Population Suggests Infrastructure Needs

Population growth is a neat indicator of where project cargo-supported infrastructure will be needed most in the medium to long term. The United Nations updates its population projections every two years with the latest revision in July 2017. In this update it calculated that the current world population of 7.6 billion was expected to reach 8.6 billion in 2030, 9.8 billion in 2050 and 11.2 billion in 2100.

In its findings, it revealed that by about 2024, India’s population is expected to surpass China’s, and that among the 10 largest countries worldwide, Nigeria is growing the most rapidly. Indeed, the population of Nigeria, currently the world’s seventh-largest, is projected to surpass the U.S. and become the world’s third-largest country shortly before 2050. Other areas to watch for population growth, and therefore increased infrastructure demand, are the Democratic Republic of the Congo, Pakistan, Ethiopia, the United Republic of Tanzania, Uganda and Indonesia.

However, there is a fly in the ointment. There are concerns that recent investment in infrastructure has not entirely achieved the desired effect, which may curtail further infrastructure spend in developing countries. The United Nations Conference on Trade and Development, or UNCTAD, in its Trade and Development Report: Power, Platforms and the Free Trade Delusion, found that infrastructure investment is not necessarily helping developing countries transform their economies and achieve sustainable prosperity.

It acknowledges that while infrastructure projects are “back on the agenda,” in part supported by scaling up of investment from multilateral financial institutions, these are not kickstarting necessary industrialization or structural transformation. There is, it states, “too much emphasis on infrastructure as a business opportunity and too little emphasis on its links to structural transformation.”

UNCTAD analyzed 40 national development plans from developing countries and least-developed countries to conclude that a “bankability” approach to infrastructure avoids the key question of “how infrastructure can become a force of productivity-enhancing structural transformation and deliver much needed economic and social change in most of the developing world.”

“Infrastructure is not just bricks and mortar, but a bridge to the future,” noted Mukhisa Kituyi, secretary-general of UNCTAD.

One positive to be taken from the report is that UNCTAD advises that most developing countries must double current investment levels in infrastructure projects of less than 3 percent of gross domestic product to about 6 percent, if there is to be any transformational impact.

In a breakdown, in Latin America and the Caribbean, infrastructure investment needs are estimated at 6.2 percent against actual spending of 3.2 percent of the region’s GDP in 2015. In Africa, projected needs are estimated to be about 5.9 percent of the region’s GDP in 2016-2040, as against the current figure of 4.3 percent. In Asia, both current and projected investment needs in 2016-2030 are estimated at about 5 percent of GDP.

Photo credit: Shutterstock

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