ECONOMIC OUTLOOK
Growth leader
remains the dominant source of investment
funds in Southern Africa. But it is not universally
popular. Botswana experienced such problems
with a Chinese-contracted power plant that future
infrastructure deals along these lines are unlikely.
Expansion of electricity generation at Morupule
B, a US$ 1.6 billion investment in four 150 MW
coal-fired units, should have been up and running
by the end of last year. However, it is not yet
online and power cuts are affecting both business
and citizens, impacting planned large investments
in railways, roads and mining that are planned to
link the country’s large untapped coal resources
with ports in Namibia and Mozambique.
One of the obstacles to investment in Africa,
particularly in infrastructure projects, is the
labyrinth of regulations and government agencies
that need to be traversed. For investment to
occur at sufficient rates to promote economic
progress, countries must make the process more
transparent.
Cameroon has taken the lesson, revising
its investment code in a bid to attract more
foreign investment. Many of the new provisions
effectively end the distinction between domestic
and foreign investors.
Zimbabwe represents the problem with other
African economies, however. While the country
was able to attract some domestic and foreign
Uganda is also making additional investments in
power generation, most recently contracting for
the 600 MW Karuma hydropower dam, a US$
1.65 billion investment. Construction should
begin before the end of 2013, and represents
the most significant power generation project in
Uganda, in tandem with the commissioning of
the 250 MW Bujagali hydropower plant in 2012.
The Karuma project is funded by China, which
investment following some market-reform
measures in 2009, statistics show the interest has
waned substantially since 2012.
One culprit is the aggressive implementation
of the indigenisation programme that requires all
foreign-owned companies to cede 51% shares to
indigenous Zimbabweans. This was compounded
by the threats of higher taxes, the possibility of
outright nationalisation of businesses, and the
revocation of previous government contracts.
Zimbabwe has vast natural resources that
under the right investment climate could attract
significant investor interest, but the country’s
inhospitable business environment and limited
access to financing are obstacles.
Private sector
Infrastructure spending is not the only growth
engine, with private sector investment also
offering significant opportunities in Southern
Africa. However, the availability of quality data
makes quantification difficult. As such, one needs
to use other indicators, such as broad economic
performance or fixed investment growth.
The opportunity for construction exists for
companies willing to take some risk to provide the
infrastructural foundation that will lead southern
Africa on the long road to significant economic
expansion
iC
international
construction
july-august 2013
28
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■
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