REVIEW : High risk keeps Africa from surfing infrastructure investment wave

Urgent action is required for African nations to prepare metropolitan areas for an unprecedented surge in population. According to the African Development Bank (AfDB), the continent's capacity to plan for rapid urbanization will shape its economic trajectory for generations. However, recent events have hindered progress, making it imperative to address this situation promptly.

According to Craig Weitz, principal of Africa Infrastructure Finance at Nedbank, in recent years, Africa's progress in planning for rapid urbanization has been hindered by a series of events.

Firstly, the COVID-19 pandemic forced many governments to redirect their infrastructure budgets to address the health and social costs of caring for citizens.

Secondly, the prolonged recovery from the pandemic, coupled with the impact of the Russia-Ukraine war on global economies, further strained fiscal resources.

High-interest rates have made borrowing expensive and weakened local currencies.

The United Nations (UN) has expressed concerns about Africa's slow progress in achieving the Sustainable Development Goals (SDGs).

A blended approach to financing the continent's development is often recommended, incorporating debt structures, public-private partnerships, and innovative solutions such as green bonds.

In the post-pandemic era, many governments are prioritizing social infrastructure, such as hospitals (SDG 3) and water and sanitation (SDG 6). These investments are particularly effective because they complement each other and contribute to the overarching goal of ending poverty (SDG 1).

Africa holds immense potential for infrastructure investment. The Africa Continental Free Trade Area (AfCFTA), which became operational in March and is the world's largest free trade area, positions the continent as an attractive destination for investment.

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