https://www.miningweekly.com

African opportunities depend on economic corridors, additional infrastructure

9th October 2015

By: Simon Rees

Creamer Media Correspondent

  

Font size: - +

Sub-Saharan Africa continued to face transport bottlenecks and difficulties in bringing large-scale infrastructure projects to fruition, despite increased economic growth and growing population levels, delegates were told at a recent Canada-Southern Africa Chamber of Business infrastructure symposium.

However, the burdens could be relieved and future opportunities captured by developing economic corridors and investing more in transport. Economic corridors also created virtuous circles, spurring additional growth, improving living standards and, through this, a greater uptake of commodities – be it from increased consumerism or further infrastructure investment.

New Horizons
Africa’s future gross domestic product (GDP) growth depended on rising rates of urbanisation and increased democratisation. In 2013, the continent’s GDP stood at $2-trillion. By 2050, that figure was expected to reach $5.5-trillion, Development Bank of Southern Africa (DBSA) group executive for infrastructure delivery Sinazo Sibisi noted.

The continent’s population was forecast to grow from 1.1-billion people in 2013 to 2.4-billion by 2050, she added. Consumer spending would rise from $1-trillion to $4.7-trillion in the same period.

However, Africa had a significant infrastructure backlog, with transport one of the most pressing concerns. Current levels were already insufficient to match current utilisation rates, let alone future demand. The DBSA noted that transport volume demand would climb by a factor of between six and eight by 2040.

Economic corridors would be integral in relieving these pressures, while also spurring further growth. African corridors had already been conceptualised by initiatives such as the Programme for Infrastructure Development in Africa, under the African Development Bank Group’s auspices, Hatch global MD of infrastructure Martin Doble stated.

Companies in the resource sector were often the first movers to invest in these economic corridors, hoping to reduce transport bottlenecks and improve their efficiencies and margins. However, “extractive corridors” designed with the resource sector in mind were problematic. Sometimes they were tied to a single, significant project. In the case of mining, an extraction corridor’s future was at risk when an operation came to the end of its life.

On other occasions, extraction corridors fed by multiple operations could still be overly reliant on a single commodity. The corridor would be threatened if that commodity were to experience a pricing slump. In addition, extraction corridors frequently failed to address local socioeconomic needs.

Other difficulties in developing corridors stemmed from the need to repair or overhaul the ageing infrastructure already in place. In addition, financing had become increasingly complicated as modern projects could no longer solely depend on tax revenues for funding. This meant more stakeholders were brought on board, with different forms of funding arrangements considered, such as public–private partnerships.

The best economic corridors were conceived with community and wider logistical needs in mind. In addition, there would be an eye to further expansion beyond a corridor’s initial remit. They could also be grafted onto existing extraction corridors and be backed with the creation of special economic zones to help increase connectivity and spur the creation of new businesses.



Nuances

Getting this balance right had not been an easy task as understanding the nuances involved could be complicated and time-consuming. The pace of growth achieved with economic corridors was often slower as well, and required larger amounts of government investment than extraction corridors.

Doble highlighted Africa’s central corridor as a prime example of an economic corridor that had made headway. It was being built to serve the East African region, with a combination of road and rail networks to link the Port of Dar es Salaam, in Tanzania, with Rwanda, Burundi, Uganda and the mineral-rich Democratic Republic of Congo.

Other rewards from economic corridors and transport investment included the removal of bottlenecks and choke points, which could translate into Africawide efficiency savings of $172-billion by 2040. “Which means $172-billion is freed up to be spent on other things,” Doble noted.


South Africa had positioned much of its development strategy on economic corridors, underpinned by the country’s National Development Plan (NDP). Doble highlighted the country’s four main corridors that would work as the primary catalysts, including the Durban–Free State–Gauteng logistics and industrial corridor, which also comprised the country’s freight transportation backbone.

“We’re expecting a tremendous amount of investment to occur along that corridor,” he said. “It has taken a long time to reach this point, but we see it as one that will move ahead quite quickly.”

Hatch Goba chairperson Trueman Goba also highlighted the importance of development corridors for South Africa. Goba had been appointed by South African President Jacob Zuma to the National Planning Commission in 2010. The commission was responsible for formulating the NDP, which projected South Africa’s development needs to 2030.

“Fortunately, South Africa has a good core network of national infrastructure,” he said. “But there are challenges to maintain and expand [this infrastructure]; both addressing future demand and the needs of the country’s growing economy.”

Mirroring wider African trends, most pressure on South Africa’s infrastructure would be felt in the cities as urbanisation rates climbed from 63% in 2014 to 74% by 2035. The greatest population increases and urban densification rates were expected in and around Johannesburg and Pretoria.

Some of the existing transport infrastructure was poorly located, or inadequate, for the tasks ahead. The latter would require significant investment to bring this infrastructure up to the standards needed, Goba added. There was also a need to improve State institutions, as outlined by the NDP in its chapter on building a capable State.

The recent decline in South African GDP growth had been an issue, falling from almost 2.2% to reach 1.4% last year, Goba noted. In part, the fall was owing to complications surrounding energy production.

The NDP had called for more power-producing infrastructure to be installed, including a greater uptake of renewables, such as wind and solar. Gas had also been considered, while there was the possibility of a nuclear programme by about 2023, if it proved affordable. The benefits of shale gas had also been identified. However, exploration had yet to begin in earnest, while government was concerned about ensuring that the environmental aspects were met.

Edited by Henry Lazenby
Creamer Media Deputy Editor: North America

Comments

Showroom

Condra Cranes
Condra Cranes

ISO-certified Condra manufactures overhead cranes, portal cranes, cantilever cranes and crane components: hoists, drives, end-carriages, brakes and...

VISIT SHOWROOM 
Multotec
Multotec

Multotec, recognised industry leaders in metallurgy and process engineering help mining houses across the world process minerals more efficiently,...

VISIT SHOWROOM 

Latest Multimedia

sponsored by

Hyphen, Eva mine, ferrochrome price make headlines
Hyphen, Eva mine, ferrochrome price make headlines
27th March 2024
Resources Watch
Resources Watch
27th March 2024

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION







sq:0.132 0.166s - 88pq - 2rq
Subscribe Now