With Africa facing an annual infrastructure funding deficit estimated at $68 billion to $108 billion, according to the African Development Bank, the global investment firm Meridiam is planning to double its investments on the continent.

In an interview with Ecofin Agency, Meridiam's new Africa Director, Mete Saraçoğlu, discussed the challenges of financing, local community involvement, and implementation constraints. The company, which already has strategic assets in Senegal, Gabon, and other African countries, also details its experience from landmark projects like the Dakar Bus Rapid Transit (BRT) and the Owendo Mineral Port. Saraçoğlu also outlined the firm's strategy for strengthening its presence across Africa.

Ecofin Agency (EA): You've just taken over Meridiam's Africa division, a continent that's a key part of your strategy. What are your main priorities?

Mete Saraçoğlu (MS): I will build on the work of my predecessor. My main priority is to double our business in Africa in the coming years. That means continuing to develop and invest in new projects while ensuring the strong performance of our existing assets—both financially and in terms of their impact. As our founder, Thierry Déau, intended, we place great importance on the social and environmental impact of our portfolio assets, focusing on the quality, accessibility, and performance of services for users across the continent.

EA: Access to funding remains a major issue in Africa, and the infrastructure gap is holding back development. The African Development Bank estimates the annual infrastructure funding deficit at $68 billion to $108 billion. What are your thoughts on the scale of this gap? What concrete solutions could help meet these investment goals?

MS: The assessment is correct, and we, like other players, are trying to provide solutions. Across Africa, there are enormous needs and challenges, and locally, many very interesting solutions are being proposed. The biggest challenge is often turning a good idea into a concrete, real-world project. Eighty percent of potential solutions never make it to a feasibility study, and half of those that do never reach financial close. One of the main challenges in Africa remains coordinating the entire ecosystem of stakeholders to bring projects to completion. Priorities can shift depending on urgent needs, and so can macroeconomic conditions like inflation or interest rates.

One of the main challenges in Africa remains coordinating the entire ecosystem of stakeholders to bring projects to completion

Faced with these constraints, Meridiam's approach remains the same: we bring project stakeholders together to work in-depth and transparently on developing concrete solutions. We then proceed with tenders, support the government in its choices, and finally invest, operate, and develop the infrastructure. Project implementation in Africa can be complex, long, and tedious, and some projects don't come to fruition. But we take a long-term view and have a genuine capacity to support states with these projects. To do this, we rely on all interested development banks and potential investors to contribute alongside us.

EA: How would you characterize Africa's infrastructure needs?

MS: Africa has both needs and resources. There are new projects to build, but also existing infrastructure to rehabilitate and reintegrate into countries' economic life. We see three major priority areas for infrastructure in Africa: the energy transition, sustainable mobility, and critical infrastructure. The first category includes decarbonized energy production as well as waste treatment and water production. The second covers transportation infrastructure, such as ports, airports, highways, railways, and public transit. The last area includes 'social' infrastructure like hospitals, schools, and public buildings, as well as 'digital' infrastructure like fiber optic networks and data centers. We manage projects in all these areas because we believe it's our responsibility to offer solutions to the problems governments in many African countries face in these different aspects.

We see three major priority areas for infrastructure in Africa: the energy transition, sustainable mobility, and critical infrastructure.

EA: The Dakar Bus Rapid Transit (BRT) is one of your landmark projects. What's your assessment of the project after a year of operation, and what opportunities do you see for improvement?

MS: The project addresses a fundamental need for sustainable, efficient, and high-quality mobility in Dakar. We introduced an electric bus network to the country, a new technology that relies on local human resources for management, which helps develop expertise, transfer skills, and create jobs. After the first year of operation, we have seen very high levels of public satisfaction.

The project was divided into two parts: the state handled the infrastructure construction, but everything related to the acquisition of rolling stock and concession operations was awarded through a tender, which we won. The concession model chosen by the Senegalese state gives it a lot of flexibility in managing the project. However, there are still opportunities for improvement, particularly in the upfront design and implementation of the project.

