Other public sector financing
China’s investments and construction in African infrastructure amounted to $25.7bn in 2018 (American Enterprise Institution – China Global Investment Tracker – AEI-CGIT: www.aei.org/china-global-investment-tracker/).
This is 32% higher than the $19.4bn level reported in 2017, and the highest level of commitments recorded since ICA started collecting such data, which averaged $13.1bn per year in the 2011-2017 period. The largest share of Chinese financing (71%) was for the energy sector, which amounted to $18.3bn. In the transport sector, Chinese commitments amounted to $6.6bn in 2018, or 26% of total financing.
China’s financing also includes $550m in the ICT sector and $230m in the water and sanitation sector.
Chinese Commitments by Sector ($m), 2014-2018
China’s Belt and Road Initiative (BRI), a multi-billion dollar plan to link Asia, Europe and Africa, is providing large amounts of financing for infrastructure in many African countries. It is estimated that the value of loans from Chinese financing of energy and infrastructure projects in Africa almost tripled between 2016 and 2017, from $3bn to $8.8bn, and is expected to increase in 2018 and beyond, although data was not available at the time of publishing of this report.
Chinese banks have been active lenders to infrastructure projects in 19 different countries in
Africa in the past four years. Infrastructure projects in Ethiopia have received $1.8bn since 2014, Kenyan projects $4.8bn, Mozambique infrastructure deals $1.6bn and Nigerian projects $5bn from Chinese lenders. RSA infrastructure projects have received $2.2bn from Chinese lenders since 2014, Zambia has received $1.5bn and Zimbabwe has seen $1.3bn in loans from Chinese policy lenders since 2014.
As one of South Africa’s largest trading partners, China plays an important role in infrastructure investment in this country. At the BRICS Summit Energy in 2018, China pledged to invest $14.7bn in RSA and to grant loans to state owned enterprises Eskom and Transnet.
Chinese Commitments by Region ($m), 2014-2018
Arab Coordination Group
The Coordination Group’s objectives are to optimize the resources provided by individual members to recipient Arab countries, and to achieve common objectives. The CG currently consists of ten institutions, four of which are national institutions including the Kuwait Fund for Arab Economic Development (KFAED), the Saudi Fund for Development (SFD) , the Abu Dhabi Fund for Development (ADFD), the Qatar Development Fund (QDF), and five regional organizations consisting of the Arab Fund for Economic and Social Development (the Arab Fund, AFESD), Islamic Development Bank (IsDB), OPEC Fund for International Development (OFID), the Arab Bank for Economic Development in Africa (BADEA), the Arab Gulf Program for United Nations Development Organizations (AGFUND) as well as the Arab Monetary Fund (AMF). The CG committed $2.4bn in 2018, markedly less (20%) than the $3bn committed in 2017.
The Kuwait Fund (KFAED) reported commitments of $752m in 2018, 50% higher than its 2017 commitments ($500m), and close to 50% higher than its 2016 commitments ($509m). More than half (57%) of total commitments benefited the transport sector. A $26m loan supported the construction of four interchanges in Conakry, Guinea. A single $26m commitment in the energy sector, in the form of a loan, supports the financing of the Power Station Geothermal Project in Djibouti.
The Arab Fund (AFESD) committed $541m in 2018, approximately half the $1bn committed in 2017. $331m, or 61%, were directed at the water and sanitation sector. Commitments of $162m targeted the energy sector, and $48m supported transport projects. Two operations were in Egypt: a $231m loan will assist in the construction of the Bahr El-Baqar Water Drainage System Project. Another loan of $132m will contribute to the construction of the second stage of the electrical power grid.
The Islamic Development Bank (IsDB) committed $518m in 2018, 13% less that the $597m committed in 2017. $284m (55%) of 2018 commitments supported one energy operation in Tunisia. The transport sector received $137m in commitments, of which $118m supported Benin with the rehabilitation of the Cotonou-Niamey Road Corridor. The IsDB committed $97m to the water and sanitation sector, of which $43m for the Conakry Sanitation Project in Guinea.
The Saudi Fund for Development (SFD) committed close to $370m in 2018. Commitments from SFD have experienced significant fluctuations over the last few years: they amounted to $97m in 2017 and $2.3bn in 2016. In 2018, commitments targeted two sectors, in very similar amounts: water and sanitation received $187m and the transport sector received $182m. The most sizeable commitment, a $122m loan, supports the Djibouti-Galafi Road Project in Djibouti. A $86m loan supports a water and sanitation project in Tunisia to improve the supply of potable water in the rural area of the Bizerte region.
