22 June 2012

Africa: 'Emerging Nations Need U.S.$851 Billion Annually for Infrastructure'

Nigeria and others emerging nations will need a total investment of $851 billion annual to enable them improve on the quality of infrastructure in their economies, the global strategy and consulting firm - the Roland Berger Strategy Consultants has said.

The Munich-based firm, which stated this in a report yesterday, listed some of the infrastructural facilities to include water, electricity supply, telecommunications or transportation.

"That is the only way their local economies can keep growing," it submitted.

According to Roland Berger, there are 145 countries with low to moderate gross national incomes that need to invest the above mentioned amount annually to bring their infrastructure up to date.

It insisted that lack of infrastructure meant that some countries were producing less than 45 per cent of their capacity, adding that they were risks associated with the poor state of infrastructure in those countries.

"These risks are often misunderstood, and should be accorded a considerably lower interest rate risk surcharge than the norm. These improperly assessed risks are costing Africa alone around $9 billion per year. For this reason, some countries today are only half as productive as they actually could be.

"Private international investors in particular could help, and boost their own businesses into the bargain, but they are holding back because of the risks. This fear is often unfounded, though, and is based on prejudice and failing to see the market properly: a misperception of local risks that is costing these countries a fortune and putting the brakes on their economic expansion."

Partner and member of the Global Management of Roland Berger, Charles-Edouard Bouée, was quoted to have argued that private international investors have a duty to help modernise essential infrastructure in emerging nations in Asia, Africa and Latin America.

"Not only can they help emerging nations grow, but they can also open up important areas of business in new markets for themselves because only growth generates more growth.

"Most of the growth of the past few years took place in emerging and developing countries. Between 2005 and 2010, Europe's gross domestic product (GDP) grew only 0.8 per cent annually. By contrast, GDP in Asia grew by more than 5 per cent annually over that same period.

"Africa, Middle East and Latin America saw annual growth of around 4 per cent. But to keep growing, many countries today are dependent on the state of their infrastructure. The greatest demand comes from the 35 countries with low gross national incomes ($1,005 per capita or less) and the 110 with moderate gross national incomes (up to $12,275 per capita)," he added.

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