Africa’s record private investment in infrastructure in 2020 sends a strong signal, the Vice President (VP) of the African Development Bank told the panel at the Tokyo International Conference on African Development ( TICAD)
Africa received its highest proportion of private sector investment in infrastructure in 2020, sending an important signal to governments and investors.
The African Development Bank’s Vice President for Private Sector, Infrastructure and Industrialization, Solomon Quaynor, made this point during a webinar hosted by the African Development Bank and the Japan International Cooperation Agency ( JICA) on August 24. The online event was held ahead of the eighth Tokyo International Conference on African Development, or TICAD, to be held in Tunisia from August 27-28, 2022.
Quaynor said the surge in private sector investment came as most African governments were grappling with the Covid-19 pandemic, limited fiscal space and high debt-to-GDP ratios. “Private sector investment in African infrastructure reached $19 billion in 2020, or 23%, the highest since 2016. This counter-cyclical role played by the private sector shows the importance of its growing role in financing infrastructure in Africa,” he said in remarks at the end of the webinar, on the topic Opportunities for Private Sector Infrastructure Development in Africa.
In his opening remarks, Keichiro Nakazawa, senior vice president of the Japan International Cooperation Agency, said the discussion would focus on the growth prospects of African countries and the role of the private sector in providing infrastructure. high quality durable.
The panelists were Rami Ghandour (Métito), Tshepidi Moremong (Africa 50), Vuyo Hlompho Ntoi (African Infrastructure Investment Managers) and Yoshio Kushiya (Sumitomo Corporation). They were joined by representatives of major development finance institutions – Shohei Hara from JICA, Mike Salawou from the African Development Bank and European Bank for Reconstruction and Development Director Sue Barrett.
Panelists shared their insights, success stories and challenges they faced in bridging the estimated $67-107 billion annual infrastructure gap in Africa. Vivek Mittal, CEO of the Africa Infrastructure Development Association, moderated the discussion.
Mittal noted that four African countries – Kenya, South Africa, Ghana and Nigeria – accounted for the majority of private sector investment interests over the past two years. Mittal said digital business in transportation and power has generated the most interest. Urban sanitation – a key piece of infrastructure – has lagged.
“Projects take too long – 8 to 10 years – in Africa,” Mittal said, adding that the slow development of local talent was another downside.
According to Moremong, Africa 50’s strong pipeline in its priority sectors – energy, transport, ports, bridges, ICT, health and education – is proof enough that the continent has bankable projects. The group’s experienced investment team works closely with development finance institutions and commercial banks, to ensure that their bankable projects continue.
She gave the example of Kigali Innovation City – a tech village that has broken the mold when it comes to innovation. Rwanda, an agriculture-based economy, sees the diversification of its sectors as essential.
“The success of this project is due to the political will and capacity of the sponsors – the Rwanda Development Board – and the investors,” said Moremong. She said the parties had strong discussions on the allocation of risk, one of the main barriers to investment. Other general obstacles cited include limited deal pipelines, weak feasibility studies, technical studies and business plans, and delays in obtaining licenses.
The African Development Bank, the continent’s leading infrastructure financier, has concluded a major public-private project in Kenya, the Nairobi-Nakuru-Mau Road PPP, with an investment of $200 million. “We would like to partner with JICA to do more,” Salawou said, noting that the bank was involved in a joint port in Morocco with the European Bank for Reconstruction and Development.
Shohei Hara said JICA’s long history of working with governments should give way to a change in mindset as they consider greater participation in privately funded infrastructure. “Governments need to change their mindsets, as well as ourselves,” he said.
He also noted the role of multilateral partners such as the African Development Bank in mitigating risks such as foreign exchange, political, regulatory, political and payment obligations.
During a recent trip to South Africa, Quaynor said he met with several key Japanese private sector companies with regional headquarters in Johannesburg involved in multiple infrastructure sectors.
“Given the maturity of Japanese markets, these companies are strategically expanding globally, but with clear risk-adjusted return expectations,” he said. “It’s good to see that we are focused on solutions.”
Quaynor also highlighted the African Alliance for Green Infrastructure, led by the African Development Bank, Africa50 and several global and African partners, including the African Union Commission and the African Union Development Agency. (AUDA-NEPAD), Rockefeller Foundation, European Investment Bank, European Bank for Reconstruction and Development, French Development Agency and African Sovereign Investors Forum. The Alliance seeks to develop green and smart infrastructure at scale and rapidly in energy, transport, water and sanitation, ICT, healthcare, and urban and rural infrastructure .
“We encourage JICA and JBIC to consider supporting this facility with concessional funds and grants. We also encourage Japanese private sector companies to provide patient business capital to ensure that large-scale green infrastructure projects are developed rapidly in Africa,” Quaynor said.
Distributed by APO Group for the African Development Bank (AfDB) Group.
Contact: Amba Mpoke-Bigg, Department of Communication and External Relations, email: [email protected]