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INFRASTRUCTURE FINANCINGTRENDS IN AFRICA – 2014

ICA Report - 2014www.icafrica.org

2 | INFRASTRUCTURE FINANCING TRENDS IN AFRICA – 2014

© 2014 The Infrastructure Consortium for Africa Secretariat c/o African Development Bank

01 BP 1387, Abidjan 01, Côte d'Ivoire

Disclaimer

This report was written by the ICA Secretariat in collaboration with a consultant. While care hasbeen taken to ensure the accuracy of the information provided in this report, the authors make norepresentation, warranty or covenant with respect to its accuracy or validity.

No responsibility or liability will be accepted by the ICA Secretariat, its employees, associates and/orconsultants for reliance placed upon information contained in this document by any third party.www.icafrica.org

INFRASTRUCTURE FINANCING TRENDS IN AFRICA - 2014 | 3

Foreword 4One-Stop Border Post Source Book 5Definitions 6Acronyms 6List of Graphics and Maps 8

1. The Big Picture 91.2 Key Messages and Findings 10

2. Financing Trends 122.1 Overview 122.2 Who Is Financing Africa’s Infrastructure 14

3. Sectoral Analysis 163.1 Overview 163.2 Transport 183.3 Morocco: Building a First-Class Transport Network 223.4 Water and Sanitation 243.5 Energy 283.6 ICT 34

4. ICA Member Financing 364.1 Overview 364.2 Types of Funding 384.3 Trends in Commitments and Disbursements 424.4 ICA Member Activities 464.5 Strategic Issues 49

5. Regional Projects 525.1 ICA Members’ Regional Trends 525.2 ICA Members’ Regional Activities 54

Mano River Union 55PIDA Financial Structuring Plan 57

6. Other Public Sector Financing 586.1 Overview 586.2 African National Budgets for Infrastructure 606.3 Subnational Financing 656.4 China 686.5 Arab Co-ordination Group 706.6 Non-ICA Member European Sources 726.7 Regional Development Banks 746.8 Other Sources of Finance 75

7 Private Sector Financing 767.1 Overview 767.2 Private Sector Survey: Investment Considerations 787.3 Private Sector Survey: Public Private Partnerships 807.4 Private Sector Survey: Market Trends 81

8 Country Studies 82Senegal: Harnessing Public-Private Partnerships 82Kenya: Investing In Renewables Projects 84

Annex 1 – Data Notes 86Annex 2 – Credits 87

Contents


Foreword

I have the pleasure of presenting to you the sixth edition of theICA annual report, Infrastructure Financing Trends in Africa2014. Over the years the report has served as a uniquedocument monitoring the flow of resources to Africa’sinfrastructure.

In line with our continuous efforts to provide ever broader andmore granular analysis of Africa’s infrastructure financing, thisyear’s report includes data and discussions on domesticresource mobilisation for infrastructure from central and localgovernment budget allocations, state utility contributions andthe private sector.

The report examines how some economies are alreadysubstantially mobilising their own resources, rather thanrelying on investment, loans, grants or remittances receivedfrom external sources. However, external support remains amuch needed catalyst for infrastructure development in manylocations. In this context, the role and activities of ICAmembers remain crucial.

Infrastructure Financing Trends in Africa 2014 shows that ICAmembers are mobilising their resources, with a record level of$13bn of disbursements, an increase of more than 14%compared with 2013. Commitments reported by ICA membersin 2014 are less than those reported in 2013, standing at$18.8bn compared with $25.3bn in the previous year. However,without the exceptional $7bn contribution from the USpresidential Power Africa initiative reported in 2013, levels ofcommitments in 2014 are slightly up on the previous year on alike-for-like basis with broadly similar organisations’ reporting.

An 80% increase in commitments to Central Africa’s transportinfrastructure, to $1.8bn in 2014, provided a larger sum thanwas committed to any other region in that sector. This wasparticularly encouraging among ICA members’ activities.

Key trends among ICA members include an increasingdeployment of resources in multi-sector projects, withdisbursements up by 14% and commitments by 11% in 2014.Information and communications technology (ICT) appears tobe attracting more interest, with Central and East Africa seeingdouble the funding in 2014 over the previous year. The 2014report reveals that, for ICA members, energy is once more themost attractive sector with $9.2bn or 48% of all commitments.

To obtain a clearer picture of resource mobilisation, we haveincreased the coverage of central government financing from20 countries in 2013 to 42 countries. Identified budgetallocations from these countries indicate that transport is a bigpriority for central governments, with allocations of $17.6bn or57% of total allocations to the sector. An additional $8.4bn wasadded to that total by Egyptian citizens who boughtinvestment certificates to fund work, now completed, to makethe Suez Canal a two-way waterway.

