The 2017 Business Monitor International (BMI) Infrastructure Risk & Reward Index for Sub-Saharan Africa has ranked Botswana among the countries whose infrastructure yields low returns on investment, when compared to other Sub Saharan African countries.
The index shows that Botswana has fallen from the top position to tenth place this year, with a score of 42.7 out of 100. BMI has indicated that the country received poor scores for industry returns due to its small industry value, estimated at only USD940 million in 2016.
BMI, the UK research company which assessed major infrastructure and construction projects, including roads, railways, power plants and industrial property in Sub Saharan Africa, has revealed that Botswana’s drop in the index came after a fall in infrastructure and construction growth rates and the expected marginal growth projected in the next nine years. According to BMI projections, Botswana’s infrastructure and construction industries’ growth is expected to decline from 4.72% expected in 2017 to 4.34% before increasing to 5.93% in 2019. After picking up to 5.93% in 2019, growth in the industry is expected to decline to 5.91% in 2020. According to the projections the growth is expected to decline steadily to 5.37% in 2021, 5.35% in 2022, 4.28% in 2023, 4.27% in 2024 and 2025 and 4.26% in 2026.
BMI stated that the most promising opportunities for investors will stem from markets with the highest growth potential, maturing business environment and openness to private investment and funding. BMI 2017 Botswana Infrastructure Report shows that the marginal growth in Botswana’s infrastructure and construction sector will continue to be supported mostly by publicly funded infrastructure development of transport and power infrastructure.
The report noted that through 2017 the Sub Saharan Africa infrastructure and construction industry is expected to continue providing investment opportunities across numerous sectors, including transport, power infrastructure and industrial construction, as governments in the region work to overcome their logistical shortcomings. The outlook for the expansion of the Sub-Saharan Africa construction industry is more positive for 2017, after regional growth in 2016 dipped to its lowest in almost 16 years. “We forecast expansion of 4.8% in real terms over 2017, keeping Sub Saharan Africa as the third-fastest growing construction market globally,” states the report.
BMI further stated that China is expected to continue dominating the Sub Sahara Africa construction industry and provides critical support for all aspects of the project lifecycle including financing, construction and operation and added that Sub Saharan African governments welcome the cheap credit lines offered by Chinese firms as their budgets remain under pressure.