Mind the gap: Africa’s infrastructure development

The infrastructure paradox

“Infrastructure has been responsible for more than half of Africa’s recent improved growth in performance.”* This weighty statement, made in a recent study by the World Bank, reflects the importance and impact that infrastructure development can have on economic growth.

The Ernst & Young 2012 Africa attractiveness aurvey found that almost 70% of the capital invested into Africa and nearly 40% of new FDI projects has gone into manufacturing-type and infrastructure-related activities. This shows a commitment being made to growing and developing the African economy.

The growth in the economy, combined with the recession in the European developed market, has put Africa on the radar of investors and businesses seeking to expand into new markets. This sentiment is reflected in a recent Ernst & Young survey of those doing business on the continent – which ranked only Asia as a more attractive region for such activity.

Infrastructure investment in Africa provides an interesting paradox. The lack of infrastructure in Africa creates significant opportunity for investment and economic growth. However, it is a lack of infrastructure that makes doing business across the continent difficult, and therefore limits investment and prohibits economic growth. The infrastructure gap is so profound that attendees at Ernst & Young 2012 Strategic Growth Forum ranked the “infrastructure gap” as the second-highest risk to doing business in Africa, behind “political uncertainty”.

The World Bank

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