This year’s report begins to look at the important rolesubnational financing plays in some countries’ infrastructurespending. Analysis reveals that finance raised and supplied bylocal governments and state utilities is substantial in somejurisdictions, including Morocco, Nigeria and South Africa.State utilities from Namibia’s port operator Namport toMorocco’s Office National des Chemins de Fer are part-fundingmajor projects alongside their governments and a wide range

of development partners. Government and subnational bondsare being mobilised alongside revenues from state utilities andtax revenues from individuals and companies.

The private sector is increasingly playing an important role inresource mobilisation, with banks and institutional investorschannelling funds for public investment in infrastructure,including roads, power plants and water facilities. Of the 69respondents to the ICA’s African Infrastructure InvestmentSurvey 2014, more than 50% of investors said they wouldinvest more in the sectors in which they already participate,while 88% of energy investors said they intend to increasetheir commitments in that sector.

Infrastructure-focused investment houses based in Africa andowned by or focused on deploying capital on behalf of banksand institutional investors now have portfolios worth at least$3.7bn. The private sector participated in projects with a totalvalue of $5.1bn according to the Private Participation inInfrastructure (PPI) Project Database, jointly produced by theWorld Bank’s Infrastructure Economics and FinanceDepartment and the Public-Private Infrastructure AdvisoryFacility (PPIAF).

The 2014 survey – while confirming the usual constraints ofbureaucracy delays, policy uncertainty, transparency and lackof institutional capacity – illustrated that identifying bankableprojects was a challenge for the private sector. To respond tothe project preparation challenge, ICA members are involvedin initiatives and programmes to improve project origination,as well as early stage project development and financing, withthe ultimate aim of increasing flows through the projectpipeline.

The report includes interviews with ICA members to helpunderstand the processes and dynamics of developing Africa’sinfrastructure, as well as the challenges . ICA members showeda strong preference for multi-sector and regional schemes, butsome were frustrated at the lack of private sector appetite forregional projects.

The new Global Infrastructure Facility was launched in 2014,holding the potential to unlock billions of dollars forinfrastructure in the developing world. The GIF is designed totap into expertise from within and outside the WBG to delivercomplex public-private infrastructure projects that no singleinstitution could address on its own. This potentially powerfultool joins forces with emerging instruments, including theinnovative Africa50 fund, that will help the continent todevelop transformative and bankable projects, whilesupporting project financing with money raised from regionaland non-African pension funds, insurance groups, sovereignwealth funds and institutional investors.

The ICA vision is that all Africans should have access tosustainable and reliable infrastructure services, includingenergy, transport, water, and ICT. We hope this report willinform and assist the mobilisation of resources needed toachieve that vision.

MOHAMED H HASSAN

Coordinator, ICA Secretariat

INFRASTRUCTURE FINANCING TRENDS IN AFRICA – 2014 | 5

The Infrastructure Consortium forAfrica’s mission is to help improvethe lives and economic well-being ofmillions across the continent, bysupporting the scaling up ofinvestment in project developmentfrom public and private sources.

With a focus on regional programmesand projects, in addition to country-specific initiatives, the ICA helps tofacilitate infrastructure development inthe water, transport, energy and ICTsectors. This is in recognition of the factthat many African countries lack theessential building blocks of economicprogress, such as well-maintainedroads and railways, access to electricity,the Internet, water and sanitation.

Not a funding agency, the ICA isintended to catalyse and facilitate thefinancing of infrastructure projects andprogrammes; it also works to overcometechnical and political challenges tobuilding more infrastructure. Underthis mandate the ICA – in partnershipwith the AfDB, and at the request of theAUC, NPCA and Regional EconomicCommunities (RECs) – published aPIDA Financial Structuring Plan inDecember 2014 to help mobilise

resources for landmark regionalprojects (see page 57).

To address problems associated withproject preparation, ICA established in2014 a Project Preparation FacilitiesNetwork (PPFN), in accordance withthe recommendations of a studyrequested by the G20. ICA in 2015completed a study on best practice andlessons learnt in co-ordinating PPFNproject co-financing, information-sharing and resource mobilisation.

The ICA Secretariat in the last twoyears has organised trainingworkshops for 24 African countries onenhanced PPA negotiation skills, withan emphasis on renewable energy (seepage 33).

The ICA publishes key knowledgeproducts, which include the annualflagship report, InfrastructureFinancing Trends in Africa, whichmonitors resource flows toinfrastructure.

ICA has established a KnowledgeCenter as an information-sharingdatabase, holding and publishingdocumentation in the key areas of

energy, transport, water, ICT andgeneral infrastructure.

In line with its commitment toinformation sharing, ICA, inconjunction with NEPAD and AfDB,and with financing from JICA, isupdating its One-Stop Border PostsSourcebook to include current bestpractices and lessons learned since thefirst edition was published (see below).

