If Africa wants to leapfrog its infrastructural hurdles, then it must look beyond its own pockets to bridge its huge financing gap. This emerged during the Africa 50 general shareholders meeting held in Marrakech, Morocco on July 19. Africa 50 is an investment bank for infrastructure in Africa that focuses on national and regional projects in energy, transport, ICT, and water.
Despite an uptick in financing from the African Development Bank (AfDB), the continent still requires between $68 billion to $108 billion every year to build better infrastructure.
Chair of the Africa 50 board and CEO of AfDB Akinwumi Adesina told delegates that public funds are not sufficient in funding transport, electricity, water, and internet connection projects in a time when the continent is facing economic strife due to the war in Ukraine, global inflation and an acute dollar shortage.
“Public funds will not be sufficient in these challenging times. We have to look for additional capital from development partners, the private sector and institutional investors.”
In the past seven years, AfDB invested $44 billion in Africa’s infrastructure while Africa 50 injected $5 billion in the past six years but many countries still have poor road and rail networks, no access to clean water, intermittent electricity, and low internet penetration.
Director-general of the Corporate Council on Africa (CCA) Florizelle Liser said time had come for Africa’s infrastructural workforce to exploit its untapped potential in natural resources. CCA is a US business association focused solely on connecting business interests in Africa.
“Institutional investors contribute $100 trillion to global funding. And 45% of this comes from the US.”
Alain Ebobisse, CEO of Africa 50, noted that the continent is not tapping enough institutional capital at a time when climate change is destroying infrastructure.
“Bridges get washed away, power lines disconnected and irrigation schemes go dry. Having good ideas is not enough, we need structures on how to implement them,” Ebobisse remarked.
Two central banks, AfDB and 28 countries are members of the Africa 50 vehicle, and 41% of its funds go to climate change funding in the continent.
AfDB’s Alliance for Green Infrastructure in Africa is collaborating with Africa 50 to raise $500 million of early-stage capital for project development targeting to generate $10 billion worth of business opportunities but huge roadblocks lie ahead.
While Africa has the potential of generating 11 terawatts of solar power, 350 gigawatts of hydroelectricity, 110 gigawatts of wind power, and 15 gigawatts of geothermal power, 770 million Africans had no access to electricity in 2019 according to the International Energy Agency (IEA).
Water insecurity is also hurting the continent, with at least 400 million people struggling to find clean water. Only about 31 km per 100 square km of land of Africa’s roads are paved in comparison to 134 km in other low-income regions. Roads in cities are also in poor state.
The World Bank estimates that for Africa to achieve universal connectivity by 2030, an investment of $100 billion is required but as at May 2022, only 36% of Africans were connected to the internet compared to a global average of 62.5%. At least 300 million Africans live more than 50 kms from a fiber or cable broadband connection.
IFC and Google estimate that proper investment in Africa’s internet infrastructure could add $180 billion to the continent’s GDP by 2025.