Jammu and Kashmir is a region bordered between India and Pakistan and has been in conflict since British rule. Both the nations claim the mountainous valley to be part of their respective nations and thus has been in an ever long political dispute (Ishfaq-ul-Hassan, 2018). For the longest time, Kashmir has been a victim of terrorism, unstable political situation and to top that, infrastructure has also been one of the major issues. The difficult terrain of Kashmir makes it especially challenging for construction and thus has been lagging when compared with most of the other states. Kashmir was for a long time, the princely state and the only Muslim majority state which joined India in 1947. Both India and Pakistan have thereon captured parts of Kashmir but are still in a tiff to have a bigger portion of the state.

An Overview of the Infrastructure Scenario of Kashmir

Infrastructure in Kashmir which includes health, education, tourism, industrial development has lagged for an exceptionally long time.  A survey of the Union Ministry of Drinking Water and Sanitation has shown that Jammu and Kashmir have the poorest sanitation facilities compared to the other states.  It is also important to note that the majority of the population still live in rural areas so the health and education infrastructure is not still as developed as it should be (Pandey, 2019). The rural areas lack private schools and the government schools are also in a bad state. Poor school infrastructure is one of the important reasons for the low literacy rate of the state. Several surveys conducted on the schooling facilities of Jammu and Kashmir have shown that due to lack of proper infrastructure, the students are made to sit on the floors, they do not have proper sanitation facilities in those schools etc. The buildings of the schools are in a worn-out state and on top of that, the 2014 floods in Jammu and Kashmir have damaged no less than 1400 schools (Digital, 2019). This leads to higher dropout rates in the state. Another important issue faced is that most of the schools do not have electricity. These infrastructural problems have been identified over the years and even though the government did put in efforts to resolve these issues, the condition of infrastructure in the state has not improved to a large extent.

As more and more tourists turn up each year, the pressure on the mountains is increasing at an alarming rate and poor infrastructure can cause unforeseen disasters if not taken care of immediately.

Why Article 370 Was a Cause of Concern?

According to Article 370 which was drafted by the then Chief Minister of Kashmir, other than a few areas of national concern like defence, foreign affairs, communication and finance, the central government had to take the consent of the state government to apply any laws or policies in Jammu and Kashmir. This article was made to be permanent and henceforth even more stringent. In simpler terms, the people of the state did not fall under the same rules as the rest of the country and lived by the rules of the state, hence given the status of special autonomy (Jaitley, 2016). This also gave the state’s government, the power to decide who could have ownership of land, or who could and could not invest in the land of Kashmir. This led to a huge problem as people who did not belong to Kashmir, could not officially buy land. This in turn meant that there weren’t any major external investments coming to Kashmir. The Modi government has linked Article 370 as one of the major reasons for the state’s infrastructure remaining underdeveloped for an awfully long period of time. In August 2019, Article 370 was finally abolished (TNN, 2019).

All of this has led to a rise in the need for a planned and vast investment boost in infrastructure in Kashmir to look forward to a better and safer future.

Huge Infrastructure Boost on the Way

The central government has aimed to bring a huge infrastructural boost to Jammu and Kashmir. The objective of this investment is to generate employment and investment in the state. Jammu and Kashmir was officially divided into two federally controlled territories on Oct 31, 2019. The region mostly depends on tourism, handicrafts and farming and has suffered poor infrastructure for decades continuously.

Prime Minister Narendra Modi has agreed on an investment boost of $3.8 billion after scraping out article 370. This is done in the view of increasing investments in the territory and generating employment opportunities. 

Let us now look at the investment programs brought through this infrastructural boost:

