Onome Amuge
Africa Finance Corporation (AFC), the leading infrastructure solutions provider on the continent, announced that it has signed a US$350 million long-term line of credit with the African Development Bank (AfDB). The agreement, which was signed during the ongoing 28th Conference of the Parties (COP 28), supports urgently needed financing for infrastructure projects to underpin sustainable development and economic growth.
The line of credit is an important milestone in a longstanding partnership between the two institutions, with AfDB becoming a shareholder in AFC in 2019 and the two co-investing in multiple transformative infrastructure projects. The AfDB’s financing will allow AFC to secure additional resources to support the development of infrastructure projects in key sectors including power, transportation, telecommunications, and natural resources, which are essential for closing Africa’s infrastructure gap.
According to a Deloitte report, sub-Saharan Africa is facing a substantial infrastructure deficit, which is especially pronounced in the transport, communication, water and power sectors. These deficiencies have impeded the region’s economic growth and development, as they have limited intra-African trade and trade with other regions. The report notes that poor infrastructure is one of the main constraints to competitiveness and that closing the infrastructure gap in the region will require significant investment.
A recent World Bank study also highlighted the impact of infrastructure on economic development in sub-Saharan Africa. It found that substandard infrastructure, including poor electricity, water, roads and ICT, reduced national economic growth by two percentage points per year and reduced business productivity by up to 40 per cent. It was estimated that at least $93 billion in annual investment would be needed over the next ten years to improve the infrastructure of sub-Saharan Africa. This investment would need to be split between new infrastructure, costing about US$60 billion, and the maintenance of existing infrastructure, which would cost US$30 billion.
Sanjeev Gupta, board member and executive director of financial services at AFC, in his remark at the signing ceremony,said the agreement reinforces the long-standing partnership between AFC and the AfDB, which shares the vision of a prosperous, resilient and sustainable Africa.
Gupta underscored the importance of collaboration between Africa’s leading institutions in driving a development agenda that is grounded in practicality, sustainability and the generation of economic prosperity through the promotion of domestic manufacturing, value addition and a shift away from the historical model of extractive industries driving economic development on the continent. This shared approach and mutual support, he argued, is essential for unlocking Africa’s full potential and ensuring that its economic growth is equitable and sustainable.
“We welcome the opportunity to widen and deepen our collaboration and deliver on our mandate that will unlock the continent’s economic potential, create jobs, and improve the quality of life for millions of Africans,” he said.
Solomon Quaynor, the African Development Bank’s vice president for private sector, infrastructure & industrialisation, described the collaboration between the bank and AFC as a shared commitment to catalysing sustainable development across the continent.
Quaynor added that the credit line would enable the two institutions to collaborate and drive economic empowerment, infrastructure development and a brighter future for Africa.
