Regulations, poor governance limit Africa investments

"We have seen in Africa institutional set-ups that are not as mature as we have in South Africa, or in some other countries (on the continent)," Chetty said. He was a panelist at the Infrastructure Africa conference held in Johannesburg.

The African Development Bank estimated the infrastructure investment requirements for the continent are $93-billion a year, with more than $14-billion a year needed to be spent on transport infrastructure.

Citing figures from the African Union's Programme for Infrastructure Development in Africa, Roelof van Tonder, the chief executive of the Built Environment Professions Export Council (Bepec), said savings of $172-billion could be achieved through a properly implemented regional transport network.

The absence of independent transport regulators and long- term transport planning were two of the main reasons that investors were scared of investing in the capital-intensive sectors of railways and ports, Chetty said.

Transport plans were often the victim of leadership changes in transport ministries.

Transnet is positioning itself as a supplier of engineering and operations skills on the continent as well as being a supplier of capital equipment to African governments and plans to supply locomotives and wagons to Africa.

"We are supplying locomotives to some of these African countries with finance by development finance institutions because the governments don't have the funding," Chetty said.

He said that the transactions became complicated once letters of comfort needed to be issued because of policy and independent regulation vacuums. "The regulatory environment is in an infant state; it's embryonic. It will take a while before we get that right."

Delegates at the conference were advised not to become mesmerised by the scale or complexity of investments, but rather to focus on the countries and a sectors, which were the most attractive to their specific business.

Source: Business Day via I-Net Bridge.