1. There has been investment in an elevated Mass rapid transit system in Kashmir. Kashmir will have two Light Rail transit systems (LRTS). The LRTS I is a 17 km long corridor that connects Bantalab to Greater Kailash with 17 stations to be crossed. The LRTS II will be 6 km long that connects Udheywala to Exhibition Ground (Digital, 2019).
2. There are infrastructure plans are Srinagar which will have two corridors. It is a 12.5-km-long corridor I which will connect HMT Junction to Indra Nagar crossing 12 stations. The second corridor is a 12.5-km-long corridor II that will connect Osmanabad to Hazuri Bagh. In order to further develop Srinagar and Jammu, the Metropolitan Regional Development Authorities (MRDAs) have been set up. Satellite townships with 50,000 new houses each are being developed in Greater Srinagar and Greater Jammu. These new townships will have one million sq ft IT parks (Digital, 2019).
3.  In view of improving connectivity, there have been investments to develop the Bilaspur-Manali-Leh railway line. The corridor will help improve connectivity with Jammu Kashmir and Himachal Pradesh. This railway line will be the world’s highest railway track and 465kms long. 52 per cent of the total 465 km length will pass through tunnels. The longest tunnel will be 27 km long. The total length of the tunnels is expected to be around 244 km (Digital, 2019).
4. The construction, operation and maintenance of 2-lane bi-directional Zojila Tunnel with Parallel Escape (Egress) Tunnel were approved during 2018 by the cabinet that excluded approaches on Srinagar-Leh section connecting NH-1A at Km 95.00 in Jammu & Kashmir. The 14 km-long tunnel will be India’s longest road tunnel and Asia’s longest bidirectional tunnel. This tunnel will be a sigh of engineering excellence considering the difficult terrain that it will be built on. The construction of this tunnel will provide all-weather connectivity between Srinagar, Kargil and Leh (Digital, 2019).
5. The Dal Lake will also be restored. The government has planned investment to improve and beautify the lake further. Srinagar and Kashmir are also set for new pollution free e-buses (Digital, 2019).

Possible Impact of the Infrastructure Boost on Kashmir’s Economy

The increase in public as well the private investment is looked forward to bringing a significant amount of income through Kashmir. The government is expecting to attract $5-6 million through these investment programs (ANI, 2020). As the Modi government was for long against the special status given to Kashmir, they now hope that the scraping out of Article 370 along with such a huge boost in the infrastructure will not only lead to a better life for the natives of Kashmir but will also help generate income to a very large extent.

The boost in infrastructure will lead to improvements in the tourism sector to a large extent. The tourism sector is one of the most important sectors of Kashmir. As every year, the number of tourists only rise, the infrastructure must be able to support the rising strengths, along with protecting the mountains and the ecology of the place (Vignesh Radhakrishnan, 2019).

The railway lines and corridors approved for construction will lead to better connectivity among the places which has been a major problem for a very long time. These large constructions were due for a long time and a properly planned and executed infrastructural project can generate employment as well as income for the long term.

The geographically difficult terrain makes it even more important focus on the infrastructure of the place for it being able to operate at its optimum capacity. The natives of Kashmir have been in distress for almost all their lives along with the fear of terrorism at any given time (IBEF, 2020). The beautiful landscape has a lot of potential for generating income and employment for its people. And this huge infrastructural boost will hopefully help in attaining that potential along with maintaining an adequate ecological balance.

Conclusion

The debate on stabilizing the economy of Kashmir has been a highlight for decades now. However, with this infrastructural boost on the way and the projects taken up by the government, there seems to be some light at the end of years of the dark tunnel.

Bibliography

Infrastructure boost for Kashmir! From highest railway line to longest tunnel, check upcoming projects. (2019). Times Now.

Ishfaq-ul-Hassan. (2018, January 23). Jammu and Kashmir: Infrastructure development gets massive boost; funds for new bridges, tunnels, highways earmarked. Retrieved from DNA: https://www.dnaindia.com/india/report-jammu-and-kashmir-infrastructure-development-gets-massive-boost-funds-for-new-bridges-tunnels-highways-earmarked-2577795

Digital, E. N. (2019, June 15). Infrastructure boost for Kashmir! From highest railway line to longest tunnel, check upcoming projects. Retrieved from ETNOWNEWS.COM: https://www.timesnownews.com/business-economy/industry/article/infrastructure-boost-for-kashmir-from-highest-railway-line-to-longest-tunnel-check-upcoming-projects/436943

Jaitley, A. (2016, 26 June). India needs $1.5 trillion for infrastructure development: Arun Jaitley. Retrieved from ZeeNews: https://zeenews.india.com/business/news/economy/india-needs-1-5-trillion-for-infrastructure-development-arun-jaitley_1900273.html

