Who is financing Africa's infrastructure development?
The major shifts in sources of funding for infrastructure development in 2014, compared to 2013, were:
- A fall in commitments by ICA members, from $25.3bn in 2013 to $18.8bn in 2014 - though when taking into account the exceptional contribution of $7bn by the US in 2013 (for the Power Africa initiative), the 2014 figure is on a par with volumes committed by ICA members since 2012;
- A sharp decline - of over $10bn - in Chinese commitments;
- The budget allocations to infrastructure by African governments totalled $34.5bn, accounting for the largest category of reported commitments.
Apart from the decline in China's commitments, funding in 2014 from non-ICA members was broadly constant. This group includes the Arab Co-ordination Group (ACG) and non-ICA member European DFIs as well as commitments identified from Brazil, India and South Korea.
Multilateral development banks committed $11bn in 2014, which was nearly $2bn up on the previous two years and close to double the $5.9bn committed in 2011. However, commitments from regional development banks declined from $2.2bn in 2013 to $1.6bn in 2014.
Figure 6: Reported and identified financing flows into Africa's infrastructure, 2014
While budget allocations by African governments provided 2014’s largest category of commitments to infrastructure development, totalling $34.5bn, the value of commitments was lower than the $46.7bn reported for 2013. Data was obtained from 42 countries in 2014, up from 20 in the 2013 report, though a more rigorous analysis of budget spending and external funding was used in 2014. Further, national government allocations may not reflect a country’s total public sector spending on infrastructure development as substantial commitments are being made to infrastructure at a sub-national level – for example by local governments and utility companies.
Figure 9: Identified central government budget allocations by sector and region, 2014
Reported for the first time in 2014, sub-national financing totalled $9.1bn - largely accounted for by the $8.4bn raised by the Egyptian bonds issued to finance the Suez Canal expansion. However, it is likely that sub-national investment from local governments and public utilities is higher than so far captured in ICA data. As data collection and analysis of sub-national funding becomes more rigorous, figures in future reports may more accurately reflect this important category of financing.
Commitments from non-ICA European countries totalled $5.4bn, compared with a $5.1bn annual average between 2011 and 2013. Arab Coordination Group commitments in 2014 were broadly constant, at $3.5bn, having averaged $3.4bn over the previous three years. Funding from the Americas was down by around $7bn, reflecting the exceptional Power Africa contribution in 2013.
Private sector funding was also lower in 2014 compared to 2013, by around $3bn at $5.1bn. However, increased interest from private equity (PE) houses is not yet fully captured in ICA data.