Geneva, 12th March 2015 – Today Trafigura has launched the latest in its series of white papers entitled, “Foundations for Growth: Infrastructure Investment in Emerging Markets”. This white paper written by independent economists Llewellyn Consulting, looks at how investment in infrastructure is of vital importance for the global economy, and in particular for developing nations.
The economics profession is in unanimous agreement that cost-effective and efficiently-executed and managed infrastructure investment is unambiguously a 'good thing'; and that there is today a chronic shortage of it, especially in the case of the world’s poorer countries, and in particular those in Africa.
The initial section of the study seeks to demonstrate how well-prepared infrastructure spending can exert a powerful and positive influence not just on aggregate demand, in the process sustaining short-term growth and employment, but also on aggregate supply, or an economy’s longer-term productive capacity.
The second section of the study details the extent of the global shortfall of appropriately-designed and efficiently-run infrastructure assets; a shortfall that is only likely to increase over the years ahead, given rapid population growth, increasing urbanisation, continued globalisation, and the burgeoning exigencies of climate change.
Globally, infrastructure outlays equivalent to some 3.5 percent of global GDP per year are required to 2030. This deficit extends to all the major infrastructure categories - energy, water and sanitation, telecommunications, and transport - and it is in the most under-developed areas of the world, many of which are in Africa, that the greatest transformation is required.
“For the developing world as a whole, it is conservatively estimated that the requirement is for a doubling of existing infrastructure spending to 6-8 percent of GDP per year. In Africa, which has the sparsest and least-developed infrastructure networks in the world, the needs are greater still. Indeed, they are nothing short of colossal,” said the report’s co-author Russell Jones, partner, Llewellyn Consulting.
The third and final section of the study suggests some practical solutions. One conclusion in particular shines through: if the developing world's cavernous infrastructure gap is to be 'bridged', then the public and private sectors and international institutions will necessarily have to come together to pool their financial resources, their experience, and their expertise, in a mutually reinforcing manner.
“It would seem wise to tap into the knowledge of a multinational corporate sector that has long demonstrated capability in resource development and exportation, and which has over recent years become increasingly aware of global citizenship responsibilities that go some way beyond those owed to its immediate shareholders,” concluded Russell Jones.
Trafigura has long demonstrated competence in trading and transportation of commodities, and is also aware of global citizenship responsibilities that go some way beyond those owed to its immediate shareholders. It stands to be at the leading edge of the future expansion of global infrastructure which supports trade.
In the foreword to the white paper Trafigura Executive Chairman Claude Dauphin writes: “It is our hope that this white paper will contribute to an informed debate about the important role of infrastructure in fostering development, and will encourage the search for innovative public-private partnerships in this area. Since the emerging-market growth that is fuelling demand is unlikely to abate in the foreseeable future, solutions will be at a premium in coming years.”
For further information contact: Trafigura’s Global Press Office: +41 (0) 22 592 4528 or firstname.lastname@example.org
Video interviews with the report’s author and a copy of the new white paper can viewed by visiting: http://www.trafigura.com/research/foundations-for-growth-infrastructure-investment-in-emerging-markets/
For high resolution images visit: https://www.flickr.com/photos/trafigura_images/
Founded in 1993, the Trafigura Group has become one of the world’s leading independent commodity traders, specialising in the oil, minerals and metals markets. Primary trading activities are the supply and transport of oil and petroleum products and metals and minerals. The trading business is supported by industrial and financial assets including global oil products distribution company Puma Energy; joint venture company DT Group; global terminals operator Impala; Trafigura’s Mining Group and Galena Asset Management. The Trafigura Group is owned by 600 of its 5,600 employees who work in 36 countries around the world. The Group has been connecting its customers to the global economy for more than two decades, growing prosperity by advancing trade.