ANI. (2020, August 2). Kashmir gets infrastructure boost in higher education sector. Retrieved from yahoo!news: https://in.news.yahoo.com/kashmir-gets-infrastructure-boost-higher-043022239.html

Vignesh Radhakrishnan, S. S. (2019, August 7 ). Is Jammu and Kashmir underdeveloped as stated by Amit Shah? Retrieved from The Hindu : https://www.thehindu.com/data/where-does-jammu-and-kashmir-stand-in-comparison-to-other-states-in-key-indicators-of-growth-and-development/article28855512.ece

IBEF. (2020, November 17 ). Jammu And Kashmir Presentation And Economic Growth Report | IBEF. Retrieved from India Brand Equity Foundation : https://www.ibef.org/states/jammu-and-kashmir-presentation

Pandey, G. (2019, August 5). Article 370: What happened with Kashmir and why it matters. Retrieved from BBC News : https://www.bbc.com/news/world-asia-india-49234708

TNN. (2019, August 3). What is Article 370? Three Key Points . Retrieved from The Times of India : https://timesofindia.indiatimes.com/india/What-is-Article-370Article-370/articleshow/35678708.cms

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In these unprecedented times, when the common citizens are adapting to the new normal and life is returning to normalcy, the eyes of the entire nation will be stuck at the national television and channels on February 1, 2021, when the union finance minister Nirmala Sitharaman will be presenting the Union Budget for the upcoming financial year 2021-22. This will be the first time ever since the release of independent India’s first budget on November 26, 1947 that the government has decided not to print the Budget documents following the protocols of COVID-19. Hence all the MPs will be receiving soft copies of the Budget and Economic Survey of FY 2021-22. 

Speaking about Union Budget 2021-22 set to be presented in the Parliament on February 1, 2020, FM Sitharaman said-

“100 years of India wouldn’t have seen a Budget being made post-pandemic like this”

The Union Budget 2021-22 will make it quite imperative for the government to come up with a comprehensive strategy for the revival of the Indian economy against the backdrop of an economic contraction of 7.7% (Mint, 2021). Therefore all the stakeholders hold great expectations from the release of the budget hoping that it provides a boost to the economic growth. While the investments in social sectors like health, education, medical infrastructure, Research and Development (R&D), inculcating better skills to manage the use of technology in medicine is going to be important, challenges in the livelihood pattern ought to be seen in a broader canvas with the changed perspective on skill development. 

Tax and FDI reforms: Impetus to the insurance industry

During the past several years, there has been a tendency of low insurance penetration in health insurance that has acted as a cause of worry for the common citizens. Following the shortage of healthcare insurance funds in the light of  COVID-19, it becomes imperative for the industry experts to believe that the Union Budget 2021 should be leveraged in such a way to mitigate the distress of individuals and industry to some extent. 

It is being speculated that the reforms in two key spheres- tax and foreign direct investment (FDI) can be undertaken and discussed at length under the Union Budget 2021. The provisions should be made for enhancing the limits of insurance under section 80C and 80D that will encourage consumers to opt for health life insurance (Mint, 2021).  

Further, the GST payable currently on the insurance premiums must be reduced by the government thus making life insurance affordable to the vulnerable sections of the society. Such tax reductions and incentives will prove to be successful in the long run by ensuring insurance penetration in India. 

Liberalisation in the FDI regime is extremely important in order to attract additional capital to expand the business in the economy and ensure substantial insurance penetration into India. Therefore, there is a growing need that the government should liberalise the current FDI regime by raising the FDI limits to 74% from the current limit of 49% of paid-up equity capital (Mint, 2021). This would in turn support the disinvestment programme of the government. The reduction in the FDI limits will prove to be an impetus to the expanding insurance industry of India thereby providing opportunities to the investors to fetch higher returns on the assets and capital. 

Another important recommendation has to be made in the form of treating annuity income as tax-free income which will encourage higher uptake of annuity policies and better financial security during the old age years.  This recommendation is significant for a country like India, which has a history of limited social security measures. 

Work from home: A time to rethink the income tax allowances 

The global outbreak of the novel COVID-19 in the month of March has drastically changed the working landscape for the organisations globally. This shift in the working landscape has put in several companies to provide enabling infrastructure such as furniture (like tables, chairs etc), printers, high-speed internet connectivity, stationery etc for providing ease to the employees working at their residences. 

