Africa is a priority under the partnership for Global Infrastructure and Investment (PGII), a G7-led, whole-of-government initiative that aims to mobilise $600 billion in public and private capital, Wally Adeyemo, Deputy Secretary of the US Treasury said at an event organised by the US Trade and Development Agency (USTDA).
“To achieve this scale, concessional capital will need to play a significant role to change the risk-reward calculation for many of these critical infrastructure projects. We are working to figure out how best to deploy these scarce concessional resources to maximize their impact and Africa is a priority,” he said at a meeting convened by USTDA to discuss the future of infrastructure finance in Africa.
However, the official noted a clear disconnect between the large amount of available private sector capital and the urgent need to fund critical infrastructure projects in Africa and elsewhere.
Estimates by the African Development Bank suggest that the infrastructure finance gap for the African continent is between $68 billion and $108 billion per year.
Adeyemo called for the need to redouble efforts to mobilise private capital to bridge this gap.
“Private investment in middle- and low-income countries peaked in 2012 and has trended down since. In 2021, private investment in Africa fell an alarming 38 percent.”
At the same time, he pointed out that infrastructure-specific funds now hold $298 billion in deployable capital. In addition, ECD pension funds hold nearly $38 trillion.
“A tiny fraction of which would be enough to bridge the infrastructure finance gap,” Adeyemo said.
(Editing by Seban Scaria)