Analysis & Opinions - Forbes

Poor Infrastructure Is Africa's Soft Underbelly

| October 25, 2012

In one of Africa's most ambitious investment decisions, South Africa's President Jacob Zuma has unveiled a plan to spend $97 billion on infrastructure over the next three years to upgrade roads, ports, and transportation networks aimed at accessing coal and other minerals.

President Zuma's proposals were immediately supported by the powerful Congress of South African Trade Unions,whose Secretary-General ZwelinzimaVavi said it "pressed all the right buttons."

But some international rating agencies are skeptical of the ambitious plan. Global Credit Rating, which rates 1,000 organizations and debt issuers in over 30 countries, has warned that the projects are likely to be hampered by Moody's and Standard & Poor's recent downgrading of the country's sovereign rating. Global Credit Rating is concerned about a lack of "certainty on the financial feasibility of these initiatives" due to "diminished capacity" to manage political and economic challenges.

The challenge for South Africa is not to make decisions based on what might appear to be diminished capacity to manage infrastructure projects. To the contrary, these investments are an opportunity for South Africa to leverage infrastructure as the foundation for economic and technological renewal....

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For Academic Citation: Juma, Calestous.“Poor Infrastructure Is Africa's Soft Underbelly.” Forbes, October 25, 2012.