An African Development Bank Group delegation, led by Acting Chief Economist and Vice President Kevin Urama, was in Washington D.C. 20-29 July, and London 1-2 August, to discuss the AEO, a flagship publication of the Bank, with global market players.

The verdict was clear. From the International Monetary Fund to the World Bank, the Centre for Global Development, Brookings Institution, the Atlantic Council, and the University College London this week, speakers agreed that the 2022 AEO provides evidence-based policy options for driving inclusive growth by building climate resilience and a just energy transition in Africa.

“If we want to avoid reinventing the wheel about the climate narrative, then the AEO 2022 is a must-read as we prepare for COP 27, ‘Africa’s COP’,” said Aloysius Uche Ordu, director of the Africa Growth Initiative at the Brookings Institution.

He said the report lays out actionable policy recommendations that should form the basis for discussions on how to support Africa’s climate resilience at COP 27, the United Nations climate conference, to be hosted by Egypt this November.

Yacob Mulugetta, professor of energy and development policy at the University College London, observed that the AEO captures how low-carbon transitions in Africa will vary from country to country.

“What this means is transformational socio-economic opportunities must be at the forefront of the green energy transition. This will require new technologies as well as climate finance…which is additional finance beyond official development assistance,” Mulugetta said at a public seminar for policy stakeholders in the UK on Monday.

Andrew Steer, CEO of the Bezos Earth Fund, said the 2022 African Economic Outlook is “an excellent report that lays out beautifully this sobering time for Africa, in particular, but actually for the whole world.”

These he explained, include “a slowing world economy, the perfect storm of rising food prices, rising energy prices, rising interest rates, and shocking increases in the impact of climate change and green vulnerability at a time that international resources are not what they need to be.”

Speaking at an AEO presentation at his organization’s headquarters in Washington D.C., Abebe Selassie, Director of the African Department at the IMF, observed that African policymakers face the unenviable task of needing to invest trillions of dollars on the transition to cleaner energy, which the region needs to advance its development.

Selassie said the findings of the 2022 African Economic Outlook were “sobering”, observing that the publication “raised some profound issues.”

In several presentations, VP Urama called on the world to treat climate finance with the same vigor it approached the Covid-19 pandemic. For a start, he wants developed countries to keep to their commitment to provide $100 billion in climate finance to developing countries to support climate adaptation and mitigation..

“Africa is facing high climate vulnerability. Climate change affects millions. 600 million Africans are without electricity. To create jobs and reduce poverty, Africa needs energy. Bold, innovative financing ideas abound. Now is the time to leverage them,” he remarked. “Carbon dioxide emission does not know boundaries; it does not need a visa to travel.”

The African Economic Outlook is published annually. It is a tool for economic intelligence, policy dialogue, and operational effectiveness, and provides compelling up-to-date evidence and analytics to inform and support Africa’s decision-makers.

The 2022 Outlook highlights climate change as a growing threat to lives and livelihoods in Africa. It also makes it clear that the Covid 19 pandemic and the Russia-Ukraine war are placing additional burdens on African economies and livelihoods across the continent.  

The African Development Bank Group launched the Outlook during its Annual Meetings in May in Accra, Ghana.

Click here to watch recordings of the discussions

Click here to view photos

Click here to watch AEO 2022 summary video

Contact: Emeka Anuforo, Communication and External Relations Department, media@afdb.org

Certainly, the headline messages make for grim reading. Africa has suffered terribly from the twin crises of Covid-19 and Russia’s invasion of Ukraine, while the escalating impacts of climate change – felt sooner and harder in Africa than anywhere else – chip constantly away at the continent’s productive capacity.

The year 2020 saw Africa slip into its first continental recession in over half a decade, and governments, needing to rapidly expand support to their ailing economies, were forced to incur massive amounts of debt that have stabilised, on average, at above 70% of GDP. 

Source: African Business

Launched on 12 November at the Africa Investment Forum, the ICA’s Infrastructure Financing Trends in Africa 2018 report shows that financing of infrastructure in Africa reached a new high of $100.8 billion in 2018, a jump of about a quarter on 2017 and 38% up on the 2015-2017 average.

Mike Salawou, ICA Coordinator, and Manager of Infrastructure Partnerships, at the African Development Bank, commented: “Over the years the Infrastructure Financing Trends in Africa report has become an important document for presenting, in a consistent manner, how funding is being mobilised to develop the continent’s infrastructure. 

“The report’s publication during the Africa Investment Forum is extremely timely. While the increase in financial commitments in 2018 is very welcome, the report also serves to highlight the size of Africa’s infrastructure financing gap – one of the key issues addressed during the forum,” Salawou said.

