Report urges doubling of infrastructure investment in Africa

The ICA’s latest annual report, ‘Infrastructure Financing Trends in Africa 2016’ (100-page / 16.5 MB PDF), said disbursements by the organisation’s members amounted to $13.4 billion in 2016 – the “highest yet reported and up by 6% from $12.6bn in 2015”.

The report said disbursements “have now remained quite consistent for the last five years, at an average of $12.6bn”. The value of projects with private sector participation reaching financial close in 2016 was $3.6bn, of which $2.6bn was private capital.

However, this was “a significant decrease on the private capital recorded in 2015 ($7.4bn) and 2014 ($5.1bn)”, the report said.

Navjeet Virk of Pinsent Masons, the law firm behind Out-Law.com, said: “The quantity and quality of infrastructure is directly linked to job creation, economic growth and poverty reduction. Although infrastructure funding by the public sector has increased, public spending alone is not enough to address the region’s needs and the significant decrease in private capital is therefore disappointing.”

Virk said: Recent developments such as Ghana’s new PPP Bill should help to encourage increased private sector investment.”

According to the ICA’s report, financial commitments to the transport sector fell to $24.5bn last year from $32.4bn in 2015 and financing of energy projects in Africa fell to $20bn in 2016 from what the report said was a “record high” of $33.5bn in 2015. ICT sector commitments were also down in 2016 – to $1.6bn from $2.4bn reported in the previous year.

ICA coordinator Mohamed Hassan said: "Identifying emerging trends that will bring new types of funding and new investors in Africa’s infrastructure development must be considered an important task.”

The ICA is a tripartite relationship of bilateral donors, multilateral agencies and African institutions. All G8 countries are members of the ICA as are the World Bank, International Finance Corporation (IFC), European Commission and European Investment Bank. Africa’s membership is led by the African Development Bank and the Development Bank of Southern Africa. South Africa is the first G20 non-G8 member of the ICA, and the first African country member.

The IFC said earlier this year that its priorities in Africa included “bridging the infrastructure gap… and promoting access to finance through financial institutions”.

Over the last fiscal year, the IFC said its advisory services spending in Africa reached $65m, with 126 active projects in 42 countries “valued at $217m over the life of the projects”.

Last May, the IFC, together with Google Inc., Convergence Partners and Mitsui & Co., agreed to invest up to $100m in CSquared – a partnership focused on deploying “wholesale, carrier-neutral, open-access fibre optic networks” across SSA.