African Infrastructure Investment in Decline

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Commitments to African infrastructure investment fell to $62.5bn in 2016, representing a 21% decline from the previous year.

The Infrastructure Consortium for Africa (“ICA”) published its latest annual report, “Infrastructure Financing Trends in Africa 2016” (, according to which overall commitments to investment in Africa’s transport, energy, water and IT/communications (“ICT”) in 2016 were at their lowest level in five years, with most notably a significant decrease in private-sector funding ($2.6bn was recorded in 2016, compared to $7.4bn in 2015 and $8.8bn in 2013) and a slow-down in external finance (Chinese funding fell to $6.4bn, from an annual average of $12bn for the 2011-2016 period).

The key challenges, identified by the report, to investors seeking suitable projects include “bankability of projects, institutional capacity, political risks and interference and the legal and regulatory framework. Lack of infrastructure planning was also identified by a number of respondents as an area of concern.”

So what can be done? According to a background paper commissioned by the Japan International Co-operation Agency and presented at the 2017 Africa Emerging Markets Forum (, Africa must double its spending on infrastructure over the coming years to simply maintain its current financing needs.

There is an imbalance in the type of projects that attract funding: while certain sectors’ financings are oversubscribed and a lack of bankable projects is quoted as the cause for the lack of investment, the ICA report identifies specific sub-sectors (“particularly larger transport and water projects”) as facing a clear funding gap. The disparity is even more apparent amongst projects with private sector participation: ten out of the twelve projects that reached financial close in 2016 were energy related (the majority of which in solar), with the remaining two being in the transport sector – no water or ICT projects were recorded for 2016.

Regionally, West Africa attracts the largest proportion of investments, according to the ICA report, including the largest amount of privately sourced finance (representing $1.52bn of the $2.56bn of private sector capital received in 2016) (unsurprisingly, “political and economic security, as well as a clear and positive regulatory framework” were found to be key drivers for private investors when polled about their top investment destinations in Africa).

The ICA argues that emerging trends such as “the adoption of smart and integrated infrastructure, as well as more recognition of the role of corridor management for regional projects” could help attract new types of investments in Africa.

It also identifies early stage development finance (such as that provided by newly established funds – the Africa50 Infrastructure Fund, the New Development Bank, etc.) as an alternative source of funding, although the report notes that private sector investors remain for the large part unaware of the opportunities such development partners can offer. Finally, the report suggests that pension funds and sovereign funds could be future investors in the African infrastructure sector, although it recognises that this will require new financial instruments, as well as reforms both in the countries in which the investments are to be made and in which those investors are regulated.

The aim of the report, as articulated by ICA’s co-ordinator Mohamed Hassan, is to “help stakeholders grasp the opportunities available to mobilise greater resources for Africa’s infrastructure development, so that the ICA’s vision that all Africans should have access to reliable and sustainable infrastructure services can be realised.” The ICA is a consortium of bilateral donors (including all G8 countries), multilateral agencies (the World Bank, the European Commission, the European Investment Bank, etc.) and African institutions (such as the African Development Bank and the Development Bank of Southern Africa), which promotes investment in infrastructure projects across Africa.


The Inside Africa team would like to thank Coraline Knights, an associate, for her contribution to this blog post.



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