The numbers tell the story. Africa’s infrastructure needs currently amount to a whopping $130 to $170 billion per year with a financing gap of $68 million to $108 billion. While this may sound insurmountable, it also presents an opportunity to foster innovative financial solutions and partnerships that have the potential to unlock funding.
Partners have long recognized that infrastructure investment, and in particular cross-border infrastructure, plays a central role in Africa’s development agenda and is critical for supporting the continent’s economic integration and growth.
This was noted during a plenary session on Management Risk to encourage Private Sector Engagement and Investment in Infrastructure Development.
According to Carla Rooseboom AUDA –NEPAD Technical assistant said that deepening market integration for goods, infrastructure services and key factors of production is especially important for a continent comprised of 54 countries, 16 of them landlocked, and characterized by mostly small and fragmented markets.
Rooseboom added that Cross-border infrastructure projects typically require multiple sources of funding in view of the large investment needed. The coordination required for project preparation and infrastructure implementation ups the complexity of cross-border projects.
Despite these challenges, investors and the partners alike recognize the benefits of priority regional infrastructure: access to larger markets, potentially reduced demand risk, increased trade and economic growth and greater investment opportunities in the region.
On his part AUDA –NEPAD Representative Ibra Wahabou said that the results are commendable. PIDA has supported the construction of 16,066 km of roads throughout the continent, 4,077 km of railway lines, 3,506 km of energy transmission lines, and the connection of 17 countries with regional fibre-optic cables.
Speaking on Mobilisation through innovation he said encouraging greater private sector investment is fundamental to accelerating sustainable infrastructure development in Africa and attracting private capital to the region requires that investors be presented with bankable and investment-ready projects.
As an example, AfDB hosts NEPAD Infrastructure Project Preparation Facility (NEPAD-IPPF), a multi-donor special fund providing expertise and grants to transform early stage projects into bankable projects and viable investment opportunities for public and private investors.
Adding that since its inception, the fund has contributed $61.23 million in support of transformative continental infrastructure projects, catalyzing downstream financing to the tune of $24.6 billion across energy, ICT and transport sectors.
The Infrastructure Consortium for Africa indicates that $81.6 billion of investments were committed to infrastructure development in Africa in 2017 as illustrated in Figure 1. However, this volume of investment is still far short of the $130-$170 billion per year to 2025 needed to close Africa’s infrastructure gap.