(Press Release. Edited by Issa Sikiti da Silva). South Africa should leverage its position in BRICS to increase investments in the development and upgrade of Africa’s inadequate infrastructure, David Humphrey, global head for power and infrastructure at Standard Bank, said this week.
This is crucial to maintain continent’s growth momentum, he added.
Humprey was speaking on the sidelines of the fifth BRICS summit held place in Durban, South Africa, on 26-27 March 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 100-billion USD in the next decade to upgrade its infrastructure, if it is to realise the economic growth potential presented by its existing newly-found vast mineral and other natural resources, such as coal, iron ore, oil and gas, Humphrey said.
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%.
Humphrey said 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 argued 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 said 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.
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.
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.