Financing trends 2015 – Other public sector financing
Total non-ICA public sector funding commitments to develop Africa’s infrastructure increased to $56.1bn in 2015, from $52.8bn in 2014. This rise of over 6% was despite African national governments reducing their identifiable infrastructure allocations in 2015.
African national budgets for infrastructure development
Identifiable infrastructure allocations by African national governments totalled $28.4bn in 2015, compared with $34.5bn in 2014. Information was received from 44 countries in 2015, up from 42 in 2014. Smaller national allocations to infrastructure development were primarily due to pressure from low oil and commodity prices, which appear to have had a negative impact on government spending in some of the continent’s largest economies.
In 2015, transport accounted for 54% of total infrastructure spending, maintaining the sector’s dominant position (51% of total spending in 2014). However, in financial terms the total amount allocated to transport dropped by 13% – from $17.6bn in 2014 to $15.3bn in 2015. Energy projects attracted the second largest amount of infrastructure allocations, accounting for $6bn or 21% of 2015 allocations compared with $7.5bn or 21.7% in 2014. Allocations to the water sector amounted to $4.1bn (14.5% of all allocations), while allocations to multi-sector projects and the ICT sector account for the remaining commitments.
Figure 36: National government budget allocations by sector ($bn)
Investments announced by China reached a record level of $20.9bn in 2015, compensating for the very low level of announcements of $3.1bn in 2014. Over the five years to 2015, the average annual level of Chinese investments is $13.1bn, while the previous highest annual total of investments of $15bn was reported in 2011.
Energy appears to have become a new priority for China, which announced investments of $10bn in the sector in 2015, double the previous record of $5.2bn recorded in 2012, and for the first time topping Chinese investment in transport. Over the previous five years, China announced investments in energy totalling $20bn and $40bn in transport. (Data for China should be treated with some caution since it is based largely on media reports of announcements, rather than commitments. Some projects may be delayed or will not go ahead.)
Figure 51: Chinese commitments by sector 2011-2015
Arab Coordination Group
Members of the Arab Coordination Group (ACG) committed a record $4.4bn to African infrastructure projects in 2015, surpassing the previously highest commitment of $3.9bn in 2012. This was substantially due to a near doubling of commitments by the Islamic Development Bank (IDB), the group’s largest financier of Africa’s infrastructure. The IDB provided $2.2bn or 49% of ACG’s commitments by value compared with $1.3bn or 34% in 2014.
There has been a shift in the ACG’s regional focus over the last two years, with funding for North Africa unusually falling substantially below the 50% mark in 2015. In 2014 the ACG’s funding focus was beginning to expand beyond the countries with which it has cultural and linguistic ties to East and West Africa. The 2015 data seems to underline this trend, while the group also appears to be focusing more on Central and Southern Africa, albeit from a relatively low base.
There has also been a change in the sectoral emphasis. While energy was the focus in the three years to 2014, there has been an increase in interest during this period in the transport sector, to the extent that in 2015 transport commitments surpassed those made to energy by $517m, to top $2bn.
Figure 53: Arab Co-ordination Group commitments by sector and region, 2013-2015
Non-ICA member European funding
Commitments to African infrastructure by bilateral DFIs decreased in 2015 but this was partially compensated by the increased participation of the European Bank for Reconstruction and Development (EBRD) in the continent’s infrastructure development. Overall, commitments by non-ICA member European funders totalled $876m in 2015, down from $1.3bn in 2014.
Energy continued to be the focus of commitments in 2015 (52.3%, compared to 68% in 2014), followed by transport (39.4%) and ICT (8.3%). As in the previous two years, no investments were made in the water sector. North Africa attracted the lion’s share of commitments (79%), followed by East Africa (8.4%) and Central Africa (7.7%).
At $239m in 2015, non-ICA member DFI commitments were around one quarter of those made in 2014. This reduction was offset significantly, however by the establishment of the EBRD as a major funder of Africa’s infrastructure. EBRD committed over $637m to five energy and transport projects, in Morocco and Egypt.
Figure 55: European commitments to infrastructure by sector, 2015
Figure 56: European commitments to infrastructure by region by %, 2015
African regional development banks
Africa’s regional development banks (excluding DBSA, which is an ICA member) committed $418m in 2015, a decrease on the $583m committed in 2014. BOAD (the West African Development Bank) contributed the bulk of this ($352m), divided primarily between transport (31.9%), energy (25.6%) and ICT (21.7%).
DBSA committed $929m towards Africa’s infrastructure development in 2015, with 78.1% of this going towards the energy sector while multi-sector projects received 14% of 2015 commitments.
Other funding sources
India committed $524m to African infrastructure projects in 2015, up from $424m in 2014 (but short of the $761m committed in 2013). Of its 2015 commitments, $255m targeted the energy sector and $268m was directed at water operations. All the commitments were made up of loans extended via lines of credit from the Export-Import Bank of India.
Through its Banco Nacional de Desenvolvimento Econômico e Social (BNDES), Brazil made just one – albeit substantial – commitment in 2015, with $500m allocated to a hydro power project in Angola. Part of the government’s continuing efforts to increase the country’s hydroelectric capacity, the commitment also maintains the trend of Brazil’s development bank to support only Lusophone countries in Africa.
South Korea’s Export-Import Bank reported one commitment in 2015, with $88.19m of long-term, low-interest, credit extended to Senegal’s Maritime Infrastructure Establishment Project II. South Korea’s support for Africa’s infrastructure development, which consistently targets the transport sector, has been somewhat inconsistent, with $677m committed in 2012, $174m in 2013 and $206m in 2014.