The ICA has strong backing. Itsbilateral members include the G8countries: Canada, France, Germany,Italy, Japan, Russia, the UK and US.Membership is open to all members ofthe G20 – the Republic of South Africabecame the first non-G8 G20 memberof the ICA in December 2013.Multilateral members include theAfDB Group, EC, EIB, DBSA and WBG.

Increasingly, the ICA is working toimprove co-ordination among members,as well as between members and othersignificant sources of infrastructurefinance, who include China, India, theArab and Islamic financiers (who formthe ICA’s Arab Co-ordination Group),African regional development banks(RDBs) and the private sector.n

About the ICA

One-Stop Border Posts are one of the continent’s highestpriorities. The OSBP Sourcebook is being revised and updatedby ICA, NEPAD and AfDB, with financial support from JICA, toinclude current best practices and lessons learned since thefirst edition was published in 2011.

Africa has five of the world’s top ten fastest growingeconomies, according to the World Bank. But WTO data showthe continent’s share of global trade has remained relativelylow, at 3% in 2014, with Intra-African trade (at 16%) laggingbehind other regions, such as Europe (69%), Asia (53%), NorthAmerica (49%) and South and Central America (27%) ( 2014).With 54 countries, 16 of them landlocked, Africa has struggledto increase its rate of intra-regional trade for several decades.

Many studies in the last decade have attempted to identify theimpediments to trade in Africa. Among problems is that whileroad transit can be relatively fast, time is lost at ports, bordersand numerous official and unofficial checkpoints. One recentstudy suggests that reducing supply chain barriers couldincrease global GDP by up to six times more than by removingimport tariffs. Other studies have shown that a one day decreasein travel time in sub-Saharan Africa can lead to a 7% increase inexports, while a 10% reduction in exporting costs throughimproved facilitation could increase exports by 4.7%.

OSBPs are a means of tackling such impediments by reducingthe time and cost in cross-border transactions. OSBPs providethe legal framework, facilities and associated procedureswithin one facility, that will enable faster clearance whenvehicles exit one state and enter another. Further, OSBPsincrease public safeguards and revenue collection at borders.

Africa’s first OSBP at Chirundu, between Zimbabwe andZambia, opened in 2009. With the support of developmentpartners, the concept and development of OSBPs haveexpanded rapidly, helping to tackle impediments to Africantrade by reducing the time and cost of cross-bordertransactions.

In 2012, the AU adopted PIDA/PAP, which was formulated bythe AUC, NEPAD, UNECA, AfDB and Regional EconomicCommunities (RECs), prioritising continental infrastructureprogrammes and projects to assist in addressing theinfrastructure deficit that severely hampers Africa’scompetitiveness. PIDA/PAP included 21 priority transportprogrammes and projects, which were broken down into 273sub-projects in an AfDB study in 2014. Of these, 75 areidentified as OSBPs. In 2014, ICA and JICA identified 27 OSBPsat various stages of construction. n

Facilitating trade: One-Stop Border Post Source Book


Budget DataBudget allocations: Total approvedgovernment budget for the respectiveitem.

Total infrastructure budget: Sumof energy, water and sanitation,transport, and ICT budget allocations.Where available, significant multi-sector or other infrastructureallocations are indicated separately.

ICA MembersAfDB, DBSA, EC, EIB, G8 countries,Republic of South Africa and theWorld Bank Group. In 2011 all G20countries were invited to join theICA. The AU Commission, NEPADSecretariat and Regional EconomicCommunities participate asobservers at ICA meetings.

InfrastructureTotal infrastructure budget: Sumof energy, water and sanitation,transport, ICT, and multi-sectorinfrastructure budget allocations.

Hard infrastructure: Physicalinfrastructure.

Soft infrastructure: Measures tosupport or accompany the productionof physical infrastructure outputs,including research, enablinglegislation, project preparation andcapacity building.

Project preparation: Theundertaking of all project preparationcycles or development activitiesnecessary to take an infrastructure

project from identification throughconcept design to financial close. Thisincludes feasibility testing andfinancial and legal structuring, as wellas raising capital.

FundingCommitments: Direct fundsapproved in a given year to projectsover their lifetime.

Disbursements: Money outflowgoing to infrastructure projects duringa given year.

ODA – official developmentAssistance: Grant or loan with publicconcessional modalities administeredby donor government agencies.

Non ODA: Non-concessional fundingfrom public or private sources.

Regional project: Projects withdirect beneficiaries in more than onecountry. These can either be cross-border projects or other regionalintegration projects involving aminimum of two countries or nationalprojects.

LocationNorth Africa: Algeria, Egypt, Libya,Mauritania, Morocco, Tunisia.

