Africa is a hugely diverse continent, but much of it suffers from an ailing or non-existent infrastructural network. However, this gap offers huge growth potential for investors

More than any other continent, Africa is unfairly homogenised; talked about as if it has an unvarying history, is in possession of a uniform culture, and faces generalised problems. At times, it is even mistaken for a single country. Unsurprisingly for a landmass that is bigger than the US, China, India and much of Europe put together, Africa is incredibly diverse.

Unfortunately, one of the ways that this difference manifests itself is in terms of infrastructural development. According to the World Bank, it takes 12 days to export a container from Egypt, at a cost of $625, but transporting the same container from the Central African Republic takes four times as long and costs almost nine times as much. The infrastructure gap between Africa and Europe or the US may be significant, but national discrepancies remain a pressing issue too

Hampered growth is one of the most disabling side effects of poor infrastructure. It’s easy to take roads, clean drinking water and electricity for granted, but without reliable access to these essentials, doing business becomes virtually impossible. This, in turn, makes it difficult to attract the investment required to fund new infrastructure projects.

In an effort to escape this vicious cycle, the African Development Bank (AfDB) will use this year’s Africa Investment Forum, due to begin on November 7 in Johannesburg, to bridge an infrastructure funding gap of $130-170bn a year. If the AfDB is successful, not only will it offer hope to its impoverished nations, but it will generate benefits for the developed world too. If it is not, Africa will remain a continent where some nations are on the road to prosperity, while others are in danger of being left behind.

Currently, Africa’s infrastructure is a mixed bag. While Angola has a road density of just 4km per square kilometre of land, South Africa’s figure is more than 15 times higher. Africa’s larger economies may be able to fund their own developments but for many others, this simply isn’t practical. Foreign investment, therefore, is set to play a major role in financing future infrastructure projects.

Source: World Finance