In our view, it would have been better to select the operator first and then design and adapt the infrastructure to that operator's needs before construction. In our case, the infrastructure was built for a different technology, so we had to adapt it a posteriori to our electric bus fleet, which led to additional delays. For projects involving new construction, it's always best for all parties to communicate from the very beginning to avoid unnecessary costs and delays.

The infrastructure for Dakar’s BRT was built for a different technology, so we had to adapt it a posteriori to our electric bus fleet, which led to additional delays.

EA: Meridiam has also been part of Gabon's logistics transformation, particularly through the development of the Owendo Mineral Port. What are your short- and medium-term outlooks for this strategic port, and more broadly, for your partnership with Gabon in the port and logistics sector?

MS: The port is a very important asset that makes a significant contribution to Gabon's economy, especially for manganese exports, thanks to its connection to the rail network. While the evolution of trade remains a variable, we are committed to making more investments to increase the port's capacity. This helps the asset grow to meet the needs of the Gabonese government, which shares our ambitions. And these aren't our only investments in Gabon. We are also involved in developing the country's rail and highway networks, as well as its first independent power production project. We are involved in key sectors in Gabon, working alongside the government to meet the country's infrastructure and development needs.

EA: A large part of your business is based on public-private partnerships. How does collaboration with administrative authorities work? Are some national contexts more complex than others?

MS: Given our significant presence across the continent, we have a very clear view of local needs, both through the tenders we respond to and our discussions with local authorities. In both cases, we operate with complete transparency to develop a proposal with governments that addresses identified needs. We outline our approach for the project's construction, financing, and management. The concept of a public-private partnership is like a 25- or 30-year marriage, which is typically the duration of our investments in a project. The key to success is precisely in involving governments in a project's development, including capital participation.

It's true that when governments change, some contractual aspects may be renegotiated. However, the transparency with which we manage our projects and the importance of the services we provide to local populations help prevent any fundamental challenges. These two dimensions are what give our public-private partnerships their full value.

When governments change, some contractual aspects may be renegotiated. However, the transparency with which projects are managed and  the importance of the services provided [...] help prevent any fundamental challenges

EA: Are investors hesitant to put money into Africa?

MS: Our investors may have questions about the African macroeconomic context or specific events, such as the COVID crisis or certain regime changes. But the duration and significance of our investments are usually the answer to those questions. This is because most of our investors are long-term investors like us, and the long-term nature of our operations on major infrastructure projects protects us from temporary shocks. Over decades of a presence, things will inevitably happen around our projects—that's a given. But the importance of our projects and the benefits they provide to local communities and regions allow them to overcome any risks.

EA: Projects like the Nairobi-Mau Summit highway and the Donsin airport have faced difficulties. Do these setbacks cause you to reconsider your strategy in Africa? And how do you currently assess the political, regulatory, and economic risks in Africa?

MS: We did win the tenders for those projects, but the newly elected authorities ultimately decided not to proceed with the original plan. That is a sovereign choice by the local authorities, and we respect it every time. This is an inherent constraint of long-term projects like ours: changes in government are not always easy to anticipate or manage. The partnerships we build are long-term marriages, as I said before. And, like in any marriage, there can be disagreements about how to proceed with ongoing projects, as was the case with the ones you mentioned. It's obviously better to resolve differences before a project starts, because it's much more complicated to manage once a project is operational or even under construction. But this does not mean we will change our strategy.

It's obviously better to resolve differences before a project starts, because it's much more complicated to manage once a project is operational or even under construction

We will always work with complete transparency and in close collaboration with the states that are our partners. We are committed to involving our local counterparts as much as possible at every stage of a project—be they governments or national sovereign funds—to best align everyone's interests over the entire life of the project. This transparency is what helps newly established authorities take ownership of the projects, allowing them to make informed decisions about whether to continue or not.

Interview by Henoc Dossa,

Adapted in English by Mouka Mezonlin