From: Biniam Tekle (email@example.com)
Date: Wed Nov 19 2008 - 10:24:02 EST
*Africa's infrastructure to deteriorate as investment dries up*
November 19, 2008
By Mzwandile Jacks
Johannesburg - Africa's infrastructure was set to deteriorate further as
investment dried up in the wake of the rapid global economic downturn,
delegates were told at the Africa Investment Forum in Midrand yesterday.
This lack of investment has caused Royal Dutch Shell to pull out of six
African countries since September, with the oil multinational citing poor
infrastructure as the reason.
Delegates at the forum, organised by the Commonwealth Business Council and
Gauteng Economic Development Agency, were told that declining levels of
trade with Africa could make infrastructure investment even harder to come
Speakers were concerned that it had become very difficult to raise money
because of the global financial crisis.
Lesao Lehohla, the deputy prime minister of Lesotho, said commercial loans
had become too expensive to service. He recommended that financial
assistance should come from international institutions in the form of grants
and soft loans.
"Efficient road, rail and air transport links are very necessary in order to
reduce high transaction costs within the countries … and also among trading
countries," he said.
"In 2006 transport costs were estimated at 50 percent of the value of
African exports to the US, while air transport costs across Africa were
about four times the costs of getting the same goods over the Atlantic. For
landlocked countries, the costs are even higher."
Transnet group executive Vuyo Kahla said African countries had missed the
global commodities boom because of the lack of infrastructure. "Now we are
playing catch-up," Kahla said, adding that the share of global trade with
Africa was declining rapidly.
But he said South Africa's railways and ports were operating at world
standards because of the good infrastructure, adding that investment was
continuing. "In many areas we are leading, in others we are either number
two or three."
Shell has pulled out of Lesotho, Gambia, Djibouti, Ethiopia, Mozambique and
Eritrea since September. It plans to depart from another five unnamed
Xavier le Mintier, the executive vice-president of Shell Oil Products, said
Shell invested in countries for the long term, but "I found that there was
no week when I did not have to deal with supply-related problems" in these
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