The African Development Bank (AfDB) estimates that by 2025, Africa will need $170 billion annually for infrastructure financing. Multilateral development banks and government-supported institutions play a crucial role, contributing roughly $100 billion to $120 billion each year towards development projects in low- and middle-income nations. Nevertheless, this results in a substantial financing gap, with many vital projects left underfunded.

Addressing Africa’s vast infrastructure needs in sectors like energy and healthcare cannot rely solely on government efforts. To bridge the financing gap, innovative funding strategies, such as public-private partnerships and cross-border investments, are essential. Engaging private capital through strategic alliances with export credit agencies, development finance institutions, and multilateral organizations can be pivotal in securing the required resources.

The Emerging Africa Infrastructure Fund (EAIF) is a public-private partnership that provides long-term debt financing for infrastructure projects in sub-Saharan Africa. In its most recent funding cycle, EAIF raised $294 million in debt facilities, one of the largest blended finance debt packages for African infrastructure. Key contributors include the governments of the UK, Netherlands, Sweden, and Switzerland, alongside private investors like Allianz and Standard Chartered Bank. This support enables EAIF to offer flexible and patient capital for significant infrastructure initiatives that enhance connectivity, foster regional integration, and drive sustainable economic development across the continent.

New projects address systemic challenges

€22 million loan is currently supporting the development of clean water infrastructure in rural Luanda. The Quiminha water project aims to refurbish the Quiminha Dam and create new water storage and distribution systems, serving approximately 100,000 rural residents.

This initiative aims to elevate living standards and stimulate economic growth by ensuring a reliable supply of clean water for industrial and agricultural uses in the Quiminha region, a crucial agricultural zone. The World Bank recognizes agribusiness as vital for Angola’s economic diversification. This project exemplifies how international financing expertise can help mitigate climate-related challenges and enhance access to essential resources.

In rural Angola, a significant €1.29 billion financing agreement with Standard Chartered aims to establish solar-powered electricity distribution networks for off-grid communities. This initiative enhances energy security while contributing to sustainable development goals by decreasing reliance on traditional energy sources. Utilizing renewable energy not only strengthens local energy resilience but also plays a crucial role in achieving global climate targets. Such projects address urgent infrastructure needs and provide long-term advantages through improved trade and connectivity, paving the way for a thriving and sustainable future.

In 2024, the Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC) and a banking partner financed a $174 million project aimed at constructing hospitals in Kong and Odienne, significantly boosting Côte d’Ivoire’s healthcare infrastructure. Equipped with modern technology, these hospitals seek to enhance access to high-quality medical services, aligning with the government’s National Development Plan and the objectives of the IMF and WHO to strengthen healthcare systems in developing regions.

Energy infrastructure remains a critical investment domain across Africa. In 2022, CrossBoundary Energy Access (CBEA) successfully secured $25 million from ARCH Emerging Markets Partners Limited, the Microsoft Climate Innovation Fund, and private banking institutions. These funds are allocated for solar-powered mini-grids across Africa, aiming to deliver clean energy to one million individuals, thus supporting the United Nations Sustainable Development Goal Seven (SDG7) on affordable and clean energy.

In Tanzania, the Ministry of Finance formalized a financing agreement with Standard Chartered Tanzania, designating it as the global co-ordinator, bookrunner, and mandated lead arranger for a $1.46 billion term loan geared toward funding the 550km Standard Gauge Railway (SGR) project linking Dar es Salaam to Makutupora. This railway will connect Tanzania to Burundi, Rwanda, and the Democratic Republic of Congo (DRC), facilitating regional trade. The project has already created over 8,000 direct jobs for Tanzanians and has enabled local communities to access essential social services. It represents one of the largest infrastructure projects in the nation. According to the Tanzania Railways Corporation, the railway will alleviate congestion and reduce freight service costs by 40%, transporting 10,000 tons of goods, comparable to 500 lorries, per trip.

The urgent need for investment

Financing Africa’s infrastructure challenges extends beyond mere financial figures; it involves cultivating an environment conducive to investment while ensuring that projects are sustainable, resilient, and inclusive. Now more than ever, innovative financial frameworks and cross-border partnerships are critical to addressing the infrastructure dilemma.

International investors, development entities, and private capital sources must continue to collaborate, utilizing their collective expertise and resources. The potential for transformative impact is significant – surpassing immediate infrastructure enhancements, these initiatives create employment opportunities, improve living conditions, and promote sustainable growth.

By mobilizing the necessary capital for resilient infrastructure, Africa can make significant strides toward industrialization, job creation, and integration into global trade, thus securing a prosperous future for its citizens.

The time for decisive action is now. International collaborations and investments must align with Africa’s ambitious vision for the future, ensuring that infrastructure acts as the bedrock of the continent’s economic evolution.