In July 2019, the launch of the African Continental Free Trade Area (AfCFTA) – the largest in the world – demonstrated a rising intergovernmental commitment to bolster the continent’s economic potential. If political and existing regional trade obstacles can be overcome, AfCFTA is set to attract large investment in critical trade and telecommunications infrastructure to enhance interconnection as the continent embraces digitalisation.
The eastern region was already producing standouts prior to the launch of AfCFTA. In a 2018 World Economic Forum event, Kenyan President Uhura Kenyatta announced ambitions to move Kenya’s installed renewable energy capacity from 70% to 100% by 2020. A target well on its way largely due to the 310MW Lake Turkana wind farm, which was connected to the national grid, via the new USD 271m Loiyangalani-Suswa power transmission line, in December 2018.
Strong political will and regulation have also made Ethiopia an attractive destination for investors. Securing energy to meet its growth needs has been a top priority for the country that, with the support of World Bank-backed programme Scaling Solar, is currently implementing a 1GW pipeline of solar PV tenders.
A growing asset class across the region is telecommunications, with strategies to improve internet penetration being explored. Ethiopia is in the process of privatising its state monopoly, Ethio Telecom, and the island country Cape Verde is to be linked to the landmark EUR 150m EllaLink subsea cable project connecting South America with Europe.
Across the continent, the construction of large assets has mainly been driven by China’s Belt and Road Initiative (BRI). However, China is facing increasing competition from French, UK, and Japanese government-backed investors to develop projects in Kenya, Ghana and Ethiopia.
#36 South Africa
Despite a long stretch of relatively sluggish growth, South Africa still ranks as the continent’s most favourable environment for private investment. The solvency crisis of state-owned utility Eskom disrupted South Africa’s pioneering Renewable Energy Independent Power Producer Procurement programme for up to three years but, in 2018, 20 onshore wind and solar PPAs were finally signed.
To prevent further disruptions to greenfield projects, the government plans to unbundle Eskom into separate generation, transmission and distribution arms.
In 2018, the UK government invested USD 500m to develop the country’s energy storage market and by September 2019 Eskom unveiled plans to launch a 360MW battery tender – the first tender of its kind in Africa.
Backed by strong performance in the Infrastructure Index across its economic and political stability scores, Morocco has ambitions to be the leading infrastructure and energy hub in the continent. Flagship projects include the 2018-inaugurated Al-Boraq high-speed rail connecting Casablanca and Tangier and, more recently, the third phase of the Tanger Med 2 port in Tangiers in June 2019. Future opportunities are set to emerge in special economic zones in northern Morocco. In 2017, the Moroccan Agency for Sustainable Energy successfully implemented the landmark 177MW Noor PV project, and is tendering several projects, including phase two of the 800MW Noor Midelt concentrated solar power plant launched in July 2019.
Algeria’s outlook for infrastructure opportunities is very positive as it begins to see results from its 2015 USD 7.8bn five-year transport expansion programme, boasting a pipeline of seaports, rail and airports. Developed by an Alstom-led consortium, the second phase of the 10.3km Constantine light rail line extension was inaugurated in July 2019. In 2019, projects such as Algiers Metro extensions and the phase one of the Sétif tram network were completed.
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