Innovative funding needed for Africa’s infrastructure

Africa is the only continent that has the potential to achieve double digit economic growth within the next decade. Image: Bizmology

Africa is the only continent that has the potential to achieve double digit economic growth within the next decade. Image: Bizmology

A lot is happening in Africa’s rail space as the continent is very resource rich, Chidi Izuwah.

Izuwah is a registered engineer and chairman of the Infrastructure and Public Private Partnership (PPP) Committee in Nigeria. In his address, he focused on one of Africa’s biggest issues – its infrastructure funding deficit.

He identified PPPs as a key to funding infrastructure projects and said it was important to understand and nurture the idea that increased private sector investment in infrastructure is the best way to achieve intensive job creation and incentivise funding.

He also said effective PPP units need to be built to support these partnerships and added that an integrated infrastructure plan should be implemented in order to have a clear focus on how to prioritise projects in the pipeline.

Speaking on projects, Izuwah said Africa needed to increase the pace and scale of its project rollout. “The problem is not resources, but resourcefulness,” he said. “We need to look at how to better apply the skills we have and alternative ways to attract investment.”

Facilitating the discussion was Howard Rosen, chairman of the Rail Networking Group in Switzerland. He said that while there are needs and demands for new infrastructure, the capabilities are also here. “We know what we want to do but how do we find the resources?” he asked.

Izuwah said that while PPPs were important in boosting the number of infrastructure projects, it was also important to have a deep knowledge of target market investors and local dynamics when looking to enter into these kinds of partnerships.

Infrastructure financing gap

Greater infrastructure investment will have the potential to increase the continent’s GDP by 2%, Izuwah said, and would help develop the backbone for rapid industrialisation across Africa. He added that it would also boost capacity to generate more domestic financial resources.

According to his numbers, Africa’s current infrastructure financing needs amounted to US$93 billion.

But how does Africa achieve this?

Izuwah said this could be done through innovative financing. He explained that this was not limited to raising funds for project implementation, but also included the creation of an appropriate environment for raising project finance at a reasonable price.

Foreign investors are also another option to growing Africa’s infrastructure at a speedier pace. Currently, China is one of the biggest foreign investors in African infrastructure, and invests US$14 billion annually.

Izuwah also said the continent needed to move away from having a narrow focus on developing individual countries and its domestic markets in order to regionalise its approaches to infrastructure investment.

He said there is also a need to focus on investing in strategic supporting infrastructure that promotes growth, trade and development.

Credit: Infrastucture News