The OPEC Fund for International Development (OFID) committed $140m in 2018, compared with $181m in 2017 and $226 in 2016. 81% ($113m) of total commitments targeted the transport sector for the support of six operations. The remaining commitments ($27m) supported two water and sanitation projects. The six transport projects are supported by OFID commitments ranging from $12m to $25m for each project. One such commitment is a $20m loan to Burundi to help fund the Rumonge-Nyanza Lac Road Rehabilitation Project. AREDA, KFAED, and SFD are also supporting this project. OFID also extended a $12m loan to Uganda to co-finance the Luwero-Butalangu Road Project. OFID has also committed $15m to support the Drinking Water Supply Project in Karonga city in Malawi. BADEA is co-financing the project.
The Arab Bank for Economic Development in Africa (BADEA) committed $123m in 2018 to support 8 infrastructure projects: 6 in transport and 2 in the water and sanitation sector. A $20m loan supports the expansion of the highway from the international airport to Niamey City Center (Phase I). OFID and the Niger Government are co-financing the operation, contributing $15m and $5m, respectively. In 2018 BADEA raised the ceiling of funding from $20m to $40m dollars in response to the varying needs of African countries.
Arab Coordination Group commitments by members ($m), 2014-2018
Non-ICA European Sources 2018
Commitments to African infrastructure by European development organizations that are not members
of ICA amounted to $1.1bn in 2018, 31% lower than the $1.6bn committed in 2017, but significantly higher
than the $392m committed in 2016.
At $509m, energy accounted for 45% of total commitments, a lower share than the 56% experienced in 2017. $336m were committed to transport, $199m to water and sanitation. Commitments in ICT were $16m and in multi-sector operations, $12m.
Non-ICA European Commitments by Sector, ($m) 2018
Non-ICA European Commitments by Region ($m), 2018
European Bank for Reconstruction and Development (EBRD)
EBRD committed $744m (66% of its total commitments) to nine infrastructure projects in North Africa in 2018, the only African region in which EBRD operates: seven in Egypt and two in Morocco. $325m (44%) targeted the energy sector, $242m went to transport, $175m to water and sanitation, and $3m to ICT.
The 2018 commitments are substantially lower than the $1.3bn committed in 2017. A $242m loan will help finance the Modernization of the Cairo Metro Project in Egypt.
A $206m energy loan to Egypt was committed to support the Suez Oil Processing Company (SOPC) to finance a package of energy efficiency investments and other refurbishments and installations.
A $93m loan will support the Kitchener Drain Depollution Project in Egypt to fight pollution in the Nile Delta. The project will also rehabilitate the infrastructure of the Kitchener drain in order to improve public health. The EU is co-financing the operation.
International Fund for Agriculture Development (IFAD)
This is the first year that data on IFAD’s support to African infrastructure is presented. IFAD, an international financial institution and a specialized agency of the United Nations, was created in 1977 in response to the food crises of the early 1970s, when global food shortages were causing widespread famine and malnutrition, primarily in the Sahelian countries of Africa. Its focus is to eradicate poverty and hunger in rural areas of developing countries through financial support to agricultural development projects and the strengthening of policies and institutions.
In 2018, IFAD committed $95m to infrastructure operations in Africa, of which $64m (67%) supported the transport sector, the rest going to ICT ($12.3m), multi-sector projects ($11.5m), water and sanitation ($6m) and energy ($1.6m). One of the transport operations, the Family Farming, Resilience and Market Project in Upper and Middle Guinea, received a commitment of $31m from IFAD: a $15.5m loan and a $15.5m debt sustainability framework grant. The project will be co-financed by OFID, the Belgian Fund for Food Security, the Government of Guinea, and by the beneficiaries themselves.
Financing by Bilateral Agencies
Commitments totaling $290m were made in 2018 by the Netherlands ($198m), Norway ($47m), Belgium ($24m), and Austria ($13m).* This compares to the $265m of commitments made in 2017 by the Netherlands, Norway, Finland, Austria, and Denmark. Of these commitments, $183m (65%) targeted the energy sector. The Netherlands was the only country to target the transport sector, for a total of $30m. The regional breakdown shows that $119m (42%) supported operations in East Africa and $56m (20%) went to Southern Africa. There were no commitments to North Africa.
* Dutch data gathered from FMO Entreprenurial Development Bank, Norway from the Norwegian Agency for Development Cooperation, Belgium from Open.Enabel, and Austria from the Austrian Development Agency. Data for other European non-ICA member bilateral financing was not available.
