Africa has often seen constrained investment into its infrastructure because of the lack of a benchmark. However this situation is set to change with the launch of the continent’s first infrastructure performance index.
Indices and benchmarks play a critical role in investment management which is why, in the interest of promoting increased investment into African infrastructure, investment solutions provider RisCura has partnered with the Africa Investor to launch the index.
“Over the last two decades Africa experienced periods of per capita income growth that were higher than those seen in developed nations,” explains Heleen Goussard, head of unlisted investment services, RisCura.
“However, of late, numerous factors have led to a slowdown in the region’s economic activity. Many would argue that the inadequate supply of infrastructure services is one reason for this,” she continues.
Goussard notes that a comparison of sub-Saharan Africa to other developing nations shows clear under performance when it comes to infrastructure development.
“When looking for answers to the continent’s infrastructure financing need, it’s easy to look at public investment as the main solution.”
Alternative finance the solution
“However, with insufficient current levels of infrastructure spend as a percentage of GDP and increasing debt-to-GDP ratios, most African countries have little room in their fiscus to accommodate higher infrastructure spend. The solution lies with alternative sources of finance – institutional investors.”
While the reasons for insufficient levels of capital committed to infrastructure funds are complicated with some elements needing more time to develop than others, Goussard notes that the introduction of infrastructure performance information for Africa is a simple step in the right direction.
“Compiling a performance index is a big step forward for any asset class aiming to attract additional investment. With the assistance of the relevant parties, we believe creating this index will address one of the problems within the environment,” she concludes.