Africa needs US$621 billion to meet SDGs

The Global Infrastructure Hub, a G20 initiative, has today published two reports that reveal an urgent need for infrastructure investment in 10 Compact with Africa countries, and highlight the reforms required to encourage greater investment.

The first of these reports, Global Infrastructure Outlook: Infrastructure Investment Need in the Compact with Africa Countries, reveals that, unless US$621 billion is invested in these 10 countries by 2030, they will fail to meet the UN Sustainable Development Goals (SDGs) for universal access to drinking water, sanitation and electricity.

This amount is three times what is expected to be delivered based on current investment trends (US$206 billion), exposing an investment gap of US$415 billion.

Moreover, the required US$621 billion is part of a greater total infrastructure investment need of US$2.4 trillion for energy, telecommunications, airports, ports, rail, roads and water to 2040, if these 10 countries are to meet the demands of accelerating economic and population growth. Based on current trends, forecast investment is US$1.4 trillion, leaving a US$1 trillion investment shortfall.

In delivering these findings, Outlook forecasts for the first time the scale of the overall infrastructure investment gaps at both country and sector level in 10 Compact with Africa countries, and how these relate to meeting the SDGs.

Ludger Schuknecht, German G20 Finance Deputy and Co-Chair of the G20 Africa Advisory Group said: “We welcome the Global Infrastructure Hub’s activities towards analysing investment conditions in Compact with Africa countries. This will help Compact Countries, together with partners, in developing sound policy frameworks for sustainable private investment.”

Currently, 40 per cent of people living in 10 Compact with Africa countries don’t have ready access to electricity , and 59 and 53 per cent live without readily available drinking water and sanitation respectively . The Global Infrastructure Hub CEO Chris Heathcote said that time is running out if the world is to meet the UN SDGs in these Compact with Africa countries.

“Recently, UN General Assembly President Miroslav Laj?ák called for a sense of urgency in financing the UN SDGs. Today’s Outlook report reveals the magnitude of that need at a country and sector level, helping public and private investors to better direct their financing,” Mr Heathcote said.

“However, the huge challenge of delivering the UN SDGs is not only a matter of finance, but also of policy reform—we need strong governance and well-planned projects in these 10 countries.”

The second report published by the Global Infrastructure Hub today, InfraCompass: Set your Infrastructure Policies in the Right Direction in the Compact with Africa Countries, provides a holistic view of the policy drivers that deliver more and better infrastructure. According to the report, to maximise the investment opportunities for the 10 countries, work needs to be done to improve governance and regulatory and institutional frameworks.

InfraCompass finds that Morocco and Rwanda are notable performers, marked by their improvements to their regulatory quality, rule of law, and investment and competition frameworks.

“Private investors are a key component to bridging the infrastructure investment gaps and, although institutional investors are willing to participate, they are also wary of the risks,” Mr Heathcote explained.

“Working with these countries to undertake reform and capacity building will pay dividends in encouraging higher levels of sustainable economic growth.”

Head of Infrastructure Policy and Project Preparation at the European Bank for Reconstruction and Development (EBRD) Matthew Jordan-Tank said, “The Outlook and InfraCompass reports resonate with our experience in Africa.

“The findings point to clear and important guidance for public and private sector stakeholders alike. In order to plan, prioritise, tender, finance and monitor infrastructure of high quality, there needs to be a focus on improved regulatory approaches and the strengthening of national institutions. EBRD looks forward to collaborating with the Global Infrastructure Hub on these efforts.”

The two reports were researched and developed over a six-month period in partnership with Oxford Economics (Outlook) and KPMG (InfraCompass). Both are available in an interactive format on our open access platform at https://www.gihub.org/