West Africa: Benin, Burkina Faso,Cape Verde, Gambia, Ghana, Guinea,Guinea Bissau, Côte d’Ivoire, Liberia,Mali, Niger, Nigeria, Senegal, SierraLeone, Togo.

Central Africa: Burundi, Cameroon,Central African Republic (CAR),Chad, Congo, Democratic Republic ofCongo (DRC), Equatorial Guinea,

Gabon, Rwanda, São Tomé andPríncipe (STP).

East Africa: Djibouti, Eritrea,Ethiopia, Kenya, Seychelles, Somalia,South Sudan, Sudan, Tanzania,Uganda.

Southern Africa excluding RSA:Angola, Botswana, Comoros, Lesotho,Madagascar, Malawi, Mauritius,Mozambique, Namibia, Swaziland,Zambia, Zimbabwe.

RSA: Republic of South Africa.

Regional DevelopmentBanksCentral African States DevelopmentBank (CASDB), DBSA (an ICAmember), EBID, EADB, West AfricanDevelopment Bank (BOAD).

SectorTransport: Airports, ports, rail, road.

Energy: Generation, transmissionand distribution of electricity and gas(including pipelines, and associatedinfrastructure).

Water and sanitation: Sanitation,irrigation, (trans-boundary) waterresource infrastructure, water supply,waste (solid & liquid) treatmentand management.

ICT: Information and communicationtechnology, including broadband,mobile network, satellite.

Multi-sector: Not sector-specific orcross-cutting projects. This couldinclude implementation of a PPP unitor capacity building programmes.

Definitions

ADF – African Development FundADFD – Abu Dhabi Fund for Development AFC – Africa Finance CorporationAFD – Agence Franç�aise deDé�veloppement (France)AfDB – African Development BankAFESD – Arab Fund for Economic andSocial Development AMCOW – African Ministers Council on

WaterAU – African UnionAWF – African Water FacilityAUC – African Union CommissionBADEA – Arab Bank for EconomicDevelopment in AfricaBDEAC – Banque de Dé�veloppement desEtats de l’Afrique CentraleBIDC – Banque d’Investissement et de

Dé�veloppement de la CEDEAO (EBID)

bn – 1 billion = 1,000,000

BIO – Belgian Investment Company forDeveloping Countries

BOAD – Banque Ouest Africaine deDé�veloppement

BOOT – build-own-operate-transfer

BNDS – Banco Nacional deDesenvolvimento

Acronyms


BTMU – Bank of Tokyo-MitsubishiCA CIB – Crédit Agricole Corporate andInvestment BankCADF – China-Africa Development FundCAGR – compound annual growth rate CAR – Central African RepublicCASDB – Central African StatesDevelopment BankCIF – Climate Investment FundCOFIDES – Spanish Development FundingCompanyCOMESA – Common Market for Easternand Southern AfricaCSP – concentrated solar powerDBSA – Development Bank of SouthernAfricaDEG – Deutsche Investitions- undEntwicklungsgesellschaft (KfW Group)DFI – development finance institutionDFID – Department for InternationalDevelopment (UK)DRC – Democratic Republic of CongoEAC – East African CommunityEADB – East Africa Development BankEAIF – Emerging Africa InfrastructureFundEAPP – Eastern African Power PoolEBID – ECOWAS Bank for Investment andDevelopment EC – European CommissionECA – export credit agencyECOWAS – Economic Community Of WestAfrican StatesEDFI – European DFIsEDF – European Development FundEIB – European Investment BankEPC – engineering, procurement andconstructionEU-AITF – European Union-AfricaInfrastructure Trust FundEXIM Bank – The Export-Import Bank ofthe United StatesFMO – Netherlands’ DevelopmentFinance CompanyG8 – Group of Eight (Canada, France,Germany, Italy, Japan, Russia, UK, US)G20 – Group of 20 (Argentina, Australia,Brazil, Canada, China, France, Germany,India, Indonesia, Italy, Japan, SouthKorea, Mexico, Russia, Saudi Arabia,South Africa, Turkey, UK, US and the EU)GIF – Global Infrastructure FacilityGIZ – Deutsche Gesellschaft fürInternationale ZusammenarbeitIBRD – International Bank forReconstruction and Development

