Construction World June 2015

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In a recent report, Brian Maina – a private equity anylyst with RisCura, says that in order for Africa to improve its often dire infrastructure deficit, African countries need to collaborate with neighbours to execute infrastructure projects.

East Africa is following a collaborative approach to attract investment and so realise the much needed infrastructure development in the area.

by cross border transmission lines which will enable the selling of excess power to neigh- bours and to access cheaper power. Ethiopia for instance, will earn revenue from the sale of electricity that will be generated at the Gibe III hydroelectric project. The country has the potential to generate some 45 000 MW of hydroelectric power – which Maina says will cost between USD3-10 cents per kWh. Once realised, the region will be energy competitive. The third outcome, says Maina, is that the joint infrastructure projects will give countries to ability to bring projects to fruition. Various railways connecting important hubs are planned or being constructed.

EDITOR Wilhelm du Plessis constr@crown.co.za ADVERTISING MANAGER Erna Oosthuisen ernao@crown.co.za LAYOUT & DESIGN Lesley Testa CIRCULATION Karen Smith Figures show how severe this infrastructure shortfall is: in China 1 MW of power is installed for every 250 people, while in Ethiopia this number goes up to 45 000 people for every 1 MW installed. African railway infrastructure fares even worse. China, despite its population of 1 357 380 000 people, has railway installed for 3 700 people per 1 km, while in Ethiopia this increases to a dizzying 45 000 people for 1 km. Hampering factors There is no doubt that infrastructure investment is a catalyst for economic growth, however, to attract major foreign investments, Maina says, the cost of doing business in certain countries have to dramatically improve, specifically transport and energy costs. Governments are the principal agents for such improvement – as such some government in especially the Eastern African region have chosen a co-oper- ative approach to create a more optimal context to attract investors and to lobby as a collective unit to get funding. Some governments, however, maintain the status quo. Its decision is based on two factors: independent implementation of infrastructure projects maximise political mileage and the

temptation of benefitting from large scale proj- ects that supersedes civil interest. In addition, says Maine, countries within the continent compete internally and aiding competitor countries by reducing their cost of doing busi- ness is a counterproductive system. Shining example In East Africa, the collaboration between Burundi, Djibouti, Ethiopia, Kenya, Uganda, Rwanda and South Sudan is a case in point. The collaboration between these countries have various outcomes and benefits: it provides access to a bigger market as the combined populations of the various countries increase potential markets. On its own a country like Rwanda with 11 million people cannot be competitive – but with Kenya and Uganda the 93 million people in this region has more clout. To achieve this, immigration and infrastructure plans have to be harmonised says Maina. The second outcome will be cheaper (and more competitive) energy costs. At the moment, Maina says, the Kenyan cost for one kWh is USD15 cents. In other African countries it is as little as USD8 cents (Egypt). Electricity costs in East Africa will be lowered

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Wilhelm du Plessis Editor Twitter: @ConstWorldSA

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CONSTRUCTION WORLD JUNE 2015