Is infrastructure development the biggest catalyst for economic growth in Africa?


Isabelle Alenus-Crosby

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.


Lagos: Notes from the “surprising, not simply rising” continent


Sarah Caddy

News broke that Nigeria has overtaken South Africa to become Africa’s largest economy as the 500+ delegates at the African Private Equity and Venture Capital Association’s 11th annual conference in Lagos returned home (in my case, to a Saharan sand-strewn London).

Africa’s most populous country’s government released revised figures that more or less doubled estimates for its GDP, testament to its increasingly diversified economy and growth of services that tap into the expanding consumer story. Most notably the telecommunications sector has increased from 0.8% of GDP to 8.6%.

Nigeria’s minister for economy and finance, Ngozi Okonjo-Iweala, is cited by the FT stating that the revision will “validate” the investment thesis to foreign investors increasingly searching for returns in the region.

They may not need reminding, however. AVCA/RisCura/SAVCA research released at the conference, downloadable here, noted that 24% of investors into private equity already find West Africa to be the most attractive region.

“What excites you about Nigeria?” asked William Wallis, Africa Affairs Editor at the FT in his interview with Michael Power, Investec, at the conference. “Its people are extraordinarily enterprising” came the reply. “Africa is not just the rising continent, it is the surprising continent.”

Though with Nigerian pension assets under management (currently NGN4 trillion/$25 billion) estimated (at the conference) to double in just three years, local – rather than foreign – capital may be the investment force to be reckoned with.


Read more insights from the AVCA conference in Lagos from the Financial Times here.

Watch AVCA’s Chief Executive, Michelle Essomé, on CNBC Africa, which filmed live from the event, here.


The UN climate change report – a catalyst for technological improvements?


Isabelle Alenus-Crosby

According to a recent UN report, climate change poses a greater threat to food and security than previously thought. The IPCC warns that global warming is leading to more volatile weather patterns that have already begun reducing crop yields worldwide. As temperatures rise, rainfall patterns change, and pests and diseases spread.

Growing up in various countries in Africa, I was often witness to the type of erratic weather patterns described in the report. I vividly remember a particularly harsh drought in Tanzania the early 1980s, where almost no rain fell for several years. Water shortage in Dar es Salaam was such that lines of people were seen hauling sea water to their homes so that their toilets could be flushed. The little water that came out of the taps was carefully boiled and filtered for drinking and food preparation. People did what they could to save water, and prayed for bad weather.

What I also remember, is that the international community reacted rather surprisingly.  Instead of simply sending food parcels to the worse hit areas in the North, it was decided to test out a completely new type of agriculture. Especially designed crops, adapted to the worse climates on earth, delivered very impressive results in less than a decade.

In one of my previous blogs “seeds of change” I mention that thanks to various technological advancements, Africa now has access to crops that are resistant to heat, droughts, floods and pests and may signify that in the future Africa will be exporting food, something that could never have been imagined a couple of decades ago.

It was the punishing climate in many parts of Africa that prompted these technological improvements, saving the African continent as a direct result. Perhaps these same crops will now save the world?