The African Development Bank (AfDB) said private sector investment in Africa’s infrastructure in 2020 stood at $19 billion, the highest since 2016.
This was disclosed by Mr Solomon Quaynor, AfDB Vice President for the Private Sector, Infrastructure and Industrialisation at a webinar organised by the bank in conjunction with the Japan International Cooperation Agency (JICA).
In a statement issued by the Communication and External Relations Department of the bank, the online event was held in the run-up to the eighth Tokyo International Conference on African Development (TICAD) which took place in Tunisia from August 27 to 28, with the theme: “Private Sector Infrastructure Development Opportunities in Africa”.
The AfDB Vice President said the greater private sector investment came as most African governments contended with the COVID-19 pandemic, limited fiscal space and high debt-to-Gross Domestic Product (GDP) ratios.
He said, “Private sector investment in Africa’s infrastructure rose to 19 billion dollars in 2020, representing 23 per cent, the highest since 2016.
“This counter-cyclical role played by the private sector shows the importance of its growing role in infrastructure financing in Africa”.
Also speaking, Keichiro Nakazawa, the Senior Vice President of JICA said the discussion focused on growth prospects for African countries and the role of the private sector in providing high-quality, sustainable infrastructure.
The panellists were: Rami Ghandour from Metito, Tshepidi Moremong from Africa 50, Vuyo Hlompho Ntoi from African Infrastructure Investment Managers, and Yoshio Kushiya from Sumitomo Corporation.
They were joined by representatives of leading development finance institutions, JICA’s Shohei Hara, Mike Salawou from the AfDB, and Sue Barrett, the Director of the European Bank for Reconstruction and Development.
The panellists shared perspectives, success stories and the challenges they faced to plug Africa’s estimated $67 billion to $107 billion annual infrastructure gap.
Vivek Mittal, the Chief Executive Officer of the AfDB Association, who moderated the discussion said that four African countries; Kenya, South Africa, Ghana and Nigeria accounted for the majority of private sector investment interest over the past two years.
He said digital activities in transportation and electricity received the highest interest, pointing out that “Projects take too long, eight to 10 years in Africa”, and that the slow development of local talent is another drawback.
However, Tshepidi Moremong said Africa 50’s robust pipeline in its priority sectors was ample proof that the continent had bankable projects, listing the sectors as energy, transportation, ports, bridges, ICT, health and education.
She noted that the group’s experienced investment team worked closely with development finance institutions and commercial banks, to ensure that their bankable projects continued, and cited as an example, Kigali Innovation City, a technology village that had broken the mould in terms of innovation.
“Rwanda, an agriculture-based economy, sees diversification of its sectors as critical. The success of this project is due to political will and capacity from both sponsors, Rwanda’s Development Board, and investors,” Moremong said.
She pointed out that the parties had robust discussions on the allocation of risk, which was one of the major investment hurdles, and cited other general obstacles including limited deal pipelines, weak feasibility studies, technical studies and business plans, and delays in obtaining licenses.
Also, Mike Salawou expressed interest “to partner with JICA to do more”, adding that the Bank was involved in a joint port in Morocco with the European Bank of Reconstruction and Development.
Furthermore, Shohei Hara said JICA’s long history working with governments would need to give way to a mind shift as they looked to greater participation in private sector-financed infrastructure, stressing that “Governments have to change their mindsets, as well as ourselves”.
Also, Hara noted the role of multilateral partners such as the AfDB in mitigating risks like foreign exchange, political, regulatory, policy and payment obligations.