An apartment buiding under construction in Addis Ababa in this 2010 photo. January 27, 2010. A report by Deloitte says African infrastructure is badly lacking, and an estimated $90-billion (U.S.) is needed over the next 10 years to help Africa catch up to other developing regions of the world.Thomas Mukoya
Africa is beginning to attract the investor hype and media attention that was once lavished on China and India. Could it turn into a bubble? Are there pitfalls that the investors are ignoring?
Much of the excitement is deserved: Africa has the resource wealth and emerging consumers that could trigger a boom. Many of its countries are not the impoverished basket-cases that the world had long assumed. Their economic growth and consumer markets are greater than most observers realize.
But there are dangers and immense challenges too. One consultant, Deloitte, has set up an "Africa Risk Map" -- a complex chart with scores of variables that can go wrong, from theft and corruption to climate change and hyperinflation.
By neglecting a full analysis of the African risks, many companies "have either under-achieved or failed in their African expansion endeavors," Deloitte says.
It has produced a useful list of examples of the African challenges and obstacles. Here are some:
- The typical manufacturing firm in Africa is plagued with electricity outages for 56 days a year.
- African infrastructure is badly lacking, and an estimated $90-billion (U.S.) is needed over the next 10 years to help Africa catch up to other developing regions of the world.
- Africa has far fewer roads than other developing regions. It has only 152 kilometres of roads per 1,000 square kilometers of land area, and only a third of these roads are paved.
- Infrastructure services can be up to 10 times more expensive than the amount paid by consumers in the rest of the world.
- Corruption is a huge problem. In Ivory Coast, for example, a survey found that 75 per cent of companies consider corruption to be a major constraint.
- Regulatory paperwork is a frequent headache. In Sudan, it can take 53 separate procedures to enforce a contract. In the Republic of Congo, it takes an average of 31 days for imports to clear customs.
- While urbanization is increasing, 70 per cent of African employment is still agricultural.
Geoffrey York