ICA – Infrastructure Consortium for AfricaICT – Information and CommunicationsTechnologyIDA – International DevelopmentAssociation (World Bank Group)IDB – Islamic Development BankIDC – Industrial Development Corporationof South Africa LtdIFC – International Finance Corporation IPO – initial public offeringIPP – independent powerproducer/projectIPPF – Infrastructure Project PreparationFacilityITF – Infrastructure Trust FundJBIC – The Japan Bank for InternationalCooperationJICA – Japan International CooperationAgencyKFAED – Kuwait Fund for Arab EconomicDevelopmentKfW – KfW Development Bank (Germany)LIC – low-income countrym – 1 million = 1,000,000MD – Moroccan dirhamMDB – multilateral development bankMCC – Millennium Challenge CorporationMDB – Multilateral development banksMIGA – Multilateral Investment GuaranteeAgency (WBG)MoU – memorandum of understandingMW – megawattNEPAD – New Partnership for Africa’sDevelopmentNTF – Nigeria Trust FundNorfund – Norwegian InvestmentDevelopment Fund for DevelopingCountriesNPCA – NEPAD Planning and Co-ordinating AgencyO&M – operations and maintenanceOCGT – open cycle gas turbineODA – official development assistanceOeEB – Development Bank of AustriaOFID – Organisation of the PetroleumExporting Countries [OPEC] Fund forInternational DevelopmentOPIC – Overseas Private InvestmentCorporation (US)% – per centPIDA – Programme for InfrastructureDevelopment in AfricaPIDA/PAP – PIDA Priority ActionProgrammePPA – power purchase agreement

PPDU – ECOWAS’ Project Preparation andDevelopment Unit

PPFN – Project Preparation FacilitiesNetwork

PPIAF – Public-Private InfrastructureAdvisory Facility

PPIU – COMESA’s Project Preparation andImplementation Unit

PPP – public-private partnership

Proparco – AFD’s private sector arm

PTA Bank – Preferential Trade Area Bank

PV – photovoltaic

RAPs – resettlement action plans

RDB – regional development bank

RECs – Regional Economic Communities

RSA – Republic of South Africa

SADC – Southern African DevelopmentCommunity

SEFA – Sustainable Energy Fund for Africa

SFD – Saudi Fund for Development

SG – Société Générale

SMBC – Sumitomo Mitsui BankingCorporation

SME – small- and medium-size enterprise

SMTB – Sumitomo Mitsui Trust Bank

SSA – Sub-Saharan Africa

SWF – sovereign wealth fund

TA – technical assistance

UEMOA – West African Economic andMonetary Union

UNECA – United Nations EconomicCommission for Africa

UAE – United Arab Emirates

UK –United Kingdom of Great Britain andNorthern Ireland

US – United States

$ – US dollar

USAID – United States Agency forInternational Development

USTDA – US Trade and DevelopmentAgency

WACDEP – Water, Climate & DevelopmentProgramme

WAPP – West African Power Pool

WBG – World Bank Group

WP – Water Platform

WSP – Water and Sanitation Programme

ZAR – South African rand

Acronyms


Figure 1: ICA members' commitments and disbursements 10Figure 2: National government (control group) infrastructurebudget allocations, 2012-2014 10Figure 3: Total commitments by sector and by region, 2014 10Figure 4: Private Participation in Infrastructure (PPIs) projectinvestments 2010-2014 10Figure 5: ICA members' soft infrastructure commitments anddisbursements 2012-2014 10Figure 6: Financing flows into Africa's infrastructure, 2013 14Figure 7: Sources of finance 2014, public external and private 15Figure 8: Other national and subnational sources of finance 15Figure 9: Identified central government budget allocations by sector and region, 2014 15Figure 10: Total infrastructure commitments by sector and region, 2014 17Figure 11: Sources of multi-sector commitments 2013 and 2014 17Figure 12: ICA commitments to the transport sector, 2010-2014 19Figure 13: Total commitments to the transport sector, 2013-14 19Figure 14: Transport map with selected ICA member projects 21Figure 15: Total transport sector commitments by region, 2014 21Figure 16:ICA member commitments to the water sector2010-14 25Figure 17: Total commitments to the water sector, 2013 and 2014 25Figure 18: Water map with selected ICA member projects 27Figure 19: Total water sector commitments by region, 2014 27Figure 20: ICA member commitments to the energy sector, 2010-2014 29Figure 21: Total commitments to the energy sector, 2013-14 29Figure 22: Energy Map with selected ICA member projects 31Figure 23: Total energy sector commitments by region, 2014 31Figure 24: Total commitments to the ICT sector, 2013 and 2014 34Figure 25: ICA member commitments to the ICT sector, 2010-14 35Figure 26: Selected ICT sector projects 35Figure 27: ICT sector commitments by region, 2014 35Figure 28: ICA members’ commitments by sector, 2014 37Figure 29: ICA members’ commitments by region, 2014 37Figure 30: ICA members’ commitments by type of funding 38Figure 31: ICA members’ soft infrastructure commitments by type, 2014 39Figure 32: Soft infrastructure commitments by category, 2014 39Figure 33: ICA members’ hard and soft infrastructurecommitments, 2014 40Figure 34: ICA members’ hard and soft infrastructuredisbursements, 2014 40Figure 35: Index of ICA members’ hard infrastructurecommitment trends, 2010-2014 41Figure 36: Index of ICA members’ soft infrastructure commitment trends, 2010-2014 41Figure 37: ICA members’ infrastructure commitments by sector and region, 2014 42Figure 38: ICA members’ infrastructure disbursements by sector and region, 2014 42Figure 39: ICA members’ infrastructure commitments by donor and region, 2014 43Figure 40: ICA members’ infrastructure disbursements by donor and region, 2014 43

