Global.
The big picture is that we need $57 trillion USD of new infrastructure worldwide by 2040 according to The Atlantic‘s annual Energy + Infrastructure summit in Washington, D.C. December 2013. That number may seem huge, but the global economy is expected to grow over the next 30 years from $70 trillion USD to $140 trillion USD if the world continues at the rate of 3.5 percent a year. The economy will be twice as big as it is now. Plus, the world will also have two billion more people by 2040, who will all need new Water supply, Sewers, Electricity, Information and Communication Technologies (ICT), Railways, Non Motorised Traffic Lanes, Roads, Subways, Sea Ports and Airports.
Economic development and infrastructure development are inter-connected. Pundits define Infrastructure as the term that covers the man-made facilities that enable any economy to operate. It can be segmented further into three broad types: transportation (e.g., railways, roads and airports), utilities (e.g., energy generation and distribution, water and waste processing and telecommunications) and social infrastructure (e.g., schools, hospitals and state housing).
Enough money is necessary to generate jobs for 2 billion new people. To create all of those new jobs, the world needs new and efficient infrastructure on one hand. On the other hand, aging and inadequate Infrastructure results in rising cost of trade, negative effect on productivity, hindering efficient resources allocation, and retards the coordination of economic activity. The average Global Infrastructure Investment is currently at 4% of GDP. Some developing countries in Asia and Africa are pushing full throttle with new infrastructure and committing up to 9%, while Europe average 5%, Australia 3% and USA 2%. However, competition between investment in capital projects and funding the operation costs, coupled with previous neglect has led to a cumulative Infrastructural Investment deficit in many countries leading to an Infrastructure Gap.
While the bulk of the Infrastructure is funded by the respective Governments, private investors have also had a go. World’s 30 Largest Investors in the Infrastructure Asset Class have marshalled over $170 billion USD in the last five years.
Australia
The Australian Government places a high priority on infrastructure development as demonstrated by implementation of The Mighty Ghan Railway extending from Darwin in Northern Territory, to Adelaide in South Australia, a total 3000 Km.
Over the six years to 2013–14 the Australian Government alone is providing $36 billion AUD in infrastructure funding across Australia, including more than 120 major road projects, 30 rail networks and six urban public transportation projects. Further commitments were made in the 2012–13 Budget including an Australian Government contribution of up to $3.65 billion AUD towards the completion of the Pacific Highway upgrade, at an estimated total cost of $7.7 billion AUD and the development of the Moorebank intermodal terminal.
State, Territory and Local Governments in Australia also provide significant funds for infrastructure.Private Infrastructure Investors in Australia have invested $47.86 billion AUD in the last 5 years.
The appointment of first Minister for Infrastructure in 2007 and establishment of the new national body Infrastructure Australia in 2008 emphasise the firm commitment towards Infrastructure delivery. Infrastructure Australia seeks to help drive the development of a long-term, national approach to infrastructure planning and development .Infrastructure Australia also aims to encourage private investment in infrastructure.
Australian Government has invested significant funds in infrastructure development over recent years in large measure to lift national productivity and in part to counteract the impact of the global financial crisis. From 1959 to 1977 infrastructure spending within Commonwealth and State Budgets averaged 4.5 per cent of Australia’s GDP. Currently, the Infrastructural Investment is at 3%.
Australia’s infrastructure deficit is estimated at $770 billion AUD over the next decade.
Africa
Being able to drive from Cape Town to Nairobi in 4 Days a distance of about 5000Km, Face Time or MPesa from the comfort of Brisbane office to a supplier in the rural of Kenya, or being able to process an International Tender from a Nairobi Hotel Business Suite via a high speed Optical fibre internet , heralds the new dawn in Africa, where the darkness in the continent is no more.
However, infrastructure huddles still exist with Power Generation, Consumption and security of supply, besides under coverage of Transportation, water supply and food security. The spread and innovation of the Mobile Phone technology so far outranks other infrastructure sectors and compares well with the Developed Countries.
Africa’s infrastructure Deficit is estimated at $75 billion USD per year or about 12% of the continent’s GDP. The Infrastructure Funding Gap is about 35 billion USD per year.
Estimates indicate that apt investment in the Infrastructure could result to an increase of between 2 – 3% of the economic growth.
Kenya
The recent Commission of the 609 Km Standard Gauge Railway (SGR) with a TCE at $3.2 billion USD, from Mombasa to Nairobi envisaged to lower cargo transport costs by 60% underlines and underscores Kenya’s commitment to closing up the Infrastructural Gap, spur the Economic growth and also generate the much desired jobs and raise the standards of living.
Current Infrastructural Projects includes a new International Airport Terminal, Ring Roads and by passes for Nairobi and other major urban centres besides refurbishment of Inter Cities Highways.
Other Infrastructure Projects include SGR Phase II from Nairobi to Kampala and beyond , the Lamu Port and Lamu- Southern Sudan-Ethiopia Transport Corridor ( LAPSSET) estimated at $30 billion USD, a over 2500 Km Oil Pipelines to Southern Sudan and to the newly established Tullow Oil Wells in Turkana Basin are also in the planning together with a duplicate 450 km Oil Pipeline from Nairobi to Mombasa, besides Infrastructure Projects planed within respective County Governments under the newly devolved governance.
Kenya has an infrastructure deficit, which is estimated to demand expenditure of about 20% of GDP for the next 10 years in order to tick all the right boxes of the Vision 2030 infrastructure blueprint, which seeks to uplift the standards of living to the level of Middle Income.
The unique Geographical location of Kenya strategically presents the Country as the Gateway to East Africa, with a hinterland cross border population of more than 100 Million, providing the necessary economies of scale. It is inevitable that efficient Infrastructure in Kenya will therefore have a major positive ripple effect to the larger East Africa Community.
Kenya has a B1 rating at Moody’s Investors Service. The recently (June 2014) launched 2.0 billion USD of Eurobonds attained a 300% over-subscription. This will help relieve the pressure on the cost of capital in the domestic market. The positive market action from the European and North American Investors is also a major vote of confidence the fiscal, legal and managerial aspects of the Kenyan economy.
Austica’s Role
In mitigating the Global Infrastructure Gap, additional funds will be necessary. Besides, improving the efficiency with which existing resources are used will be paramount, in order to ensure timely delivery of the Infrastructure Projects to the highest International Standards, and within budgets.
Austica has highly qualified Engineers who have worked on multi-billion large Infrastructure projects, and have attained fluency with the latest international Standards, Software and IT tools, while developing award winning working relationships with International Construction Companies and Clients, and have therefore forged a strong International Infrastructure implementation partnerships.
Austica is therefore positioned to provide the much needed Leadership and impact successfully and positively on the Global Infrastructure delivery, a trait that has been the signature of every project that we have so far undertaken.