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South Africa


“Rapid urbanisation and the need the develop, upgrade and maintain transport infrastructure is heaven-sent for the ITS industry”


reduced inflation, budget deficits and debt levels in Africa encouraging further foreign direct investment. Africa’s regu- latory, legal and business environment has also improved. The growing influence of the private sector in Africa is also evident. According to Ernst & Young’s 2012 Africa attrac- tiveness survey, over the past three years, the perception of Africa as a place in which to do business has improved – and will improve further over the next three years. Africa’s young and increasingly wealthy population with


increased spending power represents a vast potential mar- ket with great opportunities. Furthermore, urbanisation is an upward trend across the continent. Rapid urbanisation is resulting in efficiency, small-scale industrialisation and infrastructure to major cities – all of which is attractive to investors. Says Vorster: “Rapid urbanisation and the need the


develop, upgrade and maintain specifically transport infra- structure is heaven-sent for the ITS industry.” Africa’s natural resources are also a draw for many poten-


tial investors. They have particularly caught the attention of the Chinese, both as a potential lender and trade partner. However, despite the commodities boom over the last decade this only illustrates a part of the continent’s broader growth story. For example, Indian investment in Africa has also grown but this has been particularly in the telecoms, agricul- ture, infrastructure and mining sectors. Brazil has also inten- sified its efforts to invest in Africa and compete with China and India. This has been emphasized in the recent BRICS Summit referred to above.


KEY TO SUSTAINING GROWTH Although Africa’s economy has grown rapidly over the past decade, questions are sometimes raised about the sustain- ability of this growth. A robust structural transformation is the key to shaping Africa’s ability to generate inclusive growth and tackle serious challenges, such as poverty and unemployment. While Africa’s growth is not limited to the success of the


commodity boom, the continent is still heavily depend- ent on revenues from natural resources. As a result, Africa’s future growth prospects remain vulnerable to external risks. The continent also continues to face development deficits in infrastructure, education, human resources and science and technology. These deficits are undermining progress toward true and inclusive growth. This demonstrates the need for Africa to reduce reliance on natural resource revenues by strategically allocating funds and savings to modernise its economies and investing in key strategic sectors, such as manufacturing and agriculture.


Europe/Rest of the World Vol 8 No 2


ENABLERS OF ECONOMIC TRANSFORMATION Of the enablers of economic transformation, several holds good prospects for the transport and ITS industry. They are infrastructure development, public-private-partnerships and regional integration.


• Infrastructure development According to Ernest & Young a study conducted by the Africa Infrastructure Country Diagnostic (AICD) revealed that the continent’s infrastructure lags behind other devel- oping regions. The African Development Bank claims that shortage of roads, housing, water, sanitation and electricity causes a 40 per cent decline in SSA’s output. Political energy and private sector engagement are required to bridge the infrastructure gap in Africa. The AICD study has estimated that Africa will require an


investment of about US$90 billion annually from 2010 to 2020 to reach the levels of infrastructure in other emerging markets. Governments alone cannot shoulder the high costs of infrastructure, such as power, airports, ports and high- ways. In this regard, regulatory frameworks and policies that govern private sector investment must be reformed. Says Vorster: “While the emphasis is here on infrastruc-


ture, the operations and maintenance of existing and newly- developed transport systems will equally open business opportunities.”


• Public-private partnerships Although in the last two decades significant progress has been made in charting the respective roles of both the public and the private sector in Africa’s economic progress, regula- tory frameworks in this regard need greater strengthening. Governments should work toward providing the right


incentives and conditions for PPPs to flourish in Africa. However, businesses must also make concerted efforts in following models that integrate local producers and com- munities into value chains or target the poor. Civil society groups can also play a key role in developing such partner- ships. There have been several successful instances of PPPs in Africa, especially in the telecoms and electricity sectors, which can be replicated in other economic or social spheres. Vorster told Thinking Highways that the Gautrain Rapid


Rail between Johannesburg and Pretoria and between Sandton and the OR Tambo International Airport was a good example of a transport PPP.


• Deeper regional integration Our 2012 Africa attractiveness survey argues that the single biggest priority for Africa over the next decade should be the


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