Infrastructure the key to unlock growth in Africa

Cape Town – World economies are on the cusp of a fourth industrial revolution that will require significant changes in business models, said Kunle Elebute, National Senior Partner at KPMG in Nigeria. 

On the eve of this year’s World Economic Forum (WEF) on Africa, taking place in Durban from 3 to 5 May, the question is what the continent should be focusing on in the coming year to unlock future growth. 

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“Although Africa is presented with a number of challenges – some closely aligned to the global view and others completely unique – the continent also holds many opportunities for future growth. However, these opportunities can only be unlocked, if we tackle them systematically and if we focus on the core of what drives an economy – infrastructure, its people, and its ability to innovate and improve growth,” Elebute said. 
 
He stressed that Africa’s growth and development is intimately linked to infrastructure development on the continent, and in many instances, the lack thereof.  

“In fact, possibly the biggest obstacle for the continent to adapt to this next revolution is the lack of sufficient infrastructure. It is well known that there is a direct correlation between infrastructure and building or accessing markets, workforce productivity and generally economic growth and social development.”

Continental challenges

Africa, however, faces a number of key challenges, including: 

- economic hubs or nodes are geographically dispersed, where there are 1000’s of miles of very rural land in-between them;

- there have been very few collaborative strategies, planning or development of cross-border infrastructure projects – where rather, most countries have been focused on what they need to do in-country to improve infrastructure networks;

- there are limited funds available to fund long-term development infrastructure projects, or to maintain the ones that are built. This has left a financing gap in this sector, perpetuating bottlenecks that make these projects less attractive to investors – both foreign and local.
 
“Addressing these key issues and devising collaborative plans that focus on regional integration and cross-market support will be critical this year,” said Elebute. 

Africa does things differently 

As the world starts moving more rapidly towards the Fourth Industrial Revolution, Africa needs to look at the impact of digital transformation. 

“This sector bodes immense opportunities to further bridge the digital divide between emerging and developed markets, as well as provides great opportunity to support and advance the millennial generation and entrepreneurs in Africa – the future business owners and leaders. 

“Adapting to the Fourth Industrial Revolution therefore is a strategy that can be more inclusive, as it will empower African states to harness the technology and the skills available to them, as well as enable these states to continue to form part of the connected, global economy,” he said.  

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Innovation and job creation plays a pivotal role in the economic development of the continent and, if  Africa is facing strong headwinds, there is no doubt that a stringent focus will be placed on these two areas in this year’s WEF conference, he said.

“Africa has very often done things differently, leapfrogging the banking sector with the advent of online and mobile banking, for example, and using innovation to create growth and opportunities. This is evidence of the power of technology and in the coming years more focus needs to be placed on harnessing the power of what new technologies can offer and, as industry players, finding ways that we can better use it to create opportunities,” Elebute said. 

Africa is on the brink of a workforce revolution – driven by technology and new job seekers – and it is now that policies need to be adapted, businesses need to realign what they once knew and - as a collective - the continent needs to define new strategies to move forward, with conviction.

“Africa is a massive continent and more governments therefore need to start thinking smartly around their urban areas, planned infrastructure projects, job creation and the power of connectivity and digital transformation – as this can significantly reform their strategies towards investment and development that will underpin their adaptation to the Fourth Industrial Revolution, and will empower and enable their nations to leapfrog,” said Elebute.