Infrastructure investment attracts business to africa, says RICS

Business News of Friday, 3 March 2017

Source: Samuel Hinneh

2017-03-03

By Samuel Hinneh

Amanda Clack-RICS President speaking at RICS Africa Summit 2017 Credit: Dominic Barnardt {Johannesburg} The Royal Institution of Chartered Surveyors (RICS) says Africa needs to invest in connecting infrastructure, which is key to drive attracting businesses to stimulate economic growth on the continent.

“This can be channeled to attract business investment which in turn facilitates investment in social infrastructure, enabling housing and driving economic growth, that create our future cities,” the president of RICS, Amanda Clack, speaking at the RICS Africa Summit 2017, held in Johannesburg, South Africa. According to her infrastructure is fundamental because it underpins economic growth.

“Land fundamentally underpins everything, therefore it’s important to bring infrastructure, land and cities together. Basic level infrastructure such as water, power, sewage system, rail and networks, ultimately airports, ports and how they all start to connect together is very crucial. If you have not got those basics infrastructure you need in place, in particularly rural communities–as they start to develop and grow, you will not be able to create the rest of it that comes to the full.

“As more people flock to the cities, there is consistent pressure on sewage systems, water, even if you got them in place you got to continue to invest in them to sustain the growth that may come along with that. Every amount of money spent on infrastructure, you get a massive pay back,” Clack mentions. RICS, headquartered in the UK, is a global professional body that promotes and enforces the highest qualifications and standards in the areas of land, real estate, construction and infrastructure. As a public benefit organisation, it operates in all the world’s major financial hubs in delivering international standards and policy influence.

According to South African Institute of International Affairs (SAIIA) Global Economic Governance Africa project, Africa’s infrastructure financing deficit, estimated to be $100 billion a year, remains persistently large. The think tank states that the resulting lack of investment in energy, transport and water infrastructure on the continent presents a significant barrier to economic growth and development. Many African countries are again reaching their debt ceilings.

There is limited understanding of how the larger infrastructure financing institutions operate and there is no source of information on how these institutions and the private sector respond to African needs.

The RICS Africa Summit 2017 in its third year brings together key stakeholders in the property, built environment and investment sectors across the African continent to discuss challenges within the sector and also offer solutions. This year’s summit was on the theme, Land and Rapid Urbanisation in Sub Saharan Africa, took place at the prestigious Hilton Sandton, from February 22-23, 2017. “I truly believe investment in the infrastructure revolution is vital to countries remaining relevant and creating our future cities,” Clack notes. Currently, the world is facing an infrastructure funding gap of $57tn up until 2020. Resilient and effective infrastructure is central to supporting rapid urbanization, she says.

“It has the power to drive social change, create jobs, support businesses, improve the environment and create a better world in which to live. All markets must see further investment in infrastructure in order to maintain a competitive edge.

“Aging infrastructure in countries such as the UK and USA is holding back economic growth. While investing in infrastructure here in Africa can support and stimulate the rapid urbanisation occurring across the continent,” the RICS president emphasises. Emeka Eleh, Principal Partner of Ubosi Eleh and Company in Nigeria, said massive urbanisation has seen people scrabbling for space in the country’s biggest city, Lagos. This has resulted in a rise in slums as urban planners in the city struggle to develop infrastructure and plan ahead to deal with millions of people descending on Lagos.

“The challenge is that urbanisation in much of Africa takes a life of its own, with regulators not being pro-active enough by planning ahead. Urban areas are key to economic growth, and it is important for cities to be planned and managed to deal with rapid urbanisation. Not planning for urbanisation, will mean higher infrastructure development costs and other challenges,” he said. Bennet Kpentey, Chief Executive and Managing Consultant at Ghanaian-based Sync Consult Management Consultants said while Africa’s rapid urbanisation presented infrastructure challenges for its major cities, this was also a sign of a prospering continent.

“Africa has a young population with a growing labour force and is expected to have the world’s largest working-age population of 1.1 billion by 2034… Household consumption in Africa grew at a 4.2% compound annual rate between 2010 and 2015, while the McKinsey Global Institute forecasts Africa’s household consumption will reach US$ 1.4 trillion by 2020 and US$2 trillion by 2025. The African Development Bank predicts that by 2060, about 1.1 billion Africans will be in the middle-class. Most of these African’s will be residing in the continent’s cities,” he states.

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