This years’ report shows the role ICA continues to play in institutional and policy reform as well as its consistent financial contribution within the infrastructure space. This, along with a 65% and 33% increase in commitments over the previous 3-year average by China and African Governments respectively, and the role of other multilateral organisations resulted in the 24% increase recorded in infrastructure financing for 2018.

 Among the key findings of the report was an increase in financing commitments across all sectors, with a notable increase in the energy sector, which attracted financing commitments worth $43.8 billion, an all-time high and a 67% increase on the 2015-2017 average. The ICT sector also saw record commitments in 2018 of $7.1 billion, mostly from the private sector.

Even with the significant increase in commitments in 2018, there remains a total financing gap of $52 billion to $92 billion per year. Yearly estimates of Africa’s financing requirements range from $130 billion to $170 billion. Water and sanitation has the largest financing gap of all the sectors, based on annual financing needs of $56-$66 billion and a 2016-2018 average commitment of $13 billion.

Panellists Dr. T. Nyirenda-Jere, Dr. B. Ben Yaghlane, Dr. I. Urua, Mr. C. Kirigua and Mr. P. Guislain, addressed key messages highlighted in this year’s report, which includes, the need to increase both public and private sector financing, strengthen governance and improve the quality of infrastructure services.

Africa Investment Forum took place from 11 to 13 November 2019 in Johannesburg, South Africa, and offered a platform for sourcing funding for bankable African projects, brokering infrastructure deals and providing innovative financial solutions.

The event attracted key global companies, financial players, and public officials who addressed the continent’s critical infrastructure investment gaps.

Download the Infrastructure Financing Trends in Africa 2018

While the initiative to develop the African Continental Free Trade Area (AfCFTA) has the potential to transform the continent, its success is largely dependent on Africa’s ability to create and sustain the infrastructure needed at a regional level, to broaden and deepen integration and catalyse growth in intra-African trade.  

Bringing African countries together to fully leverage and add value to Africa’s resources and capabilities is critical for sustainable growth across the continent.  This is particularly important if Africa is to realise its potential in sectors where growth prospects are brightest, such as agriculture and food, industry, and services.  

Further, if the AfCFTA is to be successful, it is important that infrastructure development is spread evenly across the continent. The ICA’s Infrastructure Financing Trends in Africa  report highlights some notable achievements in Africa’s infrastructure development and shows how regional infrastructure projects can have the continental impact needed for a fully functioning free trade area.

The ICA’s report, which was published during the Africa Investment Forum, demonstrates how Africa’s Regional Economic Communities (RECs) and Regional Power Pools (RPPs) can play vital roles not only in the development of regional infrastructure projects but also in connecting Africa’s regions with each other.

An example of where the RECs and RPPs are already playing key roles is the Zambia-Tanzania-Kenya (ZTK) Interconnector project, which is one of the Programme for Infrastructure Development in Africa (PIDA) Priority Action Plan projects and programmes. To be successful – and have continental impact – the project must be executed by several domestic and regional actors working cooperatively.  ZTK is also supported by a number of development finance institutions, including AfDB, EIB, JICA and the World Bank.

Beyond regional benefits, the ZTK Interconnector project will connect the southern and eastern African power pools and enhance inter-regional electricity trading by interconnecting the two pools’ grids. The project is expected to create the largest power pool on the continent and will be an essential component of the North-South (Cape to Cairo) power transmission corridor.

The challenges are highlighted in this year’s annual report from the Infrastructure Consortium for Africa (ICA) – Infrastructure Financing Trends in Africa 2017. As well as reporting on financial commitments to Africa’s infrastructure development, the report examines the extent to which limited bankable projects and, in particular, ineffective institutional arrangements, rather than a shortage of funds, are contributing to the continuation of the infrastructure financing gap.

The ICA’s report was launched on the first day of the Africa Investment Forum, which flags up the dearth of bankable projects, and regulatory and institutional arrangements that are unfriendly to business, as two major barriers holding back private sector investment on the continent.

The report indicates that experience in several countries – notably in the ports, energy and telecommunications sectors – shows private sector finance is available for projects that present conducive political, regulatory, legislative and financial environments.

Examples in the report include South Africa, where the Renewable Energy Independent Power Producer Programme (REIPPP) has attracted private sector investment by developing a sound procurement policy, while the government has shown its ability to manage an effective bidding process that stimulates competitive bidding.

