Africa needs to spend $90 billion every year for the next decade in order to upgrade and maintain its existing infrastructure. More than 50 percent of countries on the continent lack access to electricity and will require an infrastructure investment of $360 billion in power production, power transmission, water storage, modern railways, port capacity and modern highways, until 2040. To address these challenges, General Electric whose roots in Africa are over a century old, is entering into a joint venture (JV) with the Mara Group and Atlas Merchant Capital dedicated to investing in the highly underdeveloped African infrastructure sector.
“This joint venture unifies three businesses with a strong commitment and expertise in infrastructure in Africa,” Jay Ireland, President and CEO GE Africa said. “The joint venture is our response to an integrated infrastructure approach in Africa.”
The JV will seek to invest in infrastructure equity projects in selected countries throughout Africa, with focus on high growth prospects in power generation, transport, oil & gas and other infrastructure areas including mining. It will facilitate access to capital, thus offering the ability to execute and fully finance both advanced and early development stage projects. With population set to rise to 1.5 billion by 2025, Africa’s economic growth potential is significant and GE and partners will be tapping into this.
The JV is well placed to act as a leading shareholder alongside sponsors of infrastructure projects, and will use its relationships with lending banks and connectivity to power Africa and related institutions to meet the debt component of its funding.
The projects to be focused on by the JV is expected to help Africa tackle one of the major hindrances to trade on the continent. Africa’s growth has been linked to regional trade but the stumbling block to this has not only been policy but also lack of infrastructure to foster trade within the continent; the new joint venture will address this.
“Africa is a continent of 54 countries, but there is very low connectivity between them. Intra-African trade, a key driver for economic growth, represents only a fraction of Africa’s total trade over the past decade and this is largely due to a growing shortfall in infrastructure development. Through our joint venture with GE and Atlas Merchant Capital, we hope to tackle the funding deficit by creating a platform that has the power to truly change the lives of those living on the continent,” Ashish J Thakkar, Founder, Mara Group said.
Akinwumi Ayodeji Adesina, President of the African Development Bank who is passionate about improving infrastructure in Africa, especially in energy, expressed delight at the new partnership. He expressed confidence in their ability to have real impact in infrastructure development in Africa, being world-class players in their respective industries.
“We all know painfully well the imperative to fill Africa’s annual $50 billion infrastructure funding gap. Partnerships like these are a crucial part of the development agenda as we seek to promote social and economic development and fight poverty in Africa,” Adesina added.