Africa needs USD130-USD170 billion for infrastructure – Report

Despite the continent contributing at least 40% of the current $80 billion annually towards its infrastructural growth, there is a significant financial gap in funding and this has hindered Africa’s growth.

Statistics reveal that this gap is costing Africa a 2% annual reduction in its GDP growth hence resolving to adopting innovative financing solutions through domestic resource mobilisation and governance reforms as it is therefore critical for governments balancing competing budget lines.

The recent new report which was launched in South Africa at the 5th finance in common summit, the global summit of public development banks laid out important loopholes and opportunities for the Africa –Europe partnership scout for more opportunities that will unlock Africa

As Africa forges forward in matters infrastructure, the Africa-Europe foundation and the African union development agency (AUDA), in partnership with the African climate foundation, have crafted and released a new report addressing the infrastructure gaps in the continent dubbed: The missing connection: unlocking sustainable infrastructure financing in Africa.

The African union development agency (AUDA)- NEPAD chief executive officer (C.E.O) Nardos Bekele Thomas expressed the need for the continent’s cooperation noting that infrastructure development could not succeed when sectors operate in isolation.

“Energy, transport, water, and digitalisation must function as parts of a larger whole, creating synergies that drive sustainability and long-term impact. Coordinating efforts across these interconnected sectors ensures that every road, bridge, or power plant becomes a vital link in a broader network that uplifts communities and fuels economic growth” she uttered.

The executive director of the Africa -Europe foundation Paul Walton notes that “Unlocking untapped areas of cross-continental action is in the DNA of the Africa-Europe foundation and our joint work with AUDA-NEPAD and the African climate foundation. At a time when the world needs the Africa-Europe partnership to commencement, our report focuses on concrete actions and processes that will unlock more and smarter money to address the critical challenges faced by our societies.”

The executive director of African climate foundation Saliem Fakir hints that “The African climate foundation works towards transforming major economic sectors in Africa through our country investment platforms and focus on the opportunities that can ignite and unlock the much needed investment on the continent – outlined in this report.”

The just ended 5th Finance in Common Summit in association with South Africa’s Presidency of the G20, the African and European public development banks port serves as an operational blue print for both African and European banks and regional institutions to unlock the needed finance without worsening the continent’s debt crisis.

Priority areas that needs addressing includes leveraging the G20 for domestic resource mobilisation

South Africa’s G20 Presidency, corresponding with the defining financing for development conference, is key to activate the level of ambition on internal revenue mobilization and this includes clear actions on combatting illicit financial flows (estimated at $50-115 billion annually.

Reinforcing the Africa-Europe partnership to unlock investment.

The report highlights the scope for an effective working relationship between Africa and Europe that will release $2.3Trillion in investment pension and sovereign wealth funds currently locked-up overseas. It also calls for enhanced co-design and co-ownership in the implementation of ‘Team Europe’ pledged financing to ensure the impact and visibility of the flagship European Union global gateway initiative.

It further calls for the embracing of digital and artificial (AI) industry-wide to bring change

 “With digitally-driven approaches and organic artificial intelligence (AI) solutions emerging, accelerating growth and maturity needs industry-wide strategic and targeted interventions across the infrastructure ecosystem varying from asset managers to contractors and software vendors. Investment in digital public infrastructure is the technological backbone of sustainable development, leading to transparency in financial management and accelerated regional integration.”

Giving preference to infrastructure investments at the energy –climate-health nexus is key as Africa plays a key role in the global energy transition, with significant reserves of the minerals vital for global decarbonisation and consequent health co-benefits, as well as a massive store of arable land that can improve food security and support export-driven growth.

The report is also meant to standardize infrastructure investment data collection for an industry wide reporting and streamline funding processes (‘smart money not only more money’), increase transparency between investors and managers, and maximise industry participation.

These harnessed initiatives and reforms alone could generate more resources to meet Africa’s infrastructure investment gap.

To steadily improve infrastructure gaps in Africa, sustained governance improvements, financial transparency, and long-term equitable international collaboration is required from the key players.

 In a changing geopolitical context where development aid is contested and purse strings are tightening, it is crucial to improve the quality and efficiency of existing investments and projects.