Delays in project execution remain one of the biggest challenges to the sector. “More and more governments are commissioning proper feasibility studies which provide a greater level of certainty about the need, project objectives and estimated cost – but also more importantly the repayment prospects of the project,” said Jean-Pierre Labuschagne, director Africa Infrastructure and Capital Projects Lead at Deloitte. “However, these feasibility studies seem to take a disproportionate amount of time to finalise and for funding to be approved to commence with procurement and ultimately implementation,” He said while governments looked to the private sector to fund infrastructure projects, the local financial market’s ability to do so was often constrained in a number of these economies. “This means bank syndicates need to be formed. Local, overseas and development finance institutions need to be put together, with all their different approval processes, and this can take time. Also, forex risk is a big concern since in many countries a significant amount of funding is in foreign currency, as the local capital markets don’t have the ability to finance long-term large-scale projects. The time between commercial and financial close can in some cases be over a year.” From a logistics perspective, this means it can take years before a project actually sees cargo volumes move. Added Labuschagne, “Execution can often be affected by local permits and approvals, as well as the simple logistics of moving goods from congested ports along busy roads to a project site. For governmentowned projects the tender process can be opaque and practically difficult because of compliance documentation, certification or notarisations, which may or may not need to come from the bidding country’s embassy. These make the process more difficult.”
