Fatshimetrie – The urgency of rethinking infrastructure to meet social needs in Africa
Africa faces a major challenge: that of the effective implementation of essential infrastructure projects. This recurring problem affects many countries on the continent, including South Africa. Researchers point out that only about 20% of mega projects in Africa reach financial close due to a range of factors such as lack of labor skills and expertise, labor inefficiency, poor planning and poor execution, corruption, slow decision-making, poor management, lack of infrastructure maintenance, unfavorable economic policies and political instability.
This explosive cocktail has created a perfect storm in South Africa, critically impacting basic social needs such as energy and water.
There is no denying that South Africa is facing an energy crisis. Despite the suspension of power cuts in recent times, it would be naive to believe that the worst is over. Eskom must face an aging of its infrastructure as well as significant investments necessary to improve it, ensure its maintenance and deploy new transmission lines. All this as its customer base shrinks, with mines and other large consumers turning to more stable and renewable energy sources.
The energy crisis has, however, had a positive effect by stimulating the development of renewable energies, propelling South Africa towards a less carbon-intensive economy. At the end of 2023, the country had an installed capacity of around 8 GW, almost 50% of the installed capacity on the continent.
The benefits of closing the infrastructure gap in Africa are immense for all economic actors, particularly for investors seeking to unlock alternative sources of stable, long-term returns. Among these investors is Prescient Investment Management, through its Prescient Clean Energy and Infrastructure Fund.
Conway Williams, head of credit at Prescient Investment Management, highlights the importance of breaking infrastructure bottlenecks and understanding the challenges of project implementation in South Africa.
“Our investment philosophy is based on capital preservation and prudent fund management. By taking a responsible and consistent approach to investing, we can allocate our clients’ capital in ways that promote sustainability, including investing in renewable energy and related infrastructure Infrastructure is the foundation of development, catalyzing economic expansion, poverty alleviation and improved quality of life..”
Williams highlights the need for a comprehensive strategy for South Africa, including investments in renewable energy.
“The just energy transition refers to the shift from energy systems based on fossil fuels to more sustainable and equitable alternatives, while ensuring that the process is fair, inclusive and takes into account social, economic and This transition is essential to meet international climate commitments and reduce the environmental impact of energy production.”
It highlights the potential benefits of such a transition, such as job creation in the green economy, energy security through diversification of the energy mix, while recognizing the challenges related to potential job losses in the energy sector. coal and the high initial costs of the transition to renewable energy.
Amid this complexity, it is clear that Africa’s future depends largely on its ability to rethink and implement effective infrastructure to meet basic social needs. Investments in renewable energy and sustainable infrastructure can not only stimulate economic development, but also improve people’s quality of life while contributing to the fight against current environmental challenges.
Overall, it is imperative that governments, businesses and investors work closely together to address these challenges and build a more resilient and sustainable future for Africa.