Posted on :Monday , 7th January 2019
Investment opportunities in infrastructure construction is set to expand at a rapid pace in East Africa. According to GlobalData, total infrastructure construction output is expected to soar from US$25.9bn in 2017 to US$98.8bn in 2022 in the three largest markets in the region, Ethiopia, Kenya and Tanzania.
Yasmine Ghozzi, construction analyst at GlobalData said that Investment rates in transport infrastructure have been increasing thanks to major continental initiatives such as the Program for Infrastructure Development in Africa (PIDA) which is known as a strategic continental initiative for mobilising resources across African countries to transform Africa through modern infrastructure.
She also said that "There are various factors that hinder infrastructure financing in East Africa, including higher transaction costs, inadequate availability of bankable projects, permits and licenses required, and the multi-governmental agencies and institutions that investors must deal with in a typical capital project. There are also obstacles related to limited local capacity for project preparation and tender."
Although it has some of the fastest-growing economies in the world, East Africa remains among the least competitive regions globally, mainly due to poor infrastructure which constitutes a significant impediment to the achievement of the Sustainable Development Goals. Reflecting this, governments of the East Africa region have allocated around a third of their individual budgets in the new financial year towards financing a great number of the infrastructure development.
East Africa Community (EAC) reported that it needs more than US$100bn covering the next four years to plug their infrastructure gap, which has kept the cost of doing business in the region high. More than 1/4th of this amoung, US$78bn, would be used on railways, roads and energy projects over the next ten years in a bid to ease transportation and boost manufacturing.