Figure 41: Disbursement rates for projects completed in 2014 44

Figure 42: ICA members’ disbursements by sector, 2012-2014 44

Figure 43: ICA members’ commitments by sector and region,2010-2014 45

Figure 44: Trends in ICA members’ regional infrastructureportfolios, 2010-2014 53

Figure 45: PIDA/PAP and other regional commitments anddisbursements by sector, 2014 53

Figure 46: African national budget allocations governmentcontrol group (larger economies), 2012-2014 61

Figure 47: African national budget allocations governmentcontrol group (smaller economies), 2012-2014 61

Figure 48: Identifiable African national budget allocations by sector and region 61

Figure 49: Allocations to infrastructure in national budgets, 2014, by US$ per capita and percentage of GDP 63

Figure 50: Percentage of infrastructure allocations by sector, 2014 63

Figure 51: Financing of Zambia's infrastructure needs 64

Figure 52: Chinese commitments by sector, 2011-2014 68

Figure 53: Chinese commitments by region, 2011-2014 69

Figure 54: Arab Co-ordination Group (ACG) commitments 2012-2014, by sector and region 70

Figure 55: Arab Co-ordination Group (ACG) commitments 2010-2014, by institution 71

Figure 56:Non-ICA European commitments by sector, 2014 72

Figure 57: Non-ICA European commitments by region, 2014 72

Figure 58: Non-ICA European commitments by country andsector, 2014 73

Figure 59: Non-ICA European commitments by country, 2014 73

Figure 60: Regional development bank commitments, 2014 74

Figure 61: Commitments by Brazil (2012 and 2014) and India(2012-2014) 75

Figure62:Private sector projects reaching financial close in 2014 77

Figure 63: Private sector financing by region, 2014 77

Figure 64: Private sector financing trends by sector, 2010-2014 77

Figure 65: Total value of projects with private sectorparticipation, 2010-2014 77

Figure 66: Sources of financing of projects with private sectorparticipation, 2014 77

Figure 67: Countries most attractive for investment 78

Figure 68: Greatest challenges facing private sector participants in African infrastructure projects 79

Figure 69: Risks which investors were unable to mitigate 79

Figure 70: Delays experienced in African infrastructure projects 79

Figure 71: Main factors affecting implementation of PPPs 80

Figure 72: Experience of participating in PPPs according to survey respondents 80

Figure 73: African portfolio intentions over the next two years 81

Figure 74: Sources of project finance 81

Figure 75: Equity exit strategies 81

Figure 76: Internal rate of return on African infrastructureinvestments 81

Figure 77: Senegal’s existing and proposed rail infrastructure 83

List of Graphics and Maps


1. The Big Picture – 2014

$74.5bn

25.2%

ICA Members

$18.8bn $9.1bn12.2%

$9.1bn12.2%

Non-ICAMembers

$2.9bn3.9%

PrivateSector

$34.5bn45.9%

AfricanNational

GovernmentsSubnational

Financing

$34.3bn46.1%

$22.4bn30.1%

$9.7bn13%

3.2%

$2.3bn

EnergyTransport Water &Sanitation

ICT

3.9%$2.9bn

Multi-sector

$11.4bn15.3%

$23.4bn31.5%

$8.3bn11.1%

$18bn24.2% $1.6bn

2.1%

North East CentralSouthern

$11.7bn15.7%

West Multi-regional

Total Funding by Sector

Total Funding by Region

Total Funding in 2014

of Which:

Data note:

2014 figures do notinclude UScommitments. In2013 UScommitments for theenergy sectorincluded $7bnsupport throughPower Africa.

In 2014 total fundingof $2.7bn wasunallocated.


1.2 Key Messages and Findings

A total of $74.5bn was committedto Africa’s infrastructure in 2014,based on reported ICA member data,identifiable commitments made by 42African national governments, non-ICA member external public sectorfunders and the private sector.

This is less than the $99.6bnreported in 2013. This is largely dueto a sharp fall (from $13.9bn to$3.09bn) in Chinese commitments, asBeijing recalibrates its position inAfrica’s infrastructure financing; theinclusion in 2013 of an exceptional$7bn of commitments from the USpresidential Power Africa initiative; aslow-down in private sectorcommitments to the transport sector;and a more rigorous approach toreporting of central governmentbudget allocations.

