Investors flock into Africa

All eyes are on Africa as the emerging market to watch for infrastructure development.

Jamie Mills
Jamie Mills

According to the International Monetary Fund, seven of the world’s 10 fastest-growing economies are located in Africa. 

The East African Community is a significant part of that story. The regional bloc created by Kenya, Uganda, Tanzania, Rwanda and Burundi has effected a transformation demonstrated by the growth of their populations and the strengthening of their economies. 

The discovery of oil and gas in Uganda in 2006 and subsequent discoveries in other East African countries, is boosting infrastructure developments in the region. Also, many parts of Africa have long been known to be rich in mineral resources, resulting in the expansion of Africa’s mining sector to assist with the extraction of these minerals for global trade. There is also a visible trend towards renewable energy, considered a natural choice given Africa’s vast resources.

This boost in Africa’s energy sector has accelerated the need for an extensive upgrade of existing infrastructure. Governments across the region have been busy planning projects for the development of suitable roads, railways, airports and ports to support the transportation of these resources. 

Such rapid expansion of infrastructure does not come without its difficulties. Many African countries are landlocked, and it is necessary for a number of infrastructure projects to span across two or more countries. 

The hurdles that such cross-border projects present should not be underestimated. A lack of co-ordination among African nations, combined with non-alignment of regional policies, can make the delivery of cross-border projects particularly challenging.

The Programme for Infrastructure Development in Africa (PIDA) seeks to address these cross-border challenges and accelerate the implementation of regional infrastructure. The programme was developed primarily by the African Union Commission and approved by the African heads of state and governments in January 2012. It aims to accelerate the implementation of regional and continental infrastructure by 2040 by addressing priority infrastructure deficits in energy, transport, ICT and trans-boundary water.

Investors have recognised that investing in African infrastructure presents potentially lucrative opportunities. China has emerged as a major financier of largescale African infrastructure projects in recent years, with a focus on hydropower generation and rail projects.

The infrastructure and energy landscape in Africa has changed fundamentally, and this boom is set to continue.

Jamie Mills is a lawyer at Dentons