There is no gainsaying in the fact that infrastructure in many countries of Africa is in ruins. The infrastructure deficit in Africa is alarming. The roads are riddled with potholes, electricity generation and transmission are in comatose, and social amenities are few and far between in many places in the continent. 

Humongous amount of money is needed for this long-overdue infrastructural renewal across the continent. According to the African Development Bank, (AfDB) Africa’s infrastructure transformation will gulp up to $170 billion a year by 2025, with an estimated financing gap of up to $68 to $108 billion a year. 

At this point in time, Africa is standing at a critical juncture. The time for dillydally is fast fading out. The energetic and vibrant young population must be put to work if we are to avert the looming social unrest that may engulf the continent if we failed to act fast. To fully do this, infrastructure renewal, at least at the basic level, must be at the front and centre of the agenda of all stakeholders. 

Concerted efforts are needed to ensure that clean water is flowing in the taps into homes, adequate roads are built to ensure that farmers produce in the far flung villages are transported to the cities, and fast internet services become a commonplace and not a luxury. 

The elephant in the room is how do we fund these projects? Should government tax the millions of impoverished Africans who lived on less than $1.90 a day to meet up with the financing gap of $108 billion a year? Here are the available options: 

Government funding: In the African setting, when issues of infrastructure financing is on the table, the first option that comes to the mind is government funding. This is because government in the continent, at all levels, wields considerable amount of financial power. Government funding of infrastructure are done through the budgeting and allocation of money for the provision of infrastructure to the citizens free of charge. 

The next model as it relates to government funding of infrastructure is for the government to pay for the project but charge those who make use of the infrastructure. This could be tolling of roads, billing for the usage of water, electricity, etc.  

Public Private Partnership (PPP): Another popular funding model is the PPP model. This model is about the partnership between the government and private institutions to build, operate and maintain infrastructure on mutually agreed basis of participation.

Types of PPP are Concessions, Build-Operate-Transfer (BOT) Projects, and Design-Build-Operate (DBO). The World Bank has given insights into these different concepts of PPP: A concession gives a concessionaire the long term right to use all utility assets conferred on the concessionaire, including responsibility for operations and some investment. Asset ownership remains with the authority and the authority is typically responsible for replacement of larger assets. 

A Build Operate Transfer (BOT) Project is typically used to develop a discrete asset rather than a whole network and is generally entirely new or greenfield in nature (although refurbishment may be involved). In a Design-Build-Operate (DBO) Project, according to the World Bank, the public sector owns and finances the construction of new assets. The private sector designs, builds and operates the assets to meet certain agreed outputs. The documentation for a DBO is typically simpler than a BOT or Concession as there are no financing documents and will typically consist of a turnkey construction contract plus an operating contract, or a section added to the turnkey contract covering operations. 

The African Development Bank noted that five African countries accounted for more than 50% of all successful PPP activity from 2008 to 2018. The countries are South Africa, Morocco, Nigeria, Egypt and Ghana. 

Financial Institutions: Financial institutions like the World Bank, International Monetary Fund, The African Development Bank, etc., are front and centre in funding infrastructure projects in Africa. 

In June 30, 2020, the World Bank announced a $425 million financing support for the provision of infrastructure projects in Eastern and Southern Africa. In June 2021, The African Development Bank (AfDB) announced its plan to spend an additional two billion dollars on infrastructure targeted at promoting the African Continental Free Trade Area (AfCFTA).

Loan: African countries are embracing loans as a means to fund infrastructure projects in the continent. In sub-Saharan African countries, according to data from Datawrapper, the debt-GNI ratio rose nearly 20 percentage points in a decade to 43.7 per cent in 2020 from 23.4 per cent in 2011. As the governments accumulate loans, opinions are divided among the citizens as to its sustainability. For instance, in Nigeria, though the debt to GDP is 36.88%, the issue of loan from China has become an emotional and political issue. 

These infrastructural funding options are by no means exhaustive but they present to us a picture to accelerate the infrastructural transformation of the continent. 

With the rectification of the African Continental Free Trade Area Agreement (AfCFTA) by over 40 African nations which has the potential to become the world’s biggest free trade area with a collective GDP of 3billion dollars and the operational roll-out of the Pan-African Payment and Settlement System (PAPSS) which will simplify cross-border transactions and reduce the dependency on hard currencies, all the infrastructural financing options must be critically analyzed with a view of adopting the appropriate model that would boost investment in the infrastructural renewal of Africa. 

At WOFA, we have taken it upon ourselves to identify the right funding model that will work for Africa. At our three days summit, we will bring together all stakeholders for deliberations, collaborations and project implementation that will precipitate massive socio-economic growth across the continent of Africa. 

All our speakers and panelists at the summit will be conceptualizing and identifying major revolutionary infrastructure projects as they relate to the pathway for Africa’s infrastructure transformation, poverty eradication and unleashing prosperity in the continent across the thematic areas.  

They will be expounding on innovative and creative financing (with little or no loans) for projects either identified or to be conceptualized; and speaking to reforms, legal or policy frame work needed to bring into reality such projects.