By Baboloki Semele: A new report unveiled at the 5th Finance in Common Summit in South Africa shines a spotlight on the $170 billion annual infrastructure funding gap hindering Africa’s growth. Despite African governments contributing 40% of the current $80 billion investment in infrastructure, the gap remains vast, resulting in an estimated 2% reduction in annual GDP growth.
The Africa-Europe Foundation, in partnership with the African Union Development Agency (AUDA-NEPAD) and the African Climate Foundation, has launched the report titled The Missing Connection: Unlocking Sustainable Infrastructure Financing in Africa. This comprehensive document identifies key opportunities for the Africa-Europe partnership to mobilize better and more financing, which could help fill this critical gap and propel Africa’s development.
According to a press release from AUDA-NEPAD, The organ’s CEO Nardos Bekele-Thomas, emphasized the importance of coordinated infrastructure development. “Infrastructure development cannot succeed when sectors operate in isolation. Energy, transport, water, and digitalization must function as parts of a larger whole, creating synergies that drive sustainability and long-term impact,” she said, urging a collaborative approach to infrastructure investment.
The report outlines several priority areas for action, aiming to unlock the necessary finance for Africa’s infrastructure needs without further exacerbating the continent’s ongoing debt crisis. These include leveraging the G20 for domestic resource mobilization, reinforcing the Africa-Europe Partnership to unlock investments, embracing digital technologies and artificial intelligence (AI) to drive transformation, and prioritizing infrastructure investments that intersect energy, climate, and health goals.
Paul Walton, Executive Director of the Africa-Europe Foundation, highlighted the potential for cross-continental action to unlock up to $2.3 trillion in investments. He said, “Unlocking untapped areas of cross-continental action is in the DNA of the Africa-Europe Foundation, and our work with AUDA-NEPAD and the African Climate Foundation focuses on concrete actions that will unlock smarter and more effective financing.”
The report stresses the role of innovative solutions like tackling illicit financial flows—estimated at $50-115 billion per year—and increasing remittances to boost infrastructure funding. It also underscores the need to enhance the effectiveness of the EU’s Global Gateway initiative, which has pledged €300 billion for global infrastructure development, including €150 billion for Africa. This initiative presents a powerful opportunity for Africa and Europe to work together on transformative, large-scale infrastructure projects.
However, the report points to critical gaps between political promises and operational realities, particularly around the implementation of the Global Gateway strategy. While there is strong political alignment between Africa and Europe’s infrastructure goals, the report calls for more effective coordination, transparent processes, and an approach that integrates softer aspects of infrastructure development, such as workforce training and regulatory reforms.
Saliem Fakir, Executive Director of the African Climate Foundation, echoed these sentiments, emphasizing the need to focus on areas that offer long-term transformative opportunities. “We are working towards transforming key economic sectors in Africa through our country investment platforms. The report outlines crucial opportunities that can unlock much-needed investment for the continent.”
The report also calls for the standardization of infrastructure investment data collection, a critical step in streamlining funding processes and enhancing transparency between investors and project managers. A more unified approach to project preparation and the inclusion of non-economic benefits—such as the expansion of Africa’s food security and decarbonization potential—could further attract private sector participation.
The release says the report advocates for aligning infrastructure investments with Africa’s broader development strategies, notably the African Continental Free Trade Area (AfCFTA), which can serve as a driver for regional integration and economic growth. It outlines a win-win scenario for both Africa and Europe, particularly through the development of cross-border economic corridors that enhance connectivity across the continent.
The urgency of the infrastructure gap is clear. Africa’s ability to meet its $130-170 billion annual infrastructure needs is crucial not only for economic growth but also for creating sustainable, inclusive development. As the report shows, unlocking the necessary funding requires concerted efforts on domestic and international fronts—reforms in governance, strategic investments in digital infrastructure, and stronger collaboration between African and European partners. Without these steps, Africa risks further delays in its economic transformation, leaving untapped potential on the table.
The new report according to the press release provides a roadmap for addressing Africa’s infrastructure challenges and calls for a new era of cooperation between Africa and Europe and by seizing these opportunities and implementing the recommended strategies, both continents have the chance to turn this pressing challenge into a transformative opportunity for growth and prosperity.