Investors ‘more willing than ever to back African infrastructure projects’, says IFC

The World Bank’s International Finance Corporation (IFC), which supported the ‘Africa Investor CEO Infrastructure Developers’ Summit’ in Cape Town, said “private investors are more willing than ever to fund strong projects on the continent under the right conditions”.

According to the IFC, “while only about half of the more than $90 billion in regional infrastructure needs are being financed from any source today, regional and global financiers face a scarcity of projects capable of being funded”.

IFC vice-president for global client services Jean Philippe Prosper said: “There is no question that Africa is rising. However, Africa still faces many challenges, the biggest of which is infrastructure.”

Prosper said: “Infrastructure project development takes time and risk, and investors will only commit the effort if the conditions are right. We want to encourage policymakers to build more capacity to improve regulation and institutions, and public-private partnerships that balance interests through appropriate risk sharing mechanisms."

The IFC said it has identified large-scale public housing projects as a key area for support that can also spur the development of associated infrastructure in Africa.

On 29 May, the IFC and Chinese multinational construction and engineering company CITIC Construction Co Ltd launched a $300 million investment platform, CITICC (Africa) Holding Limited, to develop affordable housing in sub-Saharan Africa (SSA). The IFC said the platform “will partner with local housing developers and provide long-term capital to develop 30,000 homes over the next five years”.

“Africa’s housing market has few local developers with the technical and financial strength to construct large-scale projects,” the IFC said. The platform will work with local housing companies to develop affordable housing projects across SSA, “each ranging in size from 2,000 to 8,000 units”. The first homes to be developed will be in Kenya, Rwanda and Nigeria, “expanding to other countries as operations ramp up”.  

Assistant president of CITIC Group and chairwoman of CITIC Construction, Hong Bo, said the company had already built 200,000 homes in the new city of Kilamba Kiaxi in Angola, together with associated infrastructure and utilities, in a separate four-year programme.

Bo said: “CITIC Construction will take advantage of our engineering experience and delivery capability to develop more affordable houses for Africa through the platform with IFC.”

According to a study released by professional services firm PwC last March (88-page / 4.30 MB PDF), “private real estate capital will become an important partner of governments” across Africa. The study said “property market expansion is associated with the development of basic infrastructure, such as roads, water and electricity”.

“A general trend across the continent is continued support from government for real estate development,” the study said. “The government of Nigeria made $300 million available during 2013 to support real estate development in the country, Kenya’s government in collaboration with the African Development Bank raised $10bn to support the Konza Technology City project, and the Ghanaian government is considering policy reform to bolster real estate support.” In addition, the study said South Africa’s government, in collaboration with the Development Bank of Southern Africa and the European Union, had entered into a joint initiative to raise $130m to support infrastructure development in the southern African region.