Unlocking Africa’s growth through infrastructure investment

The African Development Bank (AfDB) estimates that the continent will need $170bn annually in infrastructure financing by 2025. Multilateral development banks and government-backed lenders contribute significantly, with approximately $100bn to $120bn committed yearly to development projects in low- and middle-income countries. Yet, the financing gap remains substantial, leaving many critical projects underfunded.

Africa’s vast infrastructure needs, spanning sectors from energy to healthcare, cannot be met by governments alone. Innovative funding solutions, including public-private partnerships and cross-border investments, are essential to close the financing gap.  Private capital, when mobilized through collaborative partnerships with export credit agencies, development finance institutions, and multilateral organizations, can play a key role in unlocking the capital needed to bridge this gap.

The Emerging Africa Infrastructure Fund (EAIF) is a public-private partnership providing long-term debt financing for infrastructure projects in sub-Saharan Africa. In its recent funding round, EAIF secured $294m in debt facilities, making it one of the largest blended finance debt packages for African infrastructure. The principal shareholders are the governments of the UK, Netherlands, Sweden, and Switzerland. EAIF also receives debt capital from private investors like Allianz and Standard Chartered Bank, and development finance institutions, enabling it to provide flexible and patient capital for major infrastructure projects in Africa that enhance connectivity, foster regional integration, and drive sustainable economic growth across the continent.

New projects address systemic challenges

Several projects led by Standard Chartered have demonstrated how international partnerships can address Africa’s systemic infrastructure challenges. In Angola, water scarcity is a pressing issue, exacerbated by climate change. For example, a €22m loan is currently being used to finance clean water infrastructure for rural communities in Luanda. The Quiminha water project will renovate the Quiminha Dam and create new water storage and distribution infrastructure, benefiting about 100,000 people in rural areas.

This initiative aims to enhance living conditions and support economic growth by ensuring a reliable supply of clean water for industrial and agricultural use in the Quiminha region, a crucial agricultural hub. According to the World Bank, agribusiness is critical for Angola’s economic diversification. The project exemplifies how global financing expertise is helping address climate-related challenges and improving access to vital resources.

In rural Angola, a €1.29bn financing deal was secured from Standard Chartered to provide solar-powered electricity distribution infrastructure for off-grid communities. This project enhances energy security while advancing sustainable development goals by diminishing reliance on traditional energy sources. By harnessing renewable energy, it not only strengthens local energy resilience but also plays a crucial role in achieving global climate targets. Such initiatives effectively address urgent infrastructure needs, all while generating long-term benefits through improved trade and connectivity, paving the way for a more sustainable and prosperous future.

In 2024, the Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC) and a banking partner funded a $174m project to build hospitals in Kong and Odienne, boosting Côte d’Ivoire’s healthcare infrastructure. The hospitals are equipped with modern technology, improving access to high-quality medical services. This investment aligns with the government’s National Development Plan and the goals of the IMF and WHO to enhance healthcare systems in developing countries.

Energy infrastructure remains one of the most critical areas of investment across the African continent. In 2022, CrossBoundary Energy Access (CBEA) secured $25m from ARCH Emerging Markets Partners Limited, Microsoft Climate Innovation Fund, and private banks. The funds financed solar-powered mini-grids in Africa to bring clean energy to one million people, supporting the United Nations Sustainable Development Goal Seven (SDG7) for affordable and clean power.

In Tanzania, the Ministry of Finance signed a facility agreement with Standard Chartered Tanzania to act as global co-ordinator, bookrunner and mandated lead arranger for a $1.46bn term loan to fund the 550km Standard Gauge Railway (SGR) project from Dar es Salaam to Makutupora. The railway will connect Tanzania to Burundi, Rwanda, and the Democratic Republic of Congo (DRC), enhancing regional trade. The project created over 8,000 new direct jobs for Tanzanians and opened opportunities for local communities to access social services. This is one of the country’s biggest projects. Tanzania Railways Corporation said the railway will address congestion and decrease freight service charges by 40%, moving 10,000 tons of freight, equivalent to 500 lorries, per trip.

The urgent call for investment

Africa’s infrastructure financing challenge is more than a numbers game; it’s about fostering an environment that encourages investment while ensuring projects are sustainable, resilient, and inclusive. Now, more than ever, innovative financial models and cross-border partnerships are critical to meeting the infrastructure challenge.

International investors, development institutions, and private capital providers must continue to collaborate, bringing their collective expertise and resources to bear. The opportunity for transformative impact is significant – beyond the immediate infrastructure upgrades, these projects create jobs, improve living standards, and promote sustainable development.

By unlocking the capital required to build resilient infrastructure, Africa can make significant strides towards industrialiaation, job creation, and global trade integration, securing a prosperous future for its people.

The time for decisive action is now. International partnerships and investments must align with Africa’s bold vision for the future, ensuring that infrastructure becomes the foundation for the continent’s economic transformation.