Hassan Hachem: infrastructure opportunities in Africa
Africa is finally under construction ! Hassan Hachem, a serial entrepreneur and construction expert, shares his vision of the infrastructure market in Africa.
Sarl-sa.com
Africa is eventually under construction !
Hassan Hachem
Serial entrepreneur and construction expert, shares his vision of the infrastructure market in Africa.
Infrastructure development could be divided into two groups: basic infrastructure and advanced infrastructure.
In the first category, there are ports and roads. In terms of ports, Africa's primary needs are largely met. We could do better and see bigger as the country develops to accompany it in its rise. But in terms of port infrastructure, most of the work has already been done. This may not be where there is the greatest potential. At road level, disparities are greater. It is the weakest link in many countries and is often an obstacle to their development. It often inhibits development. The numerous structural adjustment plans of the international financial institutions led many countries in the 1980s to make drastic cuts in road maintenance budgets, so that certain axes are no longer practicable, leading to entire economic sectors being blocked in certain regions. This is the case of cotton, whose production, which can no longer be transported, suffers. This is probably the area in which we find the greatest opportunities across Africa, the road that connects southern Morocco to Dakar, Senegal, through Mauritania, is a good example.
Railways are not classified as essential infrastructure, yet in the era of global warming, they are of strategic importance as part of a sustainable development policy. In this field, Africa is practically stricken: apart from South Africa, the railways inherited from the colonial era have been progressively abandoned so that the African railway network has been whittled away. Without political will and public funding, it is unlikely that the trend will reverse, while the needs are very important. So, limited opportunities in the near future… at least, till an Elon Musk massively invest in a transafrican, superfast bullet train.
In terms of advanced infrastructure, we can first talk about hydraulic dams: if solar and wind have been on the rise for ten years (with all the problems of profitability that we know), hydropower is at the forefront of renewable energy, which is also profitable. The hydraulic potential is enormous: less than 7% of the continent's potential is exploited while 65% of the population does not have access to electricity. I'm sure there will be many dam projects coming up in the next decade.
The situation of the airports is more mixed: if the continent is probably the least equipped of all the planet, the means and the needs vary a lot from one country to another. If we want to caricature the situation, we could divide the countries into two groups: those with strong growth rates over long periods and who need more efficient airports and have the means to finance them, in order to strengthen their integration into the globalized economy. On the other hand, countries whose development is more problematic: they must maintain existing airports and invest prudently.
The case of infrastructure for exploiting mineral resources is unique and does not concern all operators. Gaz and oil pipelines, refineries are indispensable tools for countries with mineral wealth. Long dependent on the financing of international organizations at preferential rates, these are often financed by private Chinese under specific agreements: guaranteed access to raw materials at reduced rates (but less preferential than with the IMF or the Bank World) and, of course, executed by Chinese companies. The potential for this type of partnership is important.
Franco-Lebanese entrepreneur, construction specialist, Hassan Hachem who participated in the construction of many infrastructure in Africa south of the Sahara (airports, ports and roads) concludes: "Long dependent on foreign construction giants, Africa must count more on its strengths in the context of technological transfers: Africa must not have any complex related to its know-how because it has proven for many years that some countries have learned to manage from A to Z this kind large projects, but also to transfer their expertise. "
Hassan Hachem: Equatorial Guinea infrastructure market is dynamic
In recent years, the Republic of Equatorial Guinea is experiencing a period of rapid economic growth thanks to oil production.
This has allowed, among other things, the creation of infrastructure unique in all of Africa.
The Government's main objective in carrying out this titanic work of reconstruction is to provide the country with the necessary tools to diversify the economy and to enable it not to depend exclusively on oil in the future.
To this end, the Government is maintaining more than 800 diversified construction projects, which will make it possible, among other things, to promote tourism in the country.
Roads, airports, seaports, water and electricity facilities and other infrastructure elements are being developed.
That will not only improve people's lives, but also ensure that tourists arrive.
Today, Equatorial Guinea can boast of the best modern road surface in all of Africa. New and modern roads connect the most important cities with each other and go deep into the most remote villages.
Cities
The profile of the cities is also changing day by day in this giant process: among the most outstanding projects in the real estate sector we can highlight, for example, the new city of Malabo II, which already hosts many administrative buildings, as well as social housing. The area of Buena Esperanza is also made up of dozens of single-family houses with the same purpose. Currently, there are plans for new schools, health centres, as well as transport, shops and service centres to complement the new city.
In Bata, the new La Paz Hospital should be highlighted, which is currently one of the most advanced clinical centres in the whole of Africa. The new neighbourhood with social housing, the Esplanade area with a length of 7 km, with immense estates, also appears here. The construction of the area is not yet completely finished.
