Catalyzing Africa’s private sector participation in infrastructure

There are significant opportunities for AFC to catalyze and finance private sector participation in infrastructure projects.

It is now well established that access to infrastructure services promotes economic growth. It also improves social indicators, including poverty levels, health, educational status and overall quality of life.

However, Africa’s power, roads, ports, rail and telecommunications systems are under-developed, and thereby slow down econom¬ic growth, reduce global competitiveness and retard poverty reduction efforts. Today, more than half a billion people in Africa are without modern forms of energy and only a tiny percentage of people in rural areas have access to electricity. Access to safe water, proper sewage and waste disposal, and other services is uneven through out the region.

These infrastructure gaps, especially transport and energy, are contributing to high cost of doing business in the region. African enterprises are generally competitive in factory floor direct costs of production. However, indirect costs, especially the high costs of poor infrastructure services, are a major bottleneck for African firms. Governments clearly need to create fiscal space to invest public funds in infrastructure. But Governments alone can not meet the demand for infrastructure.

There is an increasing role for the private sector both in stand-alone projects and public-private partnerships, because governments alone do not always have the resources and skills to structure and execute projects in a manner that is attractive to funders.

In dealing with this challenge, AFC looks to increased public-private sector partnerships to close the infrastructure gap. AFC promotes private sector investment in power, transport and telecom infrastructure projects in order to improve efficiency of infrastructure services and extend delivery of such services to the poor.

AFC supports infrastructure operations directly through project and principle finance and via private equity. To significantly increase Africa’s share of the international project financing and structured credit markets, AFC provides world-class origination, structuring and distribution expertise. The AFC is currently working with a group of leading international financial institutions in a partnership, focusing on launching a multibillion US dollar Infrastructure, Mining and Energy Fund for Africa.