The Economic Cost of Poor Infrastructure

Infrastructure is one of the most critical components of economic development. In Africa, inadequate networks are a major reason why the continent continues to struggle economically. Africa’s basic infrastructures are not as strong as they should be, and this has cost the continent many opportunities.

The Brookings Institution found that only 34 percent of Africans’ have access to roads and over 620 million people do not have access to electricity. These inadequate infrastructure networks limit the flow of trade, capital, education, information and people. What we see going on in Africa is an infrastructure gap. The term infrastructure gap indicates the need for basic services and public utilities that are essential for economic growth and to attract investment.

Roads, electricity and telecommunications are a few of the major infrastructures that desperately need investment and government support in order to advance. With Africa’s rapid industrialization, greater demand for goods, and surging trade levels there is a demand for new infrastructure like never before.

Africa has an immense opportunity for growth and investors are starting to recognize that. There is a vast amount of natural resources, millions of individuals eager to work and significant capital being injected into the economy. If given the right support and investment, Africa has the potential to become the world’s next emerging market.

The current inefficiencies need to be addressed so that companies will invest in Africa’s infrastructures. Investments will be the strategic tool that reduces poverty and aids Africa’s economic development. The World Bank found that by closing the infrastructure gap it could increase growth of GDP per capita by 2.6% per year in Africa.

The construction of the South Atlantic Cable System (SACS) is one step towards bridging the gap. This cable connects Fortaleza on the Brazilian coastline with Luanda in Angola and is the first transatlantic cable route in the southern hemisphere. This project is the first direct link to North America and the U.S. from Africa and is crucial for advancing Africa’s digital economy and improving global communications. Building a reliable telecommunications network also encourages larger companies to expand and invest in the continent.

Telecommunications in Angola will also see improvement because of AngoSat 1. This is Angola’s first satellite to be launched into space and is expected to survive about 15 years. AngoSat 1 will provide better reception for mobile phone users and will also support telemedicine, a way of providing clinical care for patients in distance areas from physicians. Telemedicine is crucial for those who are not located near hospitals or in places that do not have proper telephone service to reach medical professionals.

With the launch of AngoSat 1, Angola has become one of the increasing amount of sub-Saharan African countries to be in space. Ghana, Nigeria and South Africa all have implemented satellites to aid different telecommunications, telemedicine, education and environmental programs. The launch of the satellite not only improves the lives of people in Angola, but it puts the country in the space race.

Infrastructure investment, like the SACS, and AngoSat 1 is vital to the development of sustainable economic development in Africa. A great deal of funding has already begun to ameliorate the issue, with help from different banks, private investors and the government, Africa will soon see an enormous economic boom that will uncover all of Africa’s economic potential.

Zandre Campos is chairman and CEO of ABO Capital, an international investment firm that invests in companies in the healthcare, energy, transportation, hospitality, education, technology and real estate sectors throughout Africa. ABO’s mission is to create global value for developing countries in Africa, while contributing to their economic development.

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