ICA members in 2014 reportedcommitments of $18.8bn. This wasless than the $25.3bn reported in2013, but demonstrates a steadyunderlying trend: ICA members’ 2013commitments without the exceptional$7bn US contribution totalled$18.3bn. On a like-for-like basis withreporting by broadly similarorganisations, ICA members’ annualcommitments for 2012-14 respectivelywere $18.7bn, $18.3bn and $18.8bn.

Disbursements by ICA membersare holding steady, edging to arecord peak of $13bn in 2014,compared with $12.7bn in 2012 and$11.4bn in 2013.

Key trends observable from ICAmembers’ data for 2014 include ashift towards multi-sector projects,growing attention to Central Africa,the energy sector’s continueddominance in attractingcommitments and a very sharpdecline in commitments to regionalprojects, including PIDA/PAP.

Identified central governmentbudget allocations provided2014’s largest category ofcommitments to infrastructuredevelopment, totalling $34.5bn. Data

Figures 1-5ICA members' commitments and disbursements, 2010-2014 (top left); Nationalgovernment (control group) infrastructure budget allocations, 2012-2014 (top right); ICA members’ commitments by sector and by region, 2014 (middle); Private Participation in Infrastructure (PPIs) project investments 2010-2014 (bottom left)ICA members' soft infrastructure commitments and disbursements 2012-2014 (bottomright)


was obtained from 42 countries (upfrom 20 in the 2013 report) yet thetotal value of commitments is lower in2014 compared with the $46.7bnreported for 2013. This was due to amore rigorous analysis of budgetspending and external funding.However, the potential for doublecounting remains.

Central government budgetallocations for infrastructuregrew between 2012 and 2014,according to analysis that uses a morerigorous methodology applied to the2012 and 2013 budgets of a controlgroup of 20 countries (who generallyreport data in a consistent manner).In 2014, this group’s allocationstotalled $24.6bn, compared with$27.1bn in 2013 and $23.3bn in 2012.

Substantial commitments mayalso be made to infrastructure ata subnational level – by localgovernments, utility companies andother institutions. This recognisesthat national government allocationsdo not reflect a country’s total publicsector spending.

Africa’s regional developmentbanks committed nearly $1.6bn toinfrastructure projects in 2014.This is a decrease on their $2.2bncommitments across the continent in2013.

$16.5bn (88%) of the total $18.8bnICA member commitments weredirected to hard infrastructure in2014.

$2.3bn (12%) of ICA membercommitments went to softinfrastructure. Two-thirds ($1.4bn)of soft commitments went to capacitybuilding, some 16% was directed atproject preparation and around 5% atresearch and evaluation. Another 16%of commitments were aimed at othersoft infrastructure projects andprogrammes.

ICA members used conventionalfinancing instruments the most.Loans accounted for $14.3bn (75%) and

grants for $2.7bn (14%) of financings in2014. This marks a distinct shift in theemphasis of members that consistentlyreport data to ICA. In 2013 theyreported that loans and grantsprovided $10.8bn (37%) and $7.4bn(25%) of funding respectively.

Transport operations attractedthe most financial commitmentsof any sector in 2014, taking allsources of finance into account. Thiswas largely due to $17.6bn in nationalgovernment budget allocations andthe $8.4bn of investment certificatesfor Egypt’s Suez Canal expansion.

Chinese funding for transportinfrastructure fell awaysignificantly in 2014, havingcatalysed some very substantial roadand rail projects in recent years.

Commitments from non-ICAmember countries included Brazil($503.4m), India ($423.9m) and SouthKorea ($206m). Non-memberEuropean bilaterals committed$876.8m, a substantial increasecompared with $189m in 2013.

The private sector concentratedits investments mainly on energyin 2014, having showed substantialinterest in port expansions in 2013.

There was a decline in thenumber of projects with privatesector participation reachingfinancial close, as recorded in thePrivate Participation inInfrastructure (PPI) Project Database.This was down from $8.8bn in 2013 to$5.1bn in 2014. Of this, $2.9bn wasfinanced by the private sector with theremainder from DFIs.

Energy once more dominated ICAmembers’ commitments with a49% share (54% in 2013). It wasfollowed by transport at 19% (22% in2013) and water & sanitation at 18%(17%). ICT received just 2.7% of totalcommitments.

The trend towards ICA membersbacking multi-sector projects isgaining momentum. In 2013 they

attracted twice the share reported in2012, registering 5% of allcommitments, and in 2014 this rose tomore than 11% of the total.

North Africa has overtaken WestAfrica as the region that receivedthe highest commitments fromICA members in 2014, with 27% ofthe total ($5bn).

ICA members’ commitments toCentral Africa reached theirhighest point in 2014 for fiveyears, with commitments of $3.7bn.This made the region the secondhighest recipient of 2014commitments after North Africa.