In Evinayong, the asphalting of the new roads, the new social housing, the reform of the Bonifacio Ondu Edu Hospital, the St. Joseph Cathedral, etc. have just been inaugurated.
In Málabo, in addition to the renovated appearance of the streets, the enormous public school and the water purification centre stand out. And so on throughout the country.
2017 growth rate in Africa
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Hassan Hachem analysis
Among the effective obstacles to economic development in African countries, the lack of infrastructure plays a key role: it is an intrinsic condition for the economic and social development of a country. Although heavy investments have been made in this direction, there is still a considerable gap estimated at 1700 billion dollars. Some consider this financial gap as an opportunity for the private sector to invent new models of infrastructures.
At the heart of the organization of countries and necessary for the economic development of the continent, all the more so in a context of exacerbated demographic growth, infrastructures have become a major concern for many African countries. The distribution of energy, access to water, transport and the upgrading of networks are a major lever for the development of economies, analyzes Hassan Hachem. According to the World Bank, the lack of infrastructure slows growth in African countries and limits business productivity, not to mention the resulting social problems and inequalities. For in addition to the lack of infrastructure and the dilapidation of existing ones, the African population pays up to twice as much for access to services!
In order to meet the challenges, investments over the next 22 years are estimated at 6,000 billion dollars, while commitments are estimated at 4,300 billion dollars, a shortfall of 1,700 billion dollars, according to the Global Infrastructure Hub. In view of the inability of States to ensure the financing of major infrastructure projects, it is necessary to diversify the sources of financing, in particular by turning to the private sector. In fact, there are already start-up initiatives that circumvent the various problems that affect populations. Futur.e.s in Africa wants to bring to the forefront these frugal and resilient solutions to overcome the lack of infrastructure in Africa. Also, this lack of infrastructure represents an emerging and attractive market for investors; a climate conducive to the establishment of these public-private partnerships has yet to be created.
Infrastructure and Innovation : Start from scratch and skip steps
Roads, transport, telecommunications, education, hospitals... For Hassan Hachem, these are the weak links in Africa's development. Weak infrastructure is often due to under-investment by African governments. In view of the lack of infrastructure, initiatives are emerging and transforming the infrastructure landscape faster than a state would. Start-ups are increasingly offering dematerialised services, which are characteristic of African leapfrog. This produces more malleable infrastructure that is more adaptable to the differentiated needs of populations.
A striking example is mobile banking. Faced with the difficulties encountered in accessing the banking system, an alternative has been found using mobile money. In 2007 M-Pesa launched its mobile payment solution, today 28 million Kenyans out of 44 million inhabitants use it. This has revolutionised payment services. Moreover, mobile banking is considered by the World Bank as a factor of banking inclusion. This is the first step in a revolution in the relationship to infrastructures where mobile or digital services have done more than their share. A great strength of the continent lies in its ability to innovate under constraint. The evidence is clear: when you have to do things cheaper, you do them more efficiently. There are many examples: M-Kopa, which provides Kenyan households with electricity through household panels and pay-as-you-go payments. Or the Togolese start-up Urbanattic, which seeks to anticipate nutrition problems in the city so that it can act upstream. In Ghana, to counteract the lack of address and street names, the start-up SnooCode has developed a Ghanaian application that generates a unique code for each place thanks to the geolocation system of smartphones... The continent is making full use of all the potential of digital technology, in contrast to the countries of the North which have seen their economies disrupted by the arrival of digital technology. This is why Africa is a very attractive market and conducive to any kind of innovation, whatever the sector concerned. Governments have little fear of using digital as a pillar, as is the case in South Africa, which is the first country in the world to rely on the blockchain to make the University of South Africa reliable. Thus the largest university on the continent - with nearly 300,000 students - is 100% online. This makes Africa the ideal playground for innovators who want to think about infrastructure differently.
An opportunity for companies
Until now, the bulk of infrastructure financing has been supported by the countries of the continent. Since 2015, however, the economies have been weakened by successive challenges, which has tilted the balance negatively in terms of capital allocated to the construction of new infrastructure. Each year the Infrastructure Consortium for Africa (ICA) reports on trends in infrastructure financing in Africa, by 2016 this had fallen by 21%, a sign of the economic recession. A decrease as small as the needs are strong. This is because the new order of sustainable development has led to new infrastructure constraints.
In view of the economic context, and even with international aid, the Global Infrastructure Hub estimates that the African States will not be able to find all of the necessary financing: the shortfall amounts to 1700 billion Dollars. This is a complex situation for which there is already a ready-made answer: the private sector must increase its participation. More than just bonds on the financial market, this represents a real opportunity for companies to become part of the long-term development of the various African economies and thus prosper in a rapidly expanding market. Public-private partnerships also represent an opportunity for the countries of the continent. Attracting international business and investment can help to improve their trade logistics, strengthen the knowledge and skills of local entrepreneurs, gain the confidence of international buyers, and gradually enable the region's companies to become competitive.
