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Double-edged sword of Africa’s infrastructure

Inadequate infrastructure across Africa is costing about $40-billion (about R408-billion) in lost gross domestic product a year.

This deficit is estimated to be holding back economic growth by 2% each year, reducing private sector productivity by as much as 40%.

On the flip side, however, the lack of infrastructure is providing an incentive for foreign direct investment in the continent, which is good for its long-term outlook.

African Development Bank president Donald Kaberuka revealed these statistics at the Association of Central Bank Governors symposium on financial inclusion in Africa in September.

The Development Bank is the executing agency for the Programme for Infrastructure Development in Africa, which has said that closing the infrastructure deficit is vital for Africa's economic prosperity and sustainable development.

African economies are currently building roads, water systems, information and communications technology networks and electricity grids.

Access to electricity
However, the Programme for Infrastructure Development in Africa estimates that Africa's road access rate is only 34% (against 50% in other parts of the developing world), and transport costs are 100% higher.

Only 30% of Africans have access to electricity, compared to between 70% and 90% in other parts of the developing world, and water resources are underused — only 5% of agriculture is under irrigation.

Internet penetration is a mere 6%, against the 40% comparable average.

Closing Africa's infrastructure gap is expected to cost $360-billion between 2011 and 2040, with significant investments required by 2020.

These are costs beyond the financing capabilities of governments or donors — and that is where the private sector will have a key role to play in bringing equality to Africa.

Building airports, roads, power plants will become invaluable investments in generating growth and socio- economic development.

SA a gateway of choice for investing in Africa
South Africa has long been the gateway of choice for foreign direct investment in Africa and has attracted the highest foreign direct investment levels on the continent over the past decade.

A number of South African companies including MTN, Shoprite Checkers and Famous Brands have made significant infrastructure investments north of our borders.

Sectors that are thriving include mining, telecommunications, retail, oil and gas and financial services.

South Africa's National Development Plan 2030 proposes a social compact that requires business, labour, communities and the government to work together to increase economic growth.

This is the framework within which South Africa's legal market is experiencing interesting times.

The domestic market faces continued consolidation through mergers with international players.

In addition, some South African law firms have established offices in sub-Saharan Africa and there have been greenfields establishments by international firms locally and in Morocco.

The challenge now will be to provide for clients’ individual needs.

David Lancaster is senior partner at law firm Webber Wentzel

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David Lancaster
David Lancaster works from Newcastle Upon Tyne, England. Business Development Manager @distinctivepub, a full service #publishing, creative and #mediasales agency. Publishers of @waterjournaluk #B2B publications David Lancaster has over 402 followers on Twitter.

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