Africa: Infrastructure Investment Is the Foundation for Economic Growth
Posted on : Thursday , 9th July 2015
Over the past two decades the average investment in infrastructure as a percentage of GDP has hovered around 5 per cent, a much lower ration when compared to growing economies such as China that invest about 9 per cent of their GDP in infrastructure development. This lower ratio is an indication that more investment in this sector is still needed and indeed so it is not surprising that Namibia has not achieved the 7 per cent average growth rate required to make significant progress towards achieving Vision 2030.
The recent interest by government to scale up investment is highly commended because it is a step in the right direction as infrastructure is one of the key enablers to achieve NDP4 goals. However, there remains a huge infrastructure investment gap due to a combination of ageing infrastructure, years of under-investments and the expanding population - meaning more investment is still required.
In fact, the Bank of Namibia has estimated that over the next five years or so Namibia will require more than N$220 billion to finance the needed infrastructure projects. Of this amount, the highest requirement should go to rail, energy, housing and port infrastructure.
The importance of infrastructure in terms of Namibia is embedded in the objective of NDP4 - sustained economic growth, employment creation and improved income equality, which can only be achieved through sustained investment in physical infrastructure. Clearly, the lack of reliable and modern infrastructure is and will be an impediment to Namibia's economic development and a major constraint on poverty reduction.
Both rural and urban infrastructure are key elements in developing a growth path that pull poor women and men out of poverty by increasing their productivity and generating positive rural-urban economic interaction. World-over massive poverty reduction happens this way and requires a huge increase in infrastructure provision.
There is a sizable measure of evidence that shows that lives and livelihoods are suffering from the fragile state of infrastructure in Namibia. Moreover, the lack of adequate transport, power, communication networks, water sanitation and other infrastructure has put severe constraints on economic growth and poverty reduction.
Taken as a whole, these infrastructures constraints, if not addressed, will begin to eroded Namibia's competitiveness and make bringing Namibian goods and services to the world markets a challenge. The need for infrastructure indeed remains enormous, hence this call for reinvigorated efforts in the country's infrastructure investment.
While investment remains important to the development process, we need to also realise that it is "a necessary and not a sufficient condition for economic transformation and sustained growth". If we want investment to play an effective role in supporting economic transformation and growth, first and foremost we need to realise that the focus should not be solely on boosting the quantity of investment to levels deemed necessary to meet national development goals. Increasing investment (without) allocating it to sectors crucial to achieving Namibia's economic transformation agenda will be counterproductive.
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