Financing Africa’s infrastructure: new strategies, mechanisms, and instruments

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The excess savings in many advanced countries could be channeled into financing profitable infrastructure projects in Africa. That this mutually profitable global transaction is not taking place is one of the biggest paradoxes of current times. More than $100 trillion is managed by institutional investors and commercial banks globally. African countries seeking financial resources now have a wide variety of options, well beyond foreign aid. Many new financing mechanisms could be implemented in all African countries, taking into account the specific economic circumstances and the productive structures of national economies. Countries should better leverage public funds and infrastructure investments, while encouraging private sector participation. But the different stages of development of African countries mean that the policy approaches need to be country specific. Universal access to high-quality infrastructure can only be a long-term goal. Trying to achieve it with limited resources has led governments to spend too much on too many projects with low economic returns and little impetus for industrial growth and employment creation. But African countries do not need to solve all their infrastructure problems before they can achieve sustained and inclusive growth. Instead, they should focus on how to best use their scarce infrastructure budget to achieve the highest economic and social returns.

Document Information

Document Type Paper
Year of Publication 2019
Publisher African Development Bank
Number of Pages 30 pages
Region / Country Africa /
Primary Language English (en)
Keywords Long-Term Finance and Capital Markets, Pension Funds, Housing Finance, Cross-Cutting Thematics, Sustainable Finance
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