There’s a different narrative
emerging in the development
model in Africa.
It’s no longer just about
digging up dirt and shifting it to a
port. The bigger story is about what
these developments are unlocking
in terms of investment in support
industries, infrastructure, logistics
capacity and more efficient border
posts.
“Ten years ago, in most of the
rest of continent, there were a few
inefficient, tired cement plants
in each country. By contrast, in
the past 5-6 years we have seen
massive investment in basic building
materials like cement plants,
gypsum plants and downstream
iron and steel manufacturing,”
says Duncan Bonnett of specialist
consultancy Whitehouse and
Associates.
“This has translated into supply
of materials at a lower cost which
means people are able to build with
more confidence. As a result in the
Copperbelt there are now huge plans
to redevelop areas as service hubs for
the region – and the same is true of
the DRC,” he told FTW.
But this all needs efficient
infrastructure, which is an issue
that authorities are addressing.
When Bonnett visited a year ago, the
200km journey from Kolwezi
to Lubumbashi took a
whole day. Work on the
road is now almost
complete – and the
same journey will
take just three hours.
These
infrastructure
upgrades underpin
the economic growth
in the region, which
Bonnett says is likely to
be exponential.
“We’re
not
looking at 4-5% but rather annual
growth of 10-20% in several areas.
“In northern Mozambique and
southern Tanzania there are massive
gas projects starting to unfold,
with the first gas project on the
Mozambican side expected to attract
up to $20bn in investment.
“They will be building new towns
and industrial areas in virgin parts
of Mozambique, with a similar
scenario unfolding on the Tanzanian
side of the border.” In a few years’
time this could be one of the five or
six largest natural gas-producing
areas in the world, according to
Bonnett. Even in Tete Province in
Mozambique, which is currently
slowing slightly due to a slowdown
in projects and political uncertainty,
growth remains buoyant, he said.
The Copperbelt – on the Zambian
and Congolese side as well as
the new Copperbelt in North
West province – is also seen as a
significant growth node.
“A lot of growth is coming out
of the fact that project developments
are in fairly isolated areas and to
unlock that development you need
to develop roads, rail and power as
a first stage. And following that
industrial parks, airports, ports
and accommodation for workers.
So you’re seeing housing and towns
and townships
being developed
for 10 000-15 000
families at a time.”
And because
stranded
resources are
generally very
large, they can
justify this kind of investment. “We
see it in Tete with the Brazilian Vale
Group building a 1000-km rail line
plus port – and because it’s a longterm
development, they can justify
it.”
The same applies to other mining
interests in Mozambique where some
of the road and rail projects will
open up new trade and development
routes and
potentially new
ports as well. In
addition, rail links
and improved
road links are
once again being
punted in the
Copperbelt to
link stranded
resources either to
Angola or the east
coast of Africa.
Interestingly, there
is little appetite
in other countries
to strengthen
logistics links with
South Africa.
On a broader level, Bonnett
believes that Nigeria offers major
growth opportunities from a
manufacturing and consumer
perspective. Ghana – which has oil
and gas – has not been as successful
as anticipated but has seen enormous
development in the past 4-5 years
in terms of commercial and retail
property, housing and infrastructure
development. New markets are
unfolding in the likes of Uganda with
oil and Ethiopia and Kenya, both of
which have potentially large oil and
gas finds. These two countries are
also large economies and emerging
as key new hubs of development in
their own right, he added.
“We will see much more
integration of infrastructure in those
regions – which have the ability to
pay for that infrastructure through
a combination of
state, donor and
project promoter
resources.
They also have
the rationale
that would
support that
infrastructure in
terms of transport of commodities.”
While the first “scramble for
Africa” was largely done without the
participation of South Africa, local
businesses are now doing a little
better than four to five years ago,
according to Bonnett.
“Over the past few years there
have been a few brave souls who
dived into the rest of the region
and reaped the benefits. But South
African companies are now seeing
that the domestic economy is not
taking off, despite promises of huge
infrastructure spend.
“More and more are therefore
realising that they need to factor
the rest of the continent into their
long-term development plans. It’s not
good enough to fly in and fly out and
cherry-pick the odd project to prop
up the balance sheet. They have to
start engaging and taking a targeted
longer-term view of the continent.”
Currently companies based in
South Africa are getting a reasonable
share of the project action, says
Bonnett, but with countries that are
either contiguous to South Africa or
with which we have had a traditional
relationship like Tanzania, Ghana
and Nigeria.
They’re now realising that they
can make good money in the rest of
the region. They just need to do their
homework, understand the market,
take a longer-term view and put their
hands in their pockets and pay their
school fees.
“Hopefully we will soon start
to see a lot more South African
companies with a physical presence
in the region.”
INSERT & CAPTION
A lot of growth is coming
out of the fact that project
developments are in fairly
isolated areas and to unlock
that development you need
to develop roads, rail and
power as a first stage.
– Duncan Bonnett
INSERT
$20bn Investment that a gas project in
Mozambique is expected to attract.
