Africa’s infrastructure financing needs are estimated at $130 billion per year.
Average yearly infrastructure financing needs in Africa are estimated to be about $130 billion through 2025, of which only about 60% ($80 billion) was being funded in 2015, leaving a large financing gap. Similarly, project development spending needs are estimated at $6.5 billion a year, well above the $4.0 billion funded in 2015. Africa50 is designed to narrow these gaps. It facilitates project development and channels capital from private investors into well-structured projects. Thanks to its sovereign shareholder base it is well positioned to overcome project bottlenecks by mobilizing the necessary political support.
Barriers to Bridging the Infrastructure Financing Gap
|Public Sector||Private Sector|
|1. Limited public resources||2. Limited government capacity to implement projects||3. Enabling environment/ regulatory constraints||4. Limited number of early risk-takers and credible private players|
|Budgetary constraints and inefficient use of resources limit the number of projects the public sector can fund||Not enough well- prepared projects are ready for financing and implementation||Slow progress in establishing enabling environments conducive to PPPs||Early-stage investors and strong private sponsors are wary of Africa due to a perception of high risk|
Africa50: A Bridge Between the Public and Private Sectors
|Africa50 In the Public Sector||Africa50 In the Private Sector|
|Substantial government ownership combined with private sector management: |
– Constructive relationships with government shareholders
– Clear mandate to attract private investors by generating market based returns on equity
|Improve infrastructure in Africa by developing bankable projects and catalyzing investments into shareholder countries|
|Strong sponsorship from the AfDB||Leverage public funds to raise private capital from long term institutional investors in Africa and elsewhere|
|Support from other development banks||Operate commercially with an appropriate financial return while promoting economic development|
|Leverage government and AfDB ownership to support investees||Become a leading African infrastructure investor|