Africa needs major investment to meet supply chain challenges

31 May 2012

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31 May 2012 | Kamalpreet Badasha

Major upgrades to Africa’s infrastructure are still necessary to attract investment, according to Ernst & Young’s 2012 African Attractiveness survey.

The report revealed in 2010 infrastructure investment was made up of US$30 billion (£ 19.3 billion) from domestic financing - primarily the African taxpayer - and a further $55 billion (£35.3 billion) from external sources such as private investors and development institutions.

If this continues Africa will be able to close its infrastructure gap with other developing nations, as it requires an annual investment of $93 billion (£59.7 billion) per year from 2010 to 2020. Investment in Africa’s infrastructure totalled $85 billion (£54.6 billion) in 2010 which is only $7 billion (£4.5 billion) less than the estimate required to help eliminate its infrastructure deficit.

The report stated one of the continent’s major challenges was the need for major investment in its logistics, transport and energy. The report combines an annual analysis of investment into Africa, with a survey of 505 global executives predicting where investment will take place in the next decade.

Incentives to invest in Africa included securing access to raw material resources and as a location for outsourced services to increase efficiency.

Infrastructure investment is also being boosted by the South African government, as it ploughs $400 billion (£257 billion) over the next three years into 43 projects. This along with foreign direct investment (FDI) will enable the infrastructure gap to be closed, as Chinese investment had grown to $9 billion (£5.8 billion) in 2010.

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