The highest proportion of private investment in infrastructure in Africa in recent years was recorded in 2020. This was highlighted by African Development Bank (AfDB) VP: private sector, infrastructure and industrialisation Solomon Quaynor during a recent webinar, held as a precursor to the Eighth Tokyo International Conference on African Development (TICAD), which took place in Tunisia on Saturday and Sunday.
(TICADs take place every five years, the first having been held in Tokyo, Japan, in 1993. TICAD is a joint initiative of the Government of Japan, the United Nations (UN), the UN Development Programme, the World Bank and the African Union Commissioner.)
“Private sector investment into Africa’s infrastructure rose to $19-billion in 2020, representing 23%, the highest since 2016,” reported Quaynor. “This counter-cyclical role played by the private sector shows the importance of its growing role in infrastructure financing in Africa.”
Africa Infrastructure Development Association CEO Vivek Mittal pointed out that the majority of private sector investment interest in Africa over the past two years (that is, 2020 and after) had been focused on just four countries. They were, in the order given by him, Kenya, South Africa, Ghana and Nigeria. “Projects take too long – eight to ten years – in Africa,” he warned.
Africa50 investment fund chief operating officer Tshepidi Moremong cited the Kigali Innovation City in Rwanda as an example of the kind of bankable projects that already exist in Africa. “The success of this project is due to political will and capacity from both sponsors – Rwanda’s Development Board – and investors,” she affirmed. She pointed out that hurdles to investment in Africa included the allocation of risk, weak feasibility studies, technical studies and business plans, restricted deal pipelines, and delays in licensing.
The AfDB had recently concluded a public-private partnership infrastructure programme in Kenya, AfDB Infrastructure and Urban Development Department acting director Mike Salawou noted. This was the Nairobi-Nakuru-Mau road, into which the bank had invested $200-million. “We would like to partner with JICA [Japan International Cooperation Agency] to do more,” he said. He further observed that the AfDB was working with the European Bank of Reconstruction and Development to build a port in Morocco.
JICA Private Sector Partnership and Finance Department director-general Shohei Hara said that JICA had long worked with governments but would have to change its mindset as it sought to increase its involvement in private-sector funded infrastructure development. “Governments have to change their mindsets, as well as ourselves,” he emphasised. He added that multilateral partners, such as the AfDB, were important to mitigate foreign exchange, political, policy, regulatory and payment risks.
Quaynor urged Japanese institutions to support the Africa Green Infrastructure Alliance, led by the AfDB, Africa50 and other African and international partners in Europe and North America. “We encourage JICA and [the Japan Bank for International Cooperation] to consider supporting this facility with concessional funds and grants,” he stated. “We also encourage Japanese private sector companies to contribute patient commercial capital to ensure that green infrastructure projects of scale are developed with speed in Africa.”