EM Infrastructure Needs Triple By 2030


By Gordon Platt

Demand for infrastructure in emerging markets will reach $1 trillion annually through 2030, triple the level of the previous two decades, with Asia accounting for the lion’s share, according to a study of 40 major EM economies by The Royal Bank of Scotland in collaboration with the Judge Business School at Cambridge University.


Big investments in Africa

“Fast-growing populations and rising urbanization rates in emerging markets have led to a global shortage of infrastructure services, such as roads, rail, mobile and fixed-line telecommunications, and electricity,” the study notes.

BRIC countries will continue to account for the largest shares of total EM spending, with about 55% coming from China, followed by India with 20%, Brazil with 3% and Russia with 2%, according to the study, entitled “The Roots of Growth.”

Africa should generally enjoy the highest growth rates for infrastructure, however, due to the continent’s increasing population density and its current undercapacity, the study adds.

China has become a key financier of infrastructure projects across Africa, primarily in exchange for oil and minerals. Infrastructure growth rates to 2030—over the previous two decades—are projected at 506% for Nigeria, 347% for Angola and 328% for Kenya.

Emerging Europe will likely see the slowest growth rates, thanks to large infrastructure investments over the past 20 years. In Latin America, Brazil and Mexico have led in terms of investment in the region, but the RBS model suggests that other smaller economies in the region, such as Colombia and Peru, will require strong growth in investment as their economies develop.

Countries that invest in infrastructure enjoy enhanced productivity and competitiveness, which ultimately results in higher consumption and economic growth, according to the study led by Timothy Ash, head of EM research at RBS.