Infrastructure spending in sub-Saharan Africa is projected to grow by 10% a year over the next decade, exceeding $180 billion by 2025 while maintaining its 2% share of the global infrastructure market.
Nigeria and South Africa currently dominate the infrastructure market, but other countries like Ethiopia, Ghana, Kenya, Mozambique, and Tanzania are also poised for growth, tells a new report by PwC.
According to the report, titled Capital project and infrastructure spending: Outlook to 2025, growth prospects in most of sub-Saharan Africa’s economies look promising as they were greatly affected by the 2008 global financial crisis.
The financial crisis of 2008 has not had a major effect on South Africa’s infrastructure spending. From an estimated $7 billion in 2001, investment in infrastructure grew relatively consistently to reach $22 billion by 2012.
Transportation investment is expected to grow rapidly in the country over the coming decade, in particular in the road and rail subsectors. Transportation investment will likely grow to just short of $9 billion by 2025, says the report.
Infrastructure spending overall is forecasted to reach around $60 billion by 2025, having grown by 10% on average a year. However, South Africa is likely to lose share of regional spending relative to Nigeria. Nigeria’s better fiscal position and oil revenues will likely enable it to outperform South Africa over the coming decade, says the report.
Overall infrastructure spending in Nigeria is expected to grow from $23 billion in 2013 to $77 billion in 2025. A more investor-friendly environment towards oil investment is also likely to boost this projection further.
The report also shows that spending on utility infrastructure is expected to be significantly stronger in countries that need to upgrade deficient energy, water, and sanitation services and in economies that are rapidly urbanising, such as Ghana and Nigeria.
The greatest growth of spending for utilities is expected in sub-Saharan Africa where an annual rate of 10.4% between now and 2025 is forecasted.
Spending for electricity production and distribution is expected to rise from $15 billion in 2012 to $55 billion, while expenditures for improvements in water and sanitation services are forecasted to increase from $3.3 billion in 2012 to about $10 billion by 2025.
Global capital project and infrastructure spending is expected to grow to more than $9 trillion annually by 2025, up from $4 trillion in 2012.
The report finds that during 2011 and 2012, the global infrastructure market rebounded from the global financial crisis, and will continue to grow between 6 and 7% yearly to 2025.