More than 50% of private sectorinvestors said they would investmore in the sectors where theyalready participate, while 88% ofenergy investors said they intendto increase their commitments,according to the 69 respondents toICA’s African InfrastructureInvestment Survey 2014.Respondents said Kenya and SouthAfrica provided the most favourableinvestment locations followed byNigeria.

Constraints such as bureaucraticdelays, policy uncertainty, lack oftransparency and insufficientinstitutional capacity remain achallenge, private sector respondentsand ICA members agreed.

The shortage of adequatelyprepared or bankable projectswas a much bigger challenge thanfinding project finance, membersand operators agreed – although thisregistered as much less of an issue forprivate capital than in previous years.

Private sector investmentsfocused on just a few large-scaleprojects in 2014, while participationin regional projects appears toochallenging for most private sectorinvestors and developers. n


Overall commitments for Africaninfrastructure from all sourcesidentified in this year’s report standat $74.5bn, 25% down ($25bn) on the$99.6bn commitments reported in2013.

The three main reasons for thisdownturn are as follows:

• Chinese lending to Africaninfrastructure projects in 2014 of$3.09bn was substantially lower thanthe average $13.9bn reported in eachof the previous three years;

• ICA member commitments in 2013included the exceptional contributionof $7bn from the US presidentialPower Africa initiative; and

• budget allocations by Africannational governments are lower, butthis is due to a more rigorousapproach to analysing data thatmakes efforts to remove doublecounting and revenue spending.

Infrastructure financing trends tendto be substantially driven by mega-investments. China’s very highnumbers in the previous three yearswere due to very large transportcommitments made by Beijing acrossthe continent.

Project-level detail provided by ICAmembers confirms that a few largeprojects, particularly in the energysector, account for a very significantproportion of member commitments.

ICA’s strategy is to continue with thegranular collection of project-leveldetail that will provide theinformation necessary to determinewhether very large projects continueto drive up or pull down the levels ofcommitments and disbursements.

As the body of aggregated data grows,so we will better understand thedrivers of change within the sectorswhose development is promoted byICA.

Underlying trends, where sufficientdetail is available to analyse them,appear to be more even and stablethan the headline figures mightsuggest in this 2014 and previousyears’ reports.

A control group of 20 countries thatconsistently report national budgetallocations on a like-for-like basis hasbeen identified. This group’sallocations increased from $22.7bn in2012 to $24.5bn in 2014, with a peakof $26.9bn in 2013.

ICA members’ commitments anddisbursements have remainedremarkably similar for the past threeyears, when Power Africa’sexceptional contribution to the 2013data is excluded.

Very large schemes or groups ofprojects – such as those clusteredaround bidding rounds includingSouth Africa’s Renewable Energy IPPProcurement (REIPPP) programme –

2. Financing Trends

2.1 OverviewCopyright iStock/Getty Images


Sources of infrastructure financinginterrogated in InfrastructureFinancing Trends in Africa 2014 gobeyond those contemplated inprevious years’ reports, and suggestthat more trends should be examined.

Historically, several sources have notbeen included in the ICA’s reportingdue to concerns over doublecounting. However, this may meanthat substantial funds flowing intoAfrica’s infrastructure are notcaptured in the data. These includeinvestments made from cash reservesor forays into the financial markets bystate utilities and local governments.Some funds that receive onlymarginal support from financiers,including ICA members, whoseactivities are recorded elsewhere inthe ICA’s database may also besignificant contributors to Africa’sinfrastructure development. n

also substantially drive private sectorcommitments, as reported on the PPIProject Database.

To date, only a handful of schemes (asper the ICA definition ofinfrastructure projects) have beenrecorded each year on the database –which thus responds with somevolatility to the appearance ordisappearance of just a few projects.The underlying trend points to verylittle investment from the privatesector, as reported on the PPI ProjectDatabase, the exceptions coming froma handful of very large projects.

New mechanisms for collecting dataon smaller projects may be needed –these are an increasing feature ofenergy sector investments, forexample in small-scale renewabletechnologies, which are developingrapidly.

An encouraging trend is the continuedenthusiasm for investing in Africa’sinfrastructure articulated by the 69respondents to the AfricanInfrastructure Investment Survey

2014. This group appears enthusiastic,with some qualifications, on prospectsfor PPPs, and continues to be mostattracted to investing in Kenya andSouth Africa, followed by Nigeria.

From interviews with ICA membersand the inclusion of new questions inthe private sector survey, originatingor locating investable projectsemerged a significant issue.Meanwhile, finding finance forinvestments is becoming less of anissue, in some quarters at least, basedon responses from the private sector.

Both public and private sector actorswho responded to our questionsexpressed frustration at havingfinance available to invest, but eithernot having the projects to invest in ornot being able to make progress inprojects.

While finding finance for moredeveloped projects may become less ofan issue, securing funds for earlystage project development, orestablishing mechanisms to providesufficient returns