Infrastructure-Africa - For the African continent to serve as a haven for Foreign Direct Investment (FDI), it will need US$ 93 billion annually to meet its huge infrastructure deficit over the next decade, the privately-owned Guardian newspaper reported, quoting the Managing Partner, Ernst and Young, a global financial advisor for airlines and telecommunications firms, Zemedeneh Negatu. The amount represents more than 35 per cent of its gross domestic product, Negatu said, adding that the current spending on African infrastructure was US$ 45 billion.

Taking a swipe at African governments for their inability to generate electricity for their citizens, Negatu described the lack of power as the region’s most important development challenge, stressing that inadequate power supply was reducing growth in Africa.

“Africa has enormous potential for energy production from renewable sources - solar, hydro, wind and geothermal. Almost all sub-Saharan African countries have sufficient renewable resources, exploitable with current technologies, to satisfy many times their current energy demand and the private sector is increasingly aware of the enormous opportunities involved’, Negatu added.

According to him, an estimated cost savings of US$ 17 billion of the so-called “efficiency gap” could be achieved if existing resources were used more efficiently, stressing that a substantial infrastructure funding gap of US$ 31 billion a year remained.

He reiterated that yearly private investment in infrastructure reached US$ 9.4 billion in 2007, more than Official Development Assistance (ODA) of US$ 3.7 billion a year.

Negatu disclosed that the vast majority of FDI in Africa was in Information Communication Technology-related projects, hinting that mobile phone penetration rates had risen from 2  per cent in 2000 to over 30 per cent in 2010.

He recalled that between 2003 and 2007, the growth in the number of FDI projects in Africa, both in absolute terms and as a relative proportion of global FDI projects, was erratic.

The financial expert added that penetration estimate was expected to reach 50 per cent by 2012, with over 500 million subscribers, stressing that 48 of 54 African countries had more than one mobile operator.

Negatu stated that there were magnificent opportunities in Africa, but regretted that there were still hugely untapped potential.

He stated that after an exceptional 2008, in which total new projects and the proportional share of global FDI peaked, the investment figures had remained resilient, despite the negative impact of the global economic downturn.

“The fact that Africa has managed to remain relatively attractive through the economic crisis, and has maintained its increased share of FDI compared with other regions of the world, reflects positively on the economic growth prospects for Africa, as well as the improving investor’s perception,” he added.

Pana 21/09/2011