As Hassan Hachem puts it, "Some have already understood this". As in the case of the Henri Konan Bédié bridge over the Abidjan lagoon, financed by a public-private partnership between Bouygues, banks and the Ivorian state. A huge project costing almost 232 million euros, a symbol of infrastructure development in Africa. A bridge that will make traffic in the capital more fluid, but also enable the monster profits to be made from the toll...
By 2050 and in view of the ecological imperatives that will affect the continent, international organizations (the African Development Bank, the African Union, Agenda 2063 and the UN) have set strong sustainable development objectives. This is why, despite the initial investment, underlines Hassan Hachem, it is a priority to promote quality infrastructure that respects the environment. They will weigh heavily on the economic balance of countries in terms of growth and productivity. Scattered and obsolete transport networks are a good example of this. Strengthening them would make it possible to limit the losses incurred by companies and, through a virtuous circle, to increase the size of labour markets, intensify production, etc. ICTs are increasingly mobilised in sustainable development. Hassan Hachem confirms that steps have already been taken in this direction, and Rwanda is even a leader in the use of intelligent infrastructure to promote social and economic development. This is why Futur.e.s in Africa puts at the heart of its programming the thorny issue of sustainable infrastructures in Africa and their financing.
About Equatorial Guinea
Equatorial Guinea is one of the smallest in continental Africa. It is bordered by Cameroon on the north, Gabon on the south and east, and the Gulf of Guinea on the west, where the islands of São Tomé and Príncipe lie to its southwest. Formerly the Spanish colony of Spanish Guinea, the country's territory (continentally known as Río Muni) includes a number of islands, including the sizable island of Bioko where the capital, Malabo (formerly Santa Isabel), is located. Its post-independence name is suggestive of its location near both the equator and the Gulf of Guinea. It is the only country in Africa where Spanish is an official language, excluding the Spanish exclaves of Ceuta, Melilla, the Canary Islands and the Sahrawi Arab Democratic Republic.
Pre-independence Equatorial Guinea counted on cocoa production for hard currency earnings. In 1959 it had the highest per capita income of Africa. The discovery of large oil reserves in 1996 and its subsequent exploitation have contributed to a dramatic increase in government revenue. As of 2004, Equatorial Guinea is the third-largest oil producer in Sub-Saharan Africa. Its oil production has risen to 360,000 barrels/day, up from 220,000 only two years earlier. Forestry, farming, and fishing are also major components of GDP. Subsistence farming predominates. The deterioration of the rural economy under successive brutal regimes has diminished any potential for agriculture-led growth. Despite a per capita GDP (PPP) of more than US$30,000 (CIA Factbook $50,200) which is as of 2004 the sixth highest in the world, Equatorial Guinea ranks 121st out of 177 countries on the United Nations Human Development Index. In July 2004, the U.S. Senate published an investigation into Riggs Bank, a Washington-based bank into which most of Equatorial Guinea's oil revenues were paid until recently, and which also banked for Chile's Augusto Pinochet. The Senate report, as to Equatorial Guinea, showed that at least $35 million were siphoned off by Obiang, his family and senior officials of his regime. The president has denied any wrongdoing. While Riggs Bank in February 2005 paid $9 million as restitution for its banking for Chile's Augusto Pinochet, no restitution was made with regard to Equatorial Guinea, as reported in detail in [11] this Anti-Money Laundering Report from Inner City Press. Equatorial Guinea is the smallest country, in terms of population, in continental Africa (Seychelles and Sao Tome and Principe are smaller). It is also the smallest United Nations member from continental Africa. It is the smallest Spanish-speaking country in the world.
About Mauritania
Mauritania, is a country in the Maghreb region of western North Africa. It is the eleventh largest country in Africa, and is bordered by the Atlantic Ocean to the west, by Moroccan-controlled Western Sahara in the north, by Algeria in the northeast, by Mali in the east and southeast, and by Senegal in the southwest. The country derives its name from the ancient Berber Kingdom of Mauretania, which existed from the 3rd century BC to the 7th century AD, in the far north of modern-day Morocco. Approximately 90% of Mauritania's land is within the Sahara Desert and subsequently the population is concentrated in the south, where precipitation is slightly higher than the rest of the country. The capital and largest city of Mauritania is Nouakchott, located on the Atlantic coast, which is home to around one-third of the country's 3.5 million people. The government of Mauritania was overthrown on 6 August 2008, in a military coup d'état led by General Mohamed Ould Abdel Aziz. On 16 April 2009, General Aziz resigned from the military to run for president in the 19 July elections, which he won.