And in Egypt, the creation of conducive investment conditions for public and private investors in the Benban Solar Park project, one of the most complex energy projects under development on the continent, has helped secure funding of $1.98bn in 2017, of which $513m was private investment.

There are also now several successful private energy investments across the continent – including in Senegal, Ghana, Kenya and Mozambique – where independent power producer frameworks are well understood, and there is an increasing amount of installed private capacity.

The 2017 report also shows a high level of interest in new types of funding, including the demand for blended finance, in which concessional seeks to leverage non-concessional finance. The report also indicates that organisations are increasingly deploying development capital which, because it is not a grant, creates an asset for the investor that can provide modest financial returns alongside significant development impact. The ICA’s report suggests the challenge is to continue expanding the range of financial tools available, integrating these with conventional tools such as grants and loans that will continue to play a key role in infrastructure financing.

Published on the first day of the Africa Investment Forum, the ICA’s Infrastructure Financing Trends in Africa 2017 report shows that commitments to develop Africa’s infrastructure increased to $81.6bn in 2017 from US$66.9bn in 2016.

The 2017 figure is the highest reported since 2010, and the ICA’s research shows that the main factors behind the growth include a $13bn increase in identified Chinese commitments and a $3.7bn increase in African government spending. 

Mr Mike Salawou, ICA Coordinator and Manager, Infrastructure Partnerships, at the African Development Bank, commented:

“Over the years the Infrastructure Financing Trends in Africa report has become an important document for presenting, in a consistent manner, how finance is being mobilised to develop the continent’s infrastructure. 

“The report’s publication this year on the first day of the Africa Investment Forum is extremely timely.  While the 22% increase in financial commitments in 2017 is very welcome, the report also serves to highlight the size of Africa’s infrastructure financing gap – an important issue that the forum will address,” Salawou said.

The report highlighted key findings from 2017. The findings show that commitments from ICA* member countries to African infrastructure projects in 2017 rose to US$19.7 bn, an increase of 5% from the $18.6bn reported in 2016 and one of the highest commitments since the ICA began collecting data.

The value of projects with private sector participation reaching financial close in 2017 totalled $5.2bn, of which $2.3bn (44.8%) was privately financed. The transport sector continued to be the largest beneficiary of infrastructure commitments in 2017, accounting for nearly 42% of all funding, followed by the energy sector (30%) and the water sector (16%);

Of the US$81.6bn committed to Africa’s infrastructure development in 2017, West Africa received $22bn of commitments, followed by North Africa (US$15.9bn), East Africa (US$15.8bn), Southern Africa, excluding South Africa (US$12.2bn), South Africa (US$8.7bn) and Central Africa (US$6bn).

The inaugural Africa Investment Forum takes place from 7 to 9 November 2018 in Johannesburg, South Africa, offering a platform for sourcing funding for bankable African projects, brokering infrastructure deals and providing innovative financial solutions. 

The event will attract key global companies, financial players, and public officials who will address the continent’s critical infrastructure investment gaps.

Infrastructure Financing Trends in Africa 2017 can be downloaded from the Infrastructure Consortium for Africa website.

Notes to Editors

Launched at the G8 Gleneagles Summit in 2005, the role of the Infrastructure Consortium for Africa (ICA) is to help improve the lives and economic well-being of millions of Africa’s people through encouraging, supporting and promoting increased investment in infrastructure in Africa, from both public and private sources.

*The ICA is a tripartite relationship between bilateral donors, multilateral agencies and African institutions. Membership from the African side is led by the African Development Bank and Development Bank of Southern Africa. The World Bank, International Finance Corporation (IFC), European Commission (EC) and European Investment Bank (EIB) are members of the ICA, together with all G7 countries (Canada, France, Germany, Italy, Japan, the United Kingdom and the United States) and the Republic of South Africa.

The ICA was invited by the Global Energy Interconnection Development and Cooperation Organization (GEIDCO) to participate in, and present the Atlas to, the African Energy Interconnection Research Release and Investment Forum on 4 September 2018, as part of the two-day Forum on China-Africa Cooperation (FOCAC).

The energy forum – which was jointly hosted by GEIDCO, the African Union (AU) and UNECA – brought together Ministries of Energy and other stakeholders in the renewable energy sector to discuss energy interconnections, renewable energy and new technologies, as well as large interconnection projects between Africa, Europe and Asia. 

The ICA’s presentation was well received and laid the foundation for partnership discussions, with GEIDCO expressing an interest in joining the ICA and, in return, the ICA joining the GEIDCO platform.  The forum provided a unique opportunity to showcase ICA activities and to engage with China and potential partners, in the context of the ICA’s expansion drive across G20 countries.