African nations need a collective $100bn per year in extra funding if they are to meet vital infrastructure goals, according to Akinwumi Adesina, president of the African Development Bank (AfDB).
Reflecting on AfDB’s recent launch of its Africa 50 initiative – a platform to mobilise funding for public-works schemes from the private sector – Adesina told the News Agency of Nigeria that some of that additional funding could come from resources that already exist in the continent’s financial system.
“Today, Africa has about $164bn in sovereign wealth funds that can be easily used to finance infrastructure,” he said. “Our pension funds that we have in Africa are over $360bn, and this can also go into infrastructure.”
He explained: “The bank’s role is to de-risk those investments so that private sector firms can invest. The bank is also investing in rail in East Africa [and other rail projects] that will connect the ports of Mozambique to Uganda and Rwanda. We have also invested in roads connecting Lagos to Abidjan and Abidjan to Dakar [and] in air transportation and navigation systems for many airports, and will continue to invest.”
Adesina put the level of foreign direct investment (FDI) to Africa in 2015 at around $64bn, and called for FDI to rise in line with the bank’s projected funding needs for the continent.
The president’s plea chimed with the message of recent report Africa at the Crossroads: Bridging the Infrastructure Gap – published in November by international ports operator DP World in partnership with business journal The Economist’s Intelligence Unit.
That report stated: “To overcome infrastructure deficits on the continent, as much as $93bn will be required annually (approximately 10% of GDP), with only half of that amount currently available.”
It added: “Increasing levels of economic activity are taking place on a deficient network of roads, railways and power systems – not to mention the burden that the growing population places on public infrastructure… Only 11.3% of trade in Africa is intra-regional, and exports remain skewed towards providing raw minerals to global markets.”
However, in a statement, DP World chairman His Excellency Sultan Ahmed Bin Sulayem struck an optimistic tone, saying: “Private-public partnerships are an increasingly popular model to fund projects, and the regulatory frameworks supporting them are improving.
“In addition, resource-rich countries are using their commodities as leverage to obtain infrastructure investment.”
Bin Sulayem also pointed out: “Today, a growing number of the new natural-resource contracts that African governments hand out have an ‘infrastructure industrialisation’ component, requiring the company in question to invest in new infrastructure.”