Commitments to African infrastructure investment fell 21% last year as Chinese and private-sector funding slowed, according to the latest report by the Infrastructure Consortium for Africa (ICA).
The ICA, which promotes investment in the world’s second-largest continent, said commitments to infrastructure in 2016 fell to $62.5bn (€52.9bn) from $78.9bn the year earlier. Of that amount, $26.3bn came from African national governments, representing a 40% contribution. The remaining $36.2bn was from external finance.
According to ICA’s report, external finance dropped as Chinese funding was reduced to $6.4bn in 2016 from $20.9bn in 2015. Private-sector funding also fell by $2.6bn from $7.4bn.
The report however highlighted that the level of Chinese funding in 2016 compared more favourably with the annual average of $12bn for 2011-2016 – and was far higher than $3.1bn in 2014.
India more than doubled its commitment by contributing $1.2bn in 2016, up from $524m a year earlier. South Korea also committed $432m to four projects in 2016, compared with a single commitment of $81m the previous year, the report stated.
The transport sector in some of Africa’s 54 countries was apportioned the highest amount of funding as it received $24.5bn or 39.2% of the total funds, but still below the $32.4bn allocation in 2015.
Financing of energy projects in the world’s second-most populous continent fell to $20bn in 2016, from $33.5bn in 2015, but commitments to the water sector increased to $10.5bn in 2016 from $7.5bn the year before. Commitments to the information and communications technology sector stood at $1.6bn in 2016, less than the $2.4bn reported in 2015.
The report said pension funds and sovereign wealth funds “could be big investors”, but to attract them “will require reforms and new financial instruments in the countries where investable assets are located and reforms in the countries in which larger investors are regulated”.
ICA’s co-ordinator Mohamed Hassan said: “Identifying emerging trends that will bring new types of funding and new investors in Africa’s infrastructure development must be considered an important task.
“This report will help stakeholders grasp the opportunities available to mobilise greater resources for Africa’s infrastructure development, so that the ICA’s vision that all Africans should have access to reliable and sustainable infrastructure services can be realised.”