African countries need to leverage more private funds to meet infrastructure financing needs which are estimated at between USD 68 bn and USD 108 bn per annum, the chief executive of Africa50, an infrastructure investment offshoot of the African Development Bank, said on Tuesday in the Moroccan city of Marrakech.
Leveraging more private capital to finance infrastructure projects, as part of public-private partnerships, would help free public funds to projects shunned by the private sector, CEO Alain Ebobissé said on the eve of the launch of a US-Africa business summit.
Established six years ago by the African Development Bank to respond to the continent’s infrastructure challenges, Africa50 bifurcates into two investment vehicles, namely Africa50 – Project Development and Africa50 – Project Finance.
Africa50 was created to help bridge Africa’s infrastructure funding gap by facilitating project development, mobilising public and private sector finance, and investing in infrastructure on the continent. “Africa50 focuses on medium- to large-scale projects that have development impact and offer an appropriate risk-adjusted return to investors. Bringing project development and financing together in one platform, Africa50 seeks to provide support at every stage of the project cycle,” reads Africa50’s official website.
Since its creation, Africa50 has spent USD 5 bn on 16 projects in the fields of energy, transport, information and communication technologies, healthcare and education.
Africa50 has also signed on the same day a deal with a grouping of some of the richest African wealth funds to increase their involvement in African infrastructure investments.
China has been the leading foreign investor in Africa, pumping billions of dollars into the continent’s infrastructure, also related to the production of anti-covid vaccines. The US has been trying to catch up but could not overtake China just yet.
The US Trade and Development Agency (USTDA) had planned USD 26 mln last year to fund feasibility studies of African investment projects with a potential to generate USD 17 billion in financing, Enoh Ebong, the agency’s director, told Reuters.
“Sub-Saharan Africa is one of our largest portfolios at the agency,” she said, adding that she sees demand growing on US companies from the continent.
While US companies engage in feasibility studies funded by the USTDA, African partners “can get financing from any party whatsoever. We would like it if they do it with our fellow US government agencies, but we do not put any condition on who finances that project,” Ms Ebong said.
“For every USD 1 spent on feasibility studies we see a return of USD 117, which translates into jobs in the US,” she added.
“We are absolutely competitive, and we see it in the partners who are picking U.S. companies in head-to-head competition with Chinese companies,” she added, calling infrastructure “key to trade.”