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Overall, close to $78 trillion is expected to be spent globally between now and 2025 on capital projects and infrastructure.
The report shows that that the recovery will be geographically uneven, led mainly by Asia, as spending overall shifts from West to East.
The Asia-Pacific market will represent nearly 60% of all global infrastructure spending by 2025, driven mainly by China’s growth. Western Europe’s share will shrink to less than 10% from twice as much just a few years ago according to the report released by the African Press Organization today.
Overall infrastructure spending in the sub-Saharan region is projected to grow by 10% a year over the next decade – exceeding $180 billion by 2025 – while maintaining its 2% share of the global infrastructure market.
Nigeria and South Africa dominate the infrastructure market, but other countries like Ethiopia, Ghana, Kenya, Mozambique, and Tanzania are also poised for growth.
Growth prospects in most of the region’s economies look promising as they were not affected as much by the global financial crisis of 2008, the authors say.
The report also shows that spending on utility infrastructure is expected to be significantly stronger in countries that need to upgrade deficient energy, water, and sanitation services and in economies that are rapidly urbanising, such as China, Ghana and Nigeria.
The greatest growth of spending for utilities is expected in sub-Saharan Africa where an annual rate of 10.4% between now and 2025 is forecasted.
Spending for electricity production and distribution is expected to rise from $15 billion in 2012 to $55 billion, while expenditures for improvements in water and sanitation services are forecasted to increase from $3.3 billion in 2012 to about $10 billion by 2025.
A substantial increase in spending in the basic manufacturing sector is expected in sub-Saharan Africa. Annual spending in the chemical, metals and fuels sector is forecasted to increase across the seven major African economies to $16 billion, up from about $6 billion in 2012.
Extraction spending in sub-Saharan Africa is projected to increase at 8% annually over the next decade. The bulk of spending is likely to take place in South Africa and Tanzania.
The financial crisis of 2008 has not had a major effect on South Africa’s infrastructure spending. From an estimated $7 billion in 2001, investment in infrastructure grew relatively consistently to reach $22 billion by 2012.
Transportation investment is also expected to grow rapidly in South Africa over the coming decade, in particular in the road and rail subsectors. Transportation investment will likely grow to just short of $9 billion by 2025.
Infrastructure spending overall is forecasted to reach around $60 billion by 2025 for South Africa, having grown by 10% on average a year.
However, South Africa is likely to lose share of regional spending relative to Nigeria. Nigeria’s better fiscal position and oil revenues will likely enable it to outperform South Africa over the coming decade, says the report.
Overall infrastructure spending in Nigeria is expected to grow from $23 billion in 2013 to $77 billion in 2025. A more investor-friendly environment towards oil investment is also likely to boost this projection further.
