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Lack of Efficient Infrastructure: Highest Obstacle to Business in Africa, Report

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The lack of efficient infrastructure is one of the highest hurdles to business in Africa, according to Rand Merchant Bank’s Where to Invest in Africa.

Lack of Efficient Infrastructure: Highest Hurdle to Business in Africa, Report

The report also shows that this obstacle represents an opportunity to businesses involved in the development or financing of infrastructure projects.

Structural change is essentially the only hope for sustainable growth in Africa, according to Celeste Fauconnier, who, along with fellow RMB Africa analyst, Neville Mandimika, have co-authored the report.

In this eighth edition, Fauconnier and Mandimika have focused on the need for efficient infrastructure – something they believe is key to unlocking opportunities and tapping into the growth that Africa has to offer.

The publication highlights some key findings: Africa’s lack of efficient infrastructure shaves up to 2.6% off its average per-capita growth rate, according to the World Bank. This places significant strain on human development.

Furthermore, the annual infrastructure need is $130bn to $170bn, according to the African Development Bank and the continent’s available capital is insufficient to achieve this.

Challenges in Africa

The report found that the challenges to infrastructure development include weak legal, regulatory and institutional frameworks; weak infrastructure planning and project preparation; ineffective governance; and corruption. One of the consequences is limited private-sector involvement.

The key to building well-targeted infrastructure connecting African economies to global value chains is “governments dedicated to the task”, according to Fauconnier.

RMB has incorporated a ranking that encompasses both the hard- and soft-infrastructure qualities for 53 African countries. The top ten best-performing African economies are a mix between the island economies, southern Africa and North Africa.

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When assessing the overall quality of hard infrastructure in Africa, Seychelles dominated the rankings, with its high-quality tourism infrastructure and strong ICT capabilities.

North and southern Africa also featured highly, since they’re home to some of Africa’s biggest, most diversified economies.

According to the publication, common to the ten lowest-ranked countries is that they’re mostly fragile states, involved in conflict.

“Closing the infrastructure gap in Africa is a mammoth task,” according to Fauconnier, “But it must be taken on. And it must be addressed by both the public and private sectors.”

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