infrastructure is resolved, there is a strong chance that GDP levels could be way higher than projected.”



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