New Development Bank (NDB)
The main purpose of the New Development Bank (NDB), a multilateral development bank established by Brazil, Russia, India, China and South Africa (“BRICS”), is to mobilize resources for infrastructure and sustainable development projects in BRICS and other emerging economies and developing countries. To fulfill its purpose, the NDB can support public or private projects through loans, guarantees, equity participation and other financial instruments. According to the NDB’s General Strategy, sustainable infrastructure development is at the core of the Bank’s operational strategy till 2021.
In 2018, the NDB committed $500m in support of two African infrastructure projects, both in RSA, one in the energy sector and the other in transport. The first loan for the total amount of $300m to the Development Bank of Southern Africa aims to facilitate investments in renewable energy that will contribute to power generation and reduction in CO2 emissions in RSA, in line with the South African Government’s Integrated Resource Plan 2010 and its target of reducing greenhouse gas emissions.
The second loan for the total amount of $200m aims to support the development and rehabilitation of maritime and onshore infrastructure of the Durban Container Terminal.
Asian Infrastructure Investment Bank (AIIB)
The Asian Infrastructure Investment Bank (AIIB), a multilateral development bank with a mission to improve social and economic outcomes in Asia and beyond started operations in 2016. It invests in sustainable infrastructure and other productive sectors to better connect people, services and markets that over time will impact the lives of billions and build a better future. At end 2018, four African countries were members of the AIIB: Egypt, Ethiopia, Madagascar, and Sudan.* Several more African countries are being considered for membership.
In 2018, the AIIB committed $300m for a water and sanitation operation in Egypt, the Sustainable Rural Sanitation Services Program, which the WB is cofinancing with an additional commitment of $300m.
* Guinea became a member in mid-2019
Africa50 is an infrastructure investment platform, established by the AfDB, that contributes to Africa’s growth by developing and investing in bankable projects, catalyzing public sector capital, and mobilizing private sector funding, with differentiated financial returns and impact.
In 2018, Africa50 committed $78m of project finance for two projects: for $48m, it acquired 15% of the equity stake in the Nachtigal Hydro Power Company (NHPC) from the Government of Cameroon. It also invested $30m in the Room2Run, a Pan-African and multi-sector, AfDB and partners’ innovative $1bn synthetic securitization of a portfolio of seasoned African Development Bank private sector loans.
Africa50 signed a Joint Development Agreement Term Sheet with the Rwanda Development Board (“RDB”), pursuant to which Africa50 is to have exclusive rights to work with RDB to design, develop, finance, construct and operate certain components of the Kigali Innovation City (KIC), which will have a number of ICT elements. KIC is expected to house international universities, technology companies, biotech firms, and commercial and retail real estate in an area of 70 hectares. Africa50 reported $62m of disbursements in 2018.
India committed $762m in 2018, slightly higher than the $700m committed in 2017. These commitments targeted two sectors: $600 for water and sanitation and $162m for transport.
West African Development Bank (Banque Ouest Africaine de Développement, BOAD)
BOAD is the development finance institution of the member countries of the West African Monetary Union (WAMU). Member countries include Benin, Burkina, Côte d’Ivoire, Guinea Bissau, Mali, Niger, Senegal, and Togo. Its purpose is to promote the balanced development of its member countries and foster economic integration within West Africa by financing priority development projects.
BOAD committed a total of $307m targeting infrastructure operations in Africa. Of these, $222m were directed to the transport sector, $62m in support of three rural operations in Mali, Niger and Burkina Faso. The Mali project includes the construction of an interchange, an overpass and urban roads in Sikasso. The project in Niger includes the paving of the Zinder road, a link of the Trans-Sahara road connecting Algiers in Algeria to Lagos in Nigeria. In Burkina Faso, the $6m financing will contribute to the extension of the dry port in Bobo Dioulasso, which will support the trade growth between neighboring countries and seaports.
Six urban transport operations, which will add 152 km of roads, were supported with commitments totaling $160m, including the upgrading of the Kédougou-Fouladou road in Senegal, paving of the urban portion of the Zinder road in Niger, paving of the Boucle du Blouf in Senegal, improvement of the Cotonou storm water collection system in Benin, draining of Bangr Wéogo Park in Burkina Faso, and the development program of the Gourou Bassin in Côte d’Ivoire.
A total of $37m were committed to the energy sector, in support of urban and rural electrification projects, which will include the construction of a 15 MW diesel thermal facility in Bor, in Guinea Bissau, and the rehabilitation of power distribution systems in Burkina Faso.
BOAD committed $48m in support of two projects to improve access to potable water in several Abidjan neighborhoods in Côte d’Ivoire, and a number of periurban neighborhoods throughout Togo.