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AIF highlights the imperative for Africa to tackle infrastructure gap

Tuesday, 14 November 2023 18:25
AIF highlights the imperative for Africa to tackle infrastructure gap

(Ecofin Agency) - Africa is challenged with a huge infrastructure deficit estimated at $68 to $108 billion. While analysts have raised the issue as a major obstacle to the continent's economic development, efforts are multiplying to reduce this gap.

The challenge of sustainable infrastructure development was extensively discussed this week during the AIF Market Days 2023 in Marrakech. Ahead of a panel dedicated to regional corridors, the President of the African Development Bank urged various stakeholders to work together to find solutions to the problem and promote increased continental integration to enhance competitiveness.

Beyond discussions, the meeting witnessed several significant announcements in infrastructure development. The Mohammed VI Investment Fund (FM6I) has signed a letter of mandate with the European Investment Bank (EIB) to secure €500 million in financing. The funds will be allocated to infrastructure projects, the introduction of innovative financing mechanisms to support Moroccan businesses, and the strengthening of FM6I activities in private equity and venture capital.

During the forum, Sédiko Douka, ECOWAS Commissioner for Infrastructure, Energy and Digitalization, said that a total of $43 million had been raised for preparatory work on the Lagos-Abidjan highway project. Donors included the AfDB and other partners. The feasibility study for the project is now complete. The project, which is expected to link Nigeria, Benin, Togo, Ghana and Côte d'Ivoire, attracted $15.2 billion in investment interest at the AIF 2022.

The AfDB President indicated that his institution had allocated a total of $44 billion to infrastructure development in Africa over the past 7 years. This sum has been used to finance 25 transport corridors, build over 18,000 kilometers of roads, 27 border crossings and 16 bridges. Infrastructure projects supported by the AfDB include the Mozambique-Beira corridor, the Kazungula bridge, the Nacala rail and port project, the Senegambia bridge, the Lobito corridor, the Desert-to-Power initiative, etc.

Still Colossal Needs

Despite the various efforts made in recent years to reduce the infrastructure financing deficit in Africa, the gap remains significant. At Market Days 2023 in Marrakech, Julius Maada Bio, President of Sierra Leone, acknowledged that the continent still faces a serious infrastructure deficit, and that this deficit acts as an obstacle to its ability to transform its economy. Several reports confirm these comments.

According to the World Bank, for example, the cost of spending on sustainable infrastructure in developing countries should amount to 4.5% of their GDP. Developing countries will also need $2.4 trillion a year over the next seven years just to meet the costs of climate, conflict, and pandemics, the organization said, pointing out that even under the most favorable circumstances, no single economy can raise such sums. According to another report available on Ecofin Pro, the investment needed for the development of infrastructure on the continent is estimated at $130 billion to $170 billion per year. Of this total, the financing gap would be between $68 billion and $108 billion per year.

Furthermore, a report published this week by the African Development Bank (AfDB) indicates that Africa is facing a major deficit in road infrastructure, with only 43% of the population having access to drivable roads in all seasons. Only 53% of the continent's roads are paved, isolating populations from basic services and economic opportunities.

Given the importance of productive infrastructure in the fields of electricity, water, and transportation for the economic development of Africa and the reduction of poverty on the continent, the scale of the remaining work is still enormous, acknowledged by various leaders, decision-makers, and economic actors on the continent.

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ECOFIN AGENCY offers a selection of articles translated from AGENCE ECOFIN. Founded in 2011, Agence Ecofin is a leader in Francophone Pan-African economic news, particularly in West and Central Africa. The agency publishes daily news on nine African economic sectors: Public Management, Finance, ICT, Agribusiness, Energy, Mining, Transport & Logistics, Communication, and Training.

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