| Participants in the African Continental Free Trade Area (AfCFTA) Business Forum estimate that the continent requires USD 130-170 billion annually to improve its infrastructure but that the funding gap is in a range of USD 68-108 billion. The 2nd Dakar Financing Summit for Infrastructure, held in February 2023, sought to address this with a focus on building public-private partnerships and leveraging technology to modernise infrastructure. The summit generated USD 65 billion worth of interest in a variety of initiatives, including projects to support developing transportation networks, constructing energy infrastructure and improving internet connectivity. |
Frontier markets
Some countries have worked to strengthen their frameworks for investment, with Kenya and Mozambique notable examples. Because many of the continent’s economies are considered ‘frontier markets’, they do not have access to the considerable funds that might be deployed by institutional investors so must depend chiefly on funding from multilateral institutions, other national governments and public- private partnerships.
African countries have investment ties with regions across the globe. Nearly all are part of China’s Belt and Road Initiative. Japan is working with Mozambique and Kenya on enhancing the ports of Macala and Mombasa respectively. The Biden administration supports the African Union’s Agenda 2063 and has committed US funds to progress it. The European Union’s Global Gateway programme promotes investments in clean energy, biodiversity, agri-food systems, climate resilience and disaster risk reduction. Countries in the Middle East are utilising their energy expertise and ample funds to promote growth, particularly in Egypt.
The power mix
Energy projects are a key focus for many countries, with a mixture of oil and gas alongside wind and solar. In early 2023, Angola and Zambia discussed the potential to fast-track the development of an oil and gas pipeline, a rail and road corridor, and an electricity transmission line.
In Mozambique, the Central Térmica de Temane project includes a 450MW natural gas power plant and a 25 km interconnection line. Solar power projects are helping to power reservoir pumping stations. Power from Morocco’s 900MW Dakhla onshore wind project will also be used for a desalination plant.
Egypt currently generates more electricity than it consumes and is creating grid connections with other countries within the region and around the Mediterranean. Through the Sovereign Fund of Egypt (TSFE), it is pursuing partnerships with the private sector in renewable energy, green hydrogen, green ammonia and desalination.
South Africa announced numerous projects during 2022, including a smart city, a green hydrogen plant, the fifth and sixth rounds of the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), and the Seriti coal mine windfarm project. The Just Energy Transition Partnership with the UK, France, Germany, the EU and the US, which was announced two years ago at COP26, guarantees it at least USD 8.5 billion to support its plans for climate action and energy transition.
Developing connections
In Kenya, upgrading airports is a key focus as is creating new commuter bus and rail lines in and around major cities. In addition to the port refurbishment ongoing in Mombasa, China is funding the construction of a new port at Lamu in the north.
Morocco plans to extend the Al Boraq high s peed rail line, which currently links Tangier, Rabat and Casablanca, to include the cities of Marrakech and Agadir. Another spur is intended to link Rabat to Meknes, Fes and Oujda.
In South Africa, a greenfield deep-water port at Boegoebaai is slated to cost USD 2.8bn once its related rail infrastructure is taken into account. Other projects include national roads in the Eastern Cape and port infrastructure development.
Communications needs
Although there is progress in some areas of digital development, particularly in mobile payments and other fintech, Africa still lacks basic communications infrastructure. The cost of connectivity is high and the extent to which businesses and individuals use the internet in their day-to-day activities varies widely, both within and between countries.
Although there is progress in some areas of digital development, particularly in mobile payments and other fintech, Africa still lacks basic communications infrastructure.
