Infrastructure boom propels African economy

18 October 2013

ERTA (Ethiopia)

The Loan Market Association (LMA) says that seven out of the 10 fastest growing economies in the world over the next decade will be African, and Ethiopia, Mozambique and Tanzania are expected to lead the continent with an average growth rate of 7% a year.

The continent's population is forecast to reach 1.4 billion by 2025. African nations are spending $45 billion annually upgrading roads, ports, electricity plants and other infrastructure, according to the African Development Bank.

The continent, however, needs to spend $93 billion a year to help accelerate economic growth.
The London-based LMA says Sub-Saharan Africa's infrastructure boom will draw closer attention from investment banks and commercial lenders which will have the effect of reinforcing an increase in syndicated loans.

The annual amount of credit in the region organized by groups of lenders grew from $11.2 billion in 2011 to $17.7 billion in 2012 and syndicated loans totaled $19.6 billion in the year to date.

The LMA's Managing Director, Clare Dawson says "Many international banks see that there are very good opportunities for investing, particularly in infrastructure projects", and as African companies expand, their demand for syndicated loans can be expected to increase as businesses seek larger amounts of capital that may not be provided by a single lender.

The LMA is an association of financial institutions and law firms whose principal objective is to improve liquidity, efficiency and transparency in the primary and secondary syndicated loan markets in Europe, the Middle East and Africa.

Original article by Zeryhun Kassa

Category: Transport