For the smooth conduct of the work at their respective places, the organisations are providing a fixed allowance to the employees in order to meet the expenditure incurred on furniture and digital infrastructure. The governments have to work in tandem with these organizations and ensure the efficient provision of exemption and deductions for the allowances which are reimbursed by the employer to employees who are working from their respective homes. The Union Budget 2021 should also incorporate a similar approach as well thus reaping the benefits of evolving a new digital working landscape. 

The Education sector: Seeking an array of Expectations

With just a fortnight left for the release of Union Budget 2021-22 by the Ministry of Finance, the experts are in lieu of several expectations in the education sector from the Union finance minister Nirmala Sitharaman. Here is the discussion on the top five expectations for the education sector in Budget 2021 (Economic Times, 2021). 

Use of Technology in Education

Following the outbreak of COVID-19, there was an increasing use of technology in education as the schools and academic institutions were shut down. The Finance minister should provide some relief to the education sector in terms of reduction in GST and subsidy on the education loans which are granted for both formal as well as skill-based learning. The focus should also be on the provision of the appropriate flow of ed tech-focused funds into the education sector that will enable the mid-size tech start-ups inside the campuses in raising the money for better and faster experiences using technology in education. 

Online teaching

In order to make online education accessible to each and every student, the GST on online education should be cut down to 5% from 18% in the upcoming Budget 2021 (Economic Times, 2021). The experts are looking at the more announcements especially in reference to New Education Policy 2020 with a primary focus on the K12 segment. The collaborative approach should be adopted wherein the government and private institutions can come forward in order to scale up the coding education. Thus increasing the contribution of education in the lives of students across the nation. 

National Education Policy 2020

The NEP 2020 marked the historic turn of events in the education sector. The vision laid by the government in the form of mandates in NEP 2020 will play a significant role in achieving the inclusive education system. There has to be a concrete implementation plan for the NEP 2020 in the Union Budget 2021 to further ensure focussed investment in Edu-tech companies. 

Tax Exemption

In the Union Budget 2021, the central government must ensure to reduce the expenditure limit of 85% to obtain tax exemption of 75% (Economic Times, 2021). Further, the academic institutions having good NAAC score should be allowed to retain the additional 10% of the funds received by them for providing education loans to the students. Such a provision will prove to be successful in providing funds to students that cannot provide collaterals to obtain loans in the long run. 

Restoring the trust of India’s upset farmers

With the farmers’ agitation still in place, the Union Budget 2021-22 will have to address the problems in agriculture with a more comprehensive and practical approach. The promise of doubling farmers income by 2022 made by the then finance minister Nirmala Sitharaman in her last year budget would require annual growth of 15% in the real income of the farmers till 2022. The Union Budget 2021-22 will therefore have an action to increase the allocation of Central government to schemes like on irrigation, rural roads, warehousing and storage facilities. Moreover, the new Acts are likely to supplement the working of mandis and will not replace them. The Minimum Support Price (MSP) will continue with no substantial changes. This will reorient the expenditure of the government in the right direction to restore the lost trust of farmers. 

Weaving a way for healthcare innovations

While the country is still struggling to deal with the pandemic, the state of health infrastructure in some of the developed economies has raised an alarm across the globe. This pandemic has reflected on the structure of the healthcare sector in India. Keeping  in view the last year allocation of Rs 69,000 crore to the healthcare budget, some of the key considerations for the Union Budget 2021-22 are listed below:

1. The centrally funded hospital and medical college have to be established in each Indian district. This will change the landscape of healthcare in India by ensuring effective and quality healthcare facilities to citizens.
2. The National Healthcare Audit Authority (NHAA) should be set up and funded which will provide the facility of audit functioning of all the healthcare institutions in the country.
3. The Ayushman Bharat Yojana, also known as the Pradhan Mantri Jan Arogya Yojana (PMJAY) should be expanded to include all the taxpayers. 

The gap in the accessibility and affordability in healthcare facilities is enabling local technology-driven innovations that will facilitate the delivery of medical devices within the country. This gap and provision need to be addressed in Budget 2021 with a special focus on the equitable allocation of the funds for healthcare delivery, healthcare equipment, healthcare infrastructure and healthcare innovations by means of start-ups. 

