Common Futures

Common Futures: India and Africa in Partnership
inhabitants respectively. Such rapid urbanization in both India and Africa
will mean bigger modern cities with higher population densities and higher
demands for energy, transportation and water and sanitation services. Africa’s
urban population is projected to increase from 0.8 billion currently to around
1.2 billion by 2050, while India’s current urban population is about 375
million and expected to grow to 500 million by 2017. 9 Massive investments
in infrastructure supply will be required to manage this rapid expansion.
Managing the trade-offs in investing in various national infrastructure sectors
will also be critical.
Successfully bridging the infrastructure gap presents a significant opportunity
for India and Africa. A solid infrastructure base will yield major benefits
in terms of improved productivity, competitiveness and inclusive growth.
However, it is evident that the headroom for expanding public investment
in infrastructure is grossly insufficient to adequately bridge the gap. For
example in Africa, amidst competing needs, public funds and overseas
development assistance currently meets only 50% of the required investment
in infrastructure. Innovative financing and private sector involvement is
therefore critical. Already infrastructure markets in India and many African
countries have witnessed an influx of private equity firms, commercial banks
and other finance corporations investing in public-private partnerships in
infrastructure project. Close to $12.8 billion was invested by the private
sector in Greenfield or expansion infrastructure projects in Africa in 2012
alone. 10 Local and International bond markets capital markets are increasingly
becoming viable infrastructure financing alternatives. Institutions such as the
state-owned India Infrastructure Finance Corporation (IIFC), established
in 2006, fill the gap between short-term debt financing and long lead-time
and tenures of infrastructure project. Regional development banks such as
the African and Asian Development Banks are according greater attention to
infrastructure in order to crowd in increased financing. Bilateral and South-
South cooperation will also continue to be important to sharing financial and
technical expertise in infrastructure.
Stemming corruption
will also be important
to ensure sustainable
public and private
sector investment
and the delivery
of timely national
infrastructure
projects.
Although, financing is the usual suspect for India’s and Africa’s infrastructure
challenges, other critical factors such as the development of appropriate
policy frameworks should not be overlooked. Holistic strategic planning,
good governance, efficient procurement and contract systems must be
central components of these frameworks provided by national government.
Stemming corruption will also be important to ensure sustainable public and
private sector investment and the delivery of timely national infrastructure
projects. Current and future investments in infrastructure will need to
consider environment friendly options such as incorporating renewable
energy into the energy mix, climate proofing transport systems and ensuring
resource use efficiency.
9 PWC. The Opportunity and Challenge of India’s Infrastructure, 2013
10 Ernst & Young, Bridging the gap: Ensuring execution of large infrastructure projects in Africa,
2013
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