Infrastructural Development, an Enabler for Economic Development

Experts reason out infrastructure development as key for economic growth and poverty reduction in Africa. It’s essential for building markets, creating robust and diverse economies, increasing opportunities for progress and attracting new sources of investment.

It is globally reckoned that infrastructure is the ultimate enabler in development unlocking growth potential, creating jobs and bringing wealth to local communities. Efficient infrastructure attracts centers of production and consumption. It’s viewed as an access agenda aimed at unlocking growth and development potential.

The success of economic development process depends largely on the available resources and an enabling environment. Resources such as capital, manpower and technology are necessary inputs in the growth process. However, the efficiency of these inputs and the sources of economic growth endeavors, largely depend on the available factors of production such as capital, labour and Entrepreneurship. Investments in infrastructures such as energy, water, transportation, construction and communication technologies promote economic growth and help to alleviate poverty and improve living conditions.

Ethiopia is ranked among the top 10 leading markets in Africa for international chain hotel developments, while Egypt leads the group with 18 new hotel chains being developed. Currently, Ethiopia gripped 8th position with 84% hotel development pipeline and under construction; disclosed a survey presented by the Africa Hotel Investment Forum (AHIF).

The hotel business boom in Africa is topping the global market. Taking its share from the African market, Ethiopia has eight new global brand hotels under pipeline. Across the continent, 270 hotel chains are in the pipeline with the expected number of rooms exceeding 30,000. Egypt is followed by Morocco, Nigeria, Algeria, Tunisia, South Africa, Libya, Ethiopia, Kenya and Rwanda. Although the leading nations are mainly from northern Africa, countries in Sub Saharan Africa (SSA) are gaining momentum in hotel development projects.

Hotel values in the majority of these locations have been strongly growing. In African countries, 76% of hotel investment returns have been higher than combined averages across other property investments. African countries have shown significant annual growth over the last six years including Zambia and Ghana at 6.5%, Tanzania 6.3% and Angola 6.2%, from the most under-supplied opportunity markets. Ethiopia is also listed among the top markets with several deals in process and new chain hotels venturing into the untapped hotel development. Hilton signed a deal for upscale Hilton Hwassa Resort & Spa which is expected to open in five years.  Marriott International in partnership with Sunshine Business, opened Africa’s first Marriott Executive Apartments in Ethiopia’s capital.

“Hotel developments along with overall economic advancement prove that it’s an exciting time for Ethiopia which is being transformed from the traditional market to a much developed and less risky business environment.” “Investment by major operators evidenced that infrastructural developments are gaining momentum bringing much advanced facilities, ” said Alexander Burtenshaw, Country Manager of Jovago Ethiopia.

In Ethiopia infrastructure development contributed only 0.6% to GDP growth over the last decade. Experts affirm that raising the country’s infrastructure endowment to that of the region’s middle-income countries could add an additional 3% points to infrastructure’s contribution to growth. Ethiopia’s infrastructure achievements include Ethiopian Airlines, a leading regional carrier and rapidly expanding access to water and sanitation. The country’s greatest infrastructure challenge lies in the power sector, where a further 8,700 megawatts of generating plant are needed over the next decade to double the current capacity.

By Eden Sahle

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