Hospitality sector: Looking for a fair deal in Budget 2021

The travel and tourism sector is the worst-hit sector due to COVID-19 pandemic. The structural financial reforms are needed to ensure the pathbreaking recovery of the sector in the upcoming Union Budget 2021. The experts of the sector are in the view of revitalising the famous Incredible India campaign in accordance with the year 2023 when India will be hosting the G20 summit. The current GST structure of wellness and medical tourism should be restructured so that there is an infusion of funds into the tourism businesses. 

The Federation of Association in Indian Tourism and Hospitality (FAITH) has proposed the setting up of a National Council of Chief Ministers to be headed by the Prime Minister as well as the Tourism Minister. This Council should be placed in the concurrent list and be a subject matter of both Central and State government. Further, the incidence of taxes on tourism earnings should be cut down to zero per cent. The current Service Exports from India Scheme (SEIS) of 10% to all the foreign exchange earnings in tourism be made in place for the next 5 years in order to ensure the post-covid recovery (Sinha, 2021). 

The country holds immense potential for promoting domestic tourism. The Indian organisations and business houses should be encouraged to promote domestic MICE (meetings, incentives, conferences and events) by offering them 200% income tax expense benefits to those Indian organisations who are a part of domestic MICE in India. For conserving the rich cultural heritage of our country, there is a need to establish a Natural and Cultural Heritage Restoration Fund with a backup of at least Rs 2000 crore that will encourage sustainable tourism around each horizon of tourism. 

A secured comprehensive mechanism is required to secure the future travel plans for the travel agents and tour operators who are affected by the pandemic thus restoring the higher growth in the travel and tourism sector. 

Privatisation of Public Sector Banks and PSUs

While the previous year’s budget(2020-2021) made way for the bank-led growth, banks are facing the challenge of confounding the impact of COVID-19 pandemic on their balance sheets and focussing on the economic recovery of India. It is expected that the upcoming Union Budget will include the proposal for Bank Investment Company (BIC) which will increase the shareholding of the government in its banks. As a result of which Public sector banks (PSBs) will dominate the banking sector as the major responsibility will fall on them. 

The government which is running a high fiscal deficit is in search of alternatives in order to reduce its burden on the Non-Performing Assets (NPAs). it is projected that the gross NPAs will be rising to 16.2% in the first quarter of FY21. the mounting NPAs has to be reduced. The BIC is therefore seen as a first welcoming step signalling the intention of the government to undertake reforms in order to ensure that the performance of PSBs are improved. The upcoming budget could therefore act as a signal by announcing the first step- the re-emergence of the Bank Nationalisation Acts and the State Bank of India Act.

Fiscal deficit targeted at 4% of GDP by FY26

It is expected that the Central government will provide an outline and lay down a road map in the Union Budget 2021 to bring the fiscal deficit down to 4% of GDP by FY 2025-26. This plays an important role in considering the fact that there will be growing demands for expansionary policies for the next 4-5 years. This further means that the government had to deviate from the set medium-term target of around 2-3% of GDP as the recommendations made by the Fiscal Responsibility and Budget Management Act (FRBM).

An opportunity to fund data infrastructure and Artificial Intelligence skills 

India has a golden opportunity to lead the next Industrial Revolution which is dominated by Big Data and Artificial Intelligence. The upcoming Union Budget 2021-22 will act as a platform for the Union Finance Minister Nirmala Sitharaman to unfold the benefits of big data through employment multiplier by means of funding through data science which is subjected to research (Umapathy & Singh, 2021). The integrated pool of the entire national data will be the way forward. The data generators ought to share the unfiltered data with the pool. This step will boost employment, nurture the start-up ecosystem and generate employment in the economy.  

Inclusion of Climate-responsive budgeting: A way forward

There is a growing need to recognise the potential of India is working towards a national budget responsive to climate change. Several initiatives have been taken by the leaders worldwide after recognising the significance of efficient fiscal handling of the climate changes in the spheres of planning of domestic public finances. For example, the Paris government has launched the Paris Collaborative on Green Budgeting. In south-east Asia, Indonesia has successfully implemented its climate budget tagging framework in 2016 and leveraged it in 2018. 

