It is generally accepted that global economic growth will increasingly come from emerging markets. Following more than 20 years of hard-won political and economic reform, sub-Saharan Africa is set to play a very important part.
Before the economic crisis, sub-Saharan Africa had been growing quickly, with an average annual growth rate of 6 % YoY. Only in Africa has annual growth not stalled, reinforcing the belief that they may be overtaking other emerging markets more quickly than previously thought. The continent’s sustained growth is not only due to improved political and macroeconomic stability (and a strong commitment to private-sector growth), but also large investments in infrastructure.
In fact, infrastructure spending now amounts to $45 billion a year according to the World Bank. The importance of this cannot be underestimated. Many big infrastructure projects revolve around accessibility to the continent’s natural resources as sub-Saharan Africa is not only a major supplier of natural resources to the rest of the world, but also the region with the greatest potential for new discoveries.
As global growth resumes, the region should benefit from higher prices as well as higher volumes and the right infrastructure needs to be in place sooner rather than later. Africa’s road density is still sparse and the 48 countries of sub-Saharan Africa (with a combined population of 800 million) generate roughly the same amount of power as Spain (with a population of 45 million).
Africa’s water resources are abundant, but because of an absence of water storage and irrigation infrastructure, they are underutilised. With enough investment in this area, Africa can become self-sufficient in food within a couple of decades, which is key to the entire continent’s success. Investments in solar and wind power will ensure that Africa has enough power to become a world player.
Other areas are no less important. For instance, a recent $600 million private investment in high-capacity fibre-optic cable now connects southern and eastern Africa to the global Internet backbone, which is crucial to all companies across the continent, big and small. With regard to ICT, Africa has already caught up with the rest of the world, and together with Africa’s railway systems being expanded by more than 1,000%, it is clear that the continent is on the right track.