By Peter OBIORA InvestAdvocate
Lagos (INVESTADVOCATE)-Global capital project and infrastructure spending is expected to hit $6 trillion by 2029, according to Christine Lagarde, managing director of the International Monetary Fund (IMF) in her speech on Thursday entitled ‘’ The Challenge Facing the Global Economy; New Momentum to overcome a New Mediocre” at the Georgetown University, School of Foreign Service in Washington DC.
The IMF chief while speaking on public investment in infrastructure said this is especially important because the 2008 global economic crisis inflicted heavy toll on both growth and investment, which remain well below their long-term trends.
‘’As of last year, we have estimated that for the G-20 countries, GDP is 8 percent lower than it could otherwise have been. The shortfallin investment is even higher—nearly 20 percent below trend,’’ she said.
According to her, in advanced economies, capital stocks – airports, electricity, internet grids—were depleted as public investment was steadily scaled back by a quarter—from about 4 percent of GDP in the 1980s to 3 percent today.
‘’Is it any surprise that aginginfrastructure is now such a major concern? Right here in Washington DC, the American Society of Civil Engineers estimates that 99 percent of the major roads are in poor condition. Globally, some estimates place spending on infrastructure at $6 trillion over the next15 years,’’ Lagarde affirmed.
She said the issue is an obvious imperative in many countries, where bottlenecks and obstacles to transportation and energy supply abound and hamper development.
The IMF chief further affirmed that the scope for investment differs across countries—depending on infrastructure gaps and fiscal space. ‘’And for all countries, ensuring efficientinfrastructure spending is crucial. There is no question, however, that it can be a powerful impetus for growth and jobs,’’ she said.
Lagarde says recent estimates – by the Global Commission on the Economy and Climate – indicate that integrating lower emission standards into infrastructure investment would cost only a tiny fraction (about 4.5 percent) of total projected spending. ‘’So efficient investment–especially at a time of historically low interest rates–can be good for growth, good for jobs, and good for the environment,’’ the IMF chief said.
In an earlier report, released August, PricewaterhouseCoopers LLP (PwC) had said global capital project and infrastructure spending is expected to grow to more than $9 trillion annually by 2025, up from $4 trillion in 2012.
The report said overall infrastructure spending in Nigeria is expected to grow from $23 billion in 2013 to $77 billion in 2025 as a friendlier environment towards oil investment is also likely to further boost this projection.
PwC affirmed by this forecast, Nigeria’s infrastructure spending will overtake South Africa’s, which is projected to stand at $60 billion.
According to the report, in Sub-Saharan Africa, Nigeria and South Africa dominate the infrastructure market, but other countries like Ethiopia, Ghana, Kenya, Mozambique, and Tanzania are also poised for growth, the report said.
‘’Growth prospects in most of the region’s economies look promising as they were not affected as much by the global financial crisis of 2008,’’ the PwC report said.
