Africa's scarce infrastructure breeds "self-reliant" companies

Thu Apr 19, 2012 5:35pm GMT
 

By Tiisetso Motsoeneng

JOHANNESBURG (Reuters) - Companies betting on Africa's growing affluence are being forced to come up with clever ways of doing business to get around the continent's dilapidated roads, shaky power supply and inept ports.

"If there isn't a well developed distribution network in place, many companies would take some of that obligation to get the product onto the market themselves," John van Wyk, Africa co-head of private equity firm Actis, told the Reuters Africa Investment Summit this week.

SABMiller not only runs a brewery in South Sudan but the world's No.2 beer producer also operates its own solar power and waste-water treatment plants after decades of civil war left the world's newest nation with virtually no infrastructure.

"When we first got there in 2009 there was about 4 kilometres of tarred roads," Mark Bowman, Africa regional head of SABMiller told the Reuters Africa Investment Summit this week. "We tend to be very self-reliant when it comes to Africa. We make no assumptions about the environment."

Outdated infrastructure remains one of the biggest challenges for investors wanting to invest in sub-Saharan Africa, where consumer spending power is expected to double to $1.4 trillion by 2020 on the back of a rising population and relative political stability.

The region's infrastructure backlog needs $22 billion a year to keep up with an annual economic growth rate of 7 percent, the African Development Bank said.

Areas such as sanitation, electricity and roads, have the greatest need for investment, the bank, which finances many of the continent's infrastructure projects, said.

LITTLE ISLAND   Continued...

Traffic flows along the Nairobi-Thika highway project, under construction near Kenya's capital Nairobi, September 13, 2010. REUTERS/Thomas Mukoya
 
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