The state of Odisha in India which is the most disaster-prone state with the highest disaster score in the country has launched its own climate-budgeting based on the experiences of budget lines across the key economic sectors. Gujarat is another Indian state which has worked at length to adopt its own annual climate budgeting framework. However, India lacks such uniformity in the process of integrating all the subnational climate actions with the national climate goals. The state governments need the leadership of the Centre in establishing guidelines for climate-budgeting at the national level and work on climate-related risk planning. 

Climate-responsive budgeting will make sure that the future governments in power are financially stable in order to ensure the smooth transition of the economy. Moreover, India has to be ready to act as a responsible host during its maiden G20 presidency on climate change and economy. 

Personally, I believe the upcoming Union Budget 2021 will play a crucial role in lifting the Indian economy out of the recession and take significant steps that will focus on post-Covid recovery. Additionally, it is extremely important to concentrate on the forthcoming vision of the upcoming budgets on the threats imposed by climate change. For this, a proper national framework will be required focussing on the contribution of stakeholders from a diverse background including civil society and think tanks. 

Bibliography

Economic Times. (2021, January 17). Budget 2021: Expectations of Education Sector. Economic Times. https://indianexpress.com/article/opinion/columns/union-budget-2021-psb-privatisation-7148097/

Maji, P. (2021, January 15). Budget 2021 expectations. Financial Express. https://www.financialexpress.com/money/budget-2021-expectations-tax-fdi-reforms-to-provide-much-needed-impetus-to-insurance-industry/2171583/

Mint. (2021, January 16). FM holds pre budget meetings with the key stakeholders. mint. https://www.livemint.com/budget/expectations/page-2

Pandey, R., & Priyadarshini, D. (2021, January 16). Budget must take steps towards privatising ownership of public sector banks. The Indian Express. https://indianexpress.com/article/opinion/columns/union-budget-2021-psb-privatisation-7148097/

Sinha, D. (2021, January 18). Budget 2021 Expectations: Travel, Tourism sector expects pathbreaking Union Budget for post-Covid recovery. Financial Express. https://www.financialexpress.com/budget/budget-2021-expectations-travel-tourism-sector-expects-pathbreaking-union-budget-for-post-covid-recovery/2173235/

Umapathy, S., & Singh, R. (2021, January 19). View: Budget 2021 should fund data infrastructure and Artificial Intelligence skills. Economic Times. https://economictimes.indiatimes.com/tech/technology/view-budget-2021-should-fund-data-infrastructure-and-artificial-intelligence-skills/articleshow/80317424.cms

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Agriculture

Agriculture is one of the top sectors in Africa with immense growth potential. The sector contributes to over 15% of Africa’s GDP and has shown a good growth rate due to prior government policies that prioritise the sector to retain its sustainability and competitiveness. The top-earning agricultural products are coffee, cocoa, maize and wheat with Ghana, Nigeria, South Africa, Ethiopia and Uganda as the top producers.

Large areas of arable land, increasing use of technology, massive youth dividend, increasing government support and a large demand base make agriculture an attractive sector for investment despite the problem of erratic rainfall pattern in some places.

By the year 2050, it has been predicted that Africa’s population will almost double with a growth rate of 2.7% per annum. To meet the growing needs of the population, substantial investment from its global peers is absolutely necessary. That will also help the sector to grow and enhance its status as a global competitor, help in economic diversification and also mitigate the prominent problems of undernourishment, poverty and hunger that exist in the region.

Manufacturing Sector

Africa possesses an abundance of raw materials that can be easily turned to manufactured products for greater reliance on local products and increased exports of the same. The top three manufacturers in Africa are Egypt, South Africa and Morocco.

The growth of manufacturing can greatly drive economic growth and development in Africa. However, the sector faces challenges like lack of skilled-workforce, infrastructure gaps including low power supply and inadequate regulatory measures to address the prominent challenges. The import to export ratio of manufactured products in Africa is very high as Africa mostly exports unprocessed commodities. The growing manufacturing sector is making great advances in this aspect. It has already increased the total export goods from 18.7% in 2012 to 35.6% in 2017 and caused a significant decrease in imports implying greater importance to domestically manufactured products.

There has also been a shift in the focus of FDI projects from the dominant extractive industry to consumer-facing industries like retail, technology, media, etc. This trend is expected to continue in the near future.

Retail Sector

The African Development Bank is expecting the current 350-million-strong middle class to grow to under one billion by 2040. The growing middle-class demography is contributing to the growth and modernization of the retail sector which is greatly devoid of supply competition and requires investment to meet the growing consumer base. The market for essential goods constitutes the majority of consumer spending owing to the low-income levels in the economy and as the income-level status is not expected to undergo a drastic change in the recent future, the comparatively smaller market for luxury products will have a low growth rate.

As a large amount of consumer spending in Africa taking place in informal markets, due to the absence of prominent formal retail presence, is unaccounted for, Africa is projected as an economy with low household retail-spending despite that not being the case.

“The Brookings Institute’s latest analysis on trends of the African consumer market shows that consumer expenditure has grown at a compound annual rate of 3.9% since 2010 and reached US$1.4 trillion in 2015. This figure is expected to increase to US$2.5 trillion by 2030.”

There are several cyclical challenges related to the retail sector, like low GDP growth, high inflation, dwindling credit extension. The challenges can be used as opportunities to enhance the growth of the sector by focusing on the development of the retail infrastructure and modern logistics spaces to satiate the demand for high-quality space from retailers looking to expand in Africa.

Finance

Finance is one of the top sectors in Africa which regulates the funding of all the other sectors. Financial innovation guarantees the diversification of banking sector services and facilitates the incorporation of capital market instruments to reduce investment risk.

Rwanda, The Gambia and Senegal have shown massive progress in financial system rankings. However, there has been an overall decline in Africa’s global financial standing from 2017 – 2018 due to a fall in the pace of reform of this sector.

The impact investing industry has shown substantial growth and is quite relevant as several countries in Africa lie below the global average score for Human Development (0.8) with declining levels of official assistance. The industry has made an abundant impact across a wide range of sectors like Healthcare, Agriculture, Housing, Education and others. This provides ample opportunities for investment in several initiatives which will reap both financial and environmental returns.

Some of the prominent threats to this sector include underdeveloped market infrastructure due to limited funding, difficulty in gathering viable investment to meet financial and social targets, limited capital supply, unclear regulatory environment, inconsistent impact-measures and so on. These might prove to be a disincentive to many and hinder their investments. However, a far-sighted investor might implement innovative measures to meet the pending gaps and turn these challenges into opportunities to optimise social and environmental investments.

Infrastructure

Infrastructural inadequacy causes a huge hindrance to investment and growth in all sectors of Africa. There is a wide gap between the infrastructure needs of the continent and the amount being spent on fulfilling the need. There is an urgent need to bridge the gap through sufficient investment to meet the growing needs of Africa.

In countries like East Africa, Ethiopia and Tanzania, infrastructure investments in the form of new roads, energy support, transportation networks and others have led to guaranteed growth and transformation of the prevailing sectors. Construction has been primarily responsible for high economic expansion in Egypt. Infrastructural developments lead to employment generation via contractors, boosting aggregate demand. Investment in infrastructure by foreign players can prove to be very beneficial as it would provide the required sophistication to the local industry by supplying goods needed for large projects.

Real estate has evolved significantly, providing higher returns on investments, thus, becoming increasingly attractive to potential investors. Despite having good growth potential, real estate has certain risks attached to it like complex legal considerations, such as property ownership rights, social instability resulting from inequality, and others. However, the growth drivers like sustained high demand driven by urbanisation, improved capital regulation, technological advancements in banking leading to a boost in investment rates, and expected GDP growth supporting the demand for housing easily overshadow the challenges.

Conclusion

For many years, Africa’s growth potential has been understated and misunderstood. It has been treated as a non-friendly investment destination due to the several challenges posed. However, there has been a worldwide lack of understanding of the ease of converting the insurmountable challenges to opportunities. Africa’s growing population and the prevailing problem of excess demand need to be met via increased investment and innovation which will, in turn, lead to increased employment, decreased poverty and increased infrastructural development. Thus, despite Africa’s slowing global growth, if the prevailing challenges are addressed adequately, growth is inevitable.

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