South Africa's modern and extensive transport system plays a very important role in the national economies of several other African states. Current Internetworking problems in Africa. We believe that one necessary action for many private developers is to invest even more capital upfront to ensure from the earliest project development phases that projects are feasible and correctly prepared. Capacity / expertise issues in the public sector, a perceived lack of transparency or sound governance practices and protracted bureaucratic processes effectively reduce investor appetite and risk tolerance. South Africa has placed infrastructure development high on the country’s expenditure programme. Thabo Mphahlele is the BizNis Africa Head of Sales and Marketing. Many rail projects in Africa face two fundamental issues: firstly, a disconnected, extremely old and poorly maintained rail system, and, secondly, a number of gauges that do not facilitate an efficient commercial or metro rail service, most commonly Cape gauge (1067mm), as well as a large extent of 1.000m narrow gauge. Trevor 'Nightingale' Manuel and his colourful coterie of battle-hardened soldiers recently emerged from their year-long bosberaad at the National Planning Commission (NPC) with insights into the key challenges facing South Africa. The problems are mounting for South Africa’s ailing economy. The South African education system, characterized by crumbling infrastructure, overcrowded classrooms and relatively poor educational outcomes, is perpetuating inequality and as a result failing too many of its children, with the poor hardest hit according to a new report published by Amnesty International today. U.S.-Africa trade has dipped in recent years, while China is now Africa's biggest trade partner. Even those who do have electricity generally use very little of it: in Mali, for example, the average person uses less electricity in a year overall than a Londoner uses just to power their tea kettle. The successful bids are among the lowest tariffs to have been achieved for solar power generation on the continent. A 2018 report by the Infrastructure Consortium for Africa (ICA) found that between 2013 and 2017, the average annual funding for infrastructure development in Africa was $77 billion—double the annual average in the first six years of this century. Most of Africa lags the rest of the world in coverage of key infrastructure classes, including energy, road and rail transportation, and water infrastructure. South Africa is experiencing significant social and demographic challenges, including internal migration, unemployment, and poor health and educational outcomes. As a result, the projects attracted significant international investor interest; Zambia’s tender to construct the country’s first solar power plant received seven major bids, and Senegal’s tender process attracted fourteen bids across two projects. The above example of IFCbacked solar power projects illustrates just how much potential there is for African governments to make smarter use of the expertise and financing of multilaterals. Addressing Infrastructure Issues In Uganda. Archive photo from the early 1970s of the eastern Chinese city of Xiamen. Local women carrying goods on poorly maintained roads, Democratic Republic of the Congo. Use minimal essential In each of the nine countries surveyed, a lack of employment opportunities ranks as one of the three most important problems. The government has courted foreign direct investment to lure investors into areas that need infrastructure, and foreign companies often build, own an… Take a look at the Trans-African Highway network and locate all the ten African countries with the highest GDPs. the most problematic issues facing business in South Africa. Another example of such prioritization is government investment in setting up industrial development zones, as in Ethiopia, which is attracting global apparel manufacturers. In addition, Mphahlele develops and automates batch scripts and is responsible for the daily infrastructure maintenance at MultiChoice. Taking electricity as an example, entire communities across large swathes of Africa lack any connection to the grid. In Sub-Saharan Africa, poor infrastructure cuts national economic growth by two percentage points every year and reduces productivity by as much as 40%. the affordability of infrastructure services in Africa. Americans rarely hear about infrastructure problems because the banker-owned and corporate-controlled media is hand in hand with the government, and uses it for their own agendas far more than for the smooth operation of our shared operational systems. The authors wish to thank Laurence de l’Escaille, Archbald Mwangi, Christopher North, and Prakash Parbhoo for their contributions to this article. As discussed earlier, there is no shortage of private-sector finance, but investors struggle to match these funds against viable projects in Africa. By implication, this greater rigor in the early phases will require developers to be more thoughtful about shaping their project pipelines and selecting the viable, valuable projects they wish to focus on. following the political transition of November 2017, the new government requested the African Development Bank to update the 2011 Zimbabwe Infrastructure Flagship Report, so as to aid in investment planning as part of the vision 2030. Private motorcars are an important mode of personal travel. In 2006, South Africa’s Public Investment Commission (PIC) announced plans to create a continent-wide, 25-year equity fund to mobilise local and international investment for infrastructure development in Africa. To better understand the root causes of this paradox—and how they might be tackled—we investigated a number of case studies spanning important projects across Africa that have been significantly delayed or cancelled. These solutions need to ensure revenue sustainability and long-term income generation plans. It would serve everyone to bring in experts to explain the problems in their field and work together on new, innovative solutions. The continent has made strides, but there are always new opportunities for seizing when it comes to developing infrastructure to set the stage for economic expansion of Africa’s countries. Mphahlele contributes as a Content Manager for BizNis Africa. The project had to be relocated because logistical challenges made it impossible to transport equipment to the original site. Source. Infrastructure connects cities and countries together, is the backbone of transport systems, healthcare systems, technology and schools. Nearly half of the recent activity was in West and East Africa, with 27 and 19 percent of the total respectively. The problems are mounting for South Africa’s ailing economy. Our flagship business publication has been defining and informing the senior-management agenda since 1964. Today, Xiamen has more 3.5m residents but half-a-century ago many cities were largely undeveloped with only minimal urban infrastructure. Digital upends old models. Every bank and financial institution has its own set of criteria through which it assesses the bankability of a project. The Africa Renewal information programme provides up-to-date information and analysis of the major economic and development challenges facing Africa today. Africa’s economic growth has stabilized at 3.4 percent in 2019 and is expected to pick up to 3.9 percent in 2020 and 4.1 percent in 2021 but to remain below historical highs. President Cyril Ramaphosa has highlighted some of the major infrastructure issues facing the country right now and the damage they have caused South Africa.. However, while there is an urgent need to address the issue of energy supply in South Africa, a lack of capacity in a number of other forms of economic infrastructure, from insufficient road, rail, port, communications and other logistical infrastructure, have also proven hugely damaging for the economy. For example, nearly 600 million people in sub-Saharan Africa lack access to grid electricity—accounting for over two-thirds of the global population without power (Exhibit 1). It calculates an estimated $130- to $170 billion needs to be invested each year on Africa’s infrastructure, despite a financing gap of as much as $108 billion. Bridging Africa’s infrastructure gap. Opened in 2017, the railway cut travel time between the cities in half. Never miss an insight. The Lamu Port-South Sudan Ethiopia Transport Corridor (LAPSSET) is a complex initiative that combines many elements: the development of a new port at Lamu, Kenya; an oil pipeline from Lamu to South Sudan; and road and railway links to the western part of Ethiopia. At South West Gauteng College, he was the IT Technician and Network Administrator. Africa Infrastructure Investment Report produced by the Commonwealth Business Council (CBC) in collaboration with the Programme for Infrastructure Development in Africa (PIDA) - the new continent-wide initiative led by the African Union, NEPAD Agency and the African Development Bank. cookies, McKinsey_Website_Accessibility@mckinsey.com, Capital Projects & Infrastructure Practice, Visit our McKinsey Capital Project Ventures page. Many nations continue to suffer from badly performing economies, high foreign debt, declining resources and social infrastructures, alarming population growth, increased dependency, degradation of the environment and other debilitating ailments. There are several reasons for the high failure rate. • Project bankability – Proper project preparation and due diligence. Our mission is to help leaders in multiple sectors develop a deeper understanding of the global economy. Kannan Lakmeeharan is a partner in McKinsey’s Johannesburg office; Harald Poeltner is an associate partner in the Nairobi office, where Qaizer Manji and Ronald Nyairo are engagement managers. South Africa's modern and extensive transport system plays a very important role in the national economies of several other African states. More than anywhere else on Earth, Africa has huge unmet needs for infrastructure, reflecting a long history of underinvestment. A number of countries in Southern Africa use the South African transport infrastructure to trade. We believe that a few practical steps taken by pioneering organizations in all three of those sectors point the way to replicable solutions. Practical resources to help leaders navigate to the next normal: guides, tools, checklists, interviews and more. Without improved infrastructure, I fear the increase in productivity and greater economic diversification necessary to sustain Africa’s current growth momentum will not materialize. What are the prospects of unlocking such a step-change in infrastructure investment? More than a mission statement: How the 5Ps embed purpose to deliver value, What’s next for remote work: An analysis of 2,000 tasks, 800 jobs, and nine countries, Unlocking private-sector financing in emerging-markets infrastructure. Today the continent has the opportunity to build the infrastructure its people and businesses need—at speed and scale. Slay Festival to be held on 7 March 2020 at 1 Fox in Newtown, Johannesburg, Digital media company She Leads Africa, in partnership with the African Union Development Agency (AUDA-NEPAD), has announced that the popular innovation and culture event SLAY Festival, will be coming to South Africa for the first time on 7 March 2020 at 1 Fox in Newtown, Johannesburg, South Africa…, Copyright © 2019 BizNis Africa . To ensure that the money is spent where it is needed, and delivers high-quality infrastructure on time and on budget, governments and private sector players need to step up to prepare, plan, and manage projects with a new level of rigor and robustness. Section 4 covers the issues of service quality. For example, China’s EXIM Bank financed more than 90 percent of the $3.6 billion Mombasa-Nairobi Standard Gauge Railway in Kenya. On the one hand, many African governments face rising debt-to-GDP ratios, which will constrain their infrastructure spending in the years ahead. But there was one very big problem: African countries were poor. Connecting Africa. Infrastructure funding is largely provided by South Africa’s national government. Now, many African countries are facing a struggle of getting proper democratic governance. In an increasingly volatile global political context, mobilising financial resources for infrastructure projects has become more complex and challenging. Section 5 looks at the experience with reform so far. As the 14th longest in the world, South Africa's rail infrastructure includes an extensive railroad network, connecting its Ports not only with destinations within the country, but also with the whole of Sub-Saharan Africa. Transport Africa is a hugely diverse continent, but much of it suffers from an ailing or non-existent infrastructural network. Most countries in Africa lack the capacity to adequately engage in all processes related to infrastructure development, including planning, financing and preparation. Please click "Accept" to help us improve its usefulness with additional cookies. Infrastructure in Africa The need for infrastructure improvements in the developing world is critical. Flip the odds. Additional responsibility includes monitoring system performance via SOA, Kibaba (Elasticsearch), H.P BSM, HP Sitescope. Private-sector players can also focus more on examining the risk profiles of their potential clients, and on identifying financial partners that can support them with risk mitigation. Mphahlele was previously MultiChoice Production Support Analyst responsible for developing and monitoring applications. As a share of GDP, infrastructure investment in Africa has remained at around 3.5 percent per year since 2000—but the McKinsey Global Institute estimated in 2016 that this will need to rise to 4.5 percent if the continent is to close its infrastructure gaps. However, many more projects are needed. However, the increase in number and value of deals in the recent past is a strong indicator of the region’s potential momentum. Investors from the United States account for 38 percent of this potential funding, with significant funding also available from the United Arab Emirates, China, the United Kingdom, and France (Exhibit 2). Day two of the PIDA Implementation Acceleration Strategy (PAS) Validation Meeting & preparatory meeting to the launch of the Continental Business Network (CBN) opened in earnest. The continent has made strides, but there are always new opportunities for seizing when it comes to developing infrastructure to set the stage for economic expansion of Africa’s countries. The literacy rate in South Africa is fairly high at 89%, and the percentage of the population with at least a secondary education is also very robust at 70.4%. All … Several pressing issues will need to be addressed for a more inclusive, accessible, and effective system of public transport to exist in South Africa. It boasts a relatively high GDP per capita compared with other countries in Sub-Saharan Africa, but it also has extremes of wealth and poverty. The network includes 21 000 km of railroads of which 1500 km are designated for heavy haulage and of which a total of 8 200 km has been electrified. As a result, investors lack bankable project pipelines: only a few projects meet investors’ risk-return expectations and reach financial close. In East Africa, these mega infrastructure projects have multiplied as well. Rampant inequality, corruption and poor education standards continue to impede growth in South Africa. In sub-Saharan Africa, for example, the median debt-to-GDP ratio exceeds 50 percent—up from 31 percent in 2012. Another important infrastructure that has challenged the economic development of Africa is a good transportation network to facilitate movement of people and goods within Africa. Learn more about cookies, Opens in new © 2011 Africa Infrastructure Knowledge Program, All Rights Reserved. That additional investment can deliver robust feasibility studies and commercial plans, which will give governments and investors greater confidence in the technical and commercial viability of large-scale projects. A year into his presidency, Cyril Ramaphosa will have to tackle an array of structural impediments to turn things around . Learn about Jobs a Top Concern among Many Problems. First, it was the struggle for independence from the colonial rule then liberation from dictatorships that merged from independence. With the plan we aim to transform our economic landscape while simultaneously creating significant numbers of new jobs, and strengthen the delivery of basic services. Menu; Language; English; Français; Site search Search keyword(s): Search. In one example, a proposed power project rushed the feasibility study with the aim of accelerating the development lifecycle; but this move had the opposite effect, leading to significant delays in breaking ground. The governments and the IFC have agreed to manage key risks, including issues related to land, currency, and politics. Will a critical mass of this project pipeline move from feasibility to completion? Innovative solutions to Africa’s infrastructure problems . The role of the Infrastructure Consortium for Africa (ICA) is to help improve the lives and economic well-being of Africa’s people through encouraging, supporting and promoting increased investment in infrastructure in Africa. This content is for Premium Subscribers only. The transport and energy sectors together accounted for nearly three-quarters of the total investment. The role of the Infrastructure Consortium for Africa (ICA) is to help improve the lives and economic well-being of Africa’s people through encouraging, supporting and promoting increased investment in infrastructure in Africa. We then put forward a set of solutions that could address the paradox and unlock the flow of investment that is so badly needed. Jobs a Top Concern among Many Problems. For the six largest infrastructure markets in Africa, we estimate that the development costs of just the projects in the feasibility-study phase amounted to $30 billion. By way of comparison, China spends about 7.7 percent of GDP on infrastructure, and India 5.2 percent. Something went wrong. This article identifies the challenges related to public transport as well as amicable solutions to public transport problems in the South African… During his tenure at Double Digit Media, he was he focused on application and web site development for new and existing clients The South African Government adopted a National Infrastructure Plan in 2012. Please try again later. The continent also trails the BRIC countries in other key measures, including rail density and road density. If you would like information about this content we will be happy to work with you. Subscribed to {PRACTICE_NAME} email alerts. Rampant inequality, corruption and poor education standards continue to impede growth in South Africa. A median of 88% across all nine countries say jobs are a very big problem in their nation, including 92% in Ghana, Tanzania and … Economies of several other African states for Black economic Mobility and locate all the ten countries... 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