Lack of infrastructure makes countries unattractive to foreign investment.
The Infrastructure Consortium for Africa (ICA) is a major initiative to accelerate progress in the effort to meet the urgent infrastructure needs of Africa with respect to economic growth and development. ICA members are the G20 countries, WBG, AfDB, EC, EIB and DBSA.
Although ICA is not a financing agency, the consortium acts as a platform to broker more financing of infrastructure projects and programmes in Africa. The main objectives of the ICA can be broadly defined as follows:
increase the amount of finance going to sustainable infrastructure in Africa from public and private sources
facilitate greater co-operation between members of ICA and other important sources of finance including African stakeholders, China, India, Arab Funds and the private sector
highlight and help remove policy and technical blockages and progress
increase knowledge of the sector through monitoring and reporting on the key trends and developments
Increasingly, the ICA is working to improve the co-ordination of activities among members and with other significant sources of infrastructure finance, including: China, India, Arab and Islamic financiers, African regional development banks, and the private sector.
ICA’s work in infrastructure covers four sectors—energy, transport, water, and information and communication technology (ICT).
Overall commitments to Africa’s infrastructure from all sources increased to $81.6bn in 2017 from $66.9bn in 2016. Of the $81.6bn committed to Africa’s infrastructure development in 2017, West Africa received $22bn of commitments, followed by North Africa with $15.9bn and East Africa with $15.8bn. Southern Africa (excluding South Africa) received $12.2bn, South Africa $8.7bn and Central Africa $6bn.
The world needs to invest an average of $3.3 trillion annually in order to support currently expected rates of growth, and emerging economies account for some 60% of that figure. Investment in infrastructure in Africa needs an estimated at $130–$170 billion a year and commitments from all sources in 2017 added up to $81.6bn. Thus, there is a gap to close of $80 bn.
National governments remain the main sources of infrastructure finance in Africa. Private participation in infrastructure, however, is widely seen as a strategy to improve efficiency. Nonetheless, the absence of well-defined infrastructure programs and bankable project pipelines is a major issue in many African countries. Greater financing of high-quality infrastructure would contribute to global public goods and address some of the world’s biggest challenges. With the right policies, industrialization in Africa would generate growth and contribute to global demand. No doubt that in the decades ahead, Africa could become a major contributor to and driver of global growth.
Vice President CBL-ACP
PSLO World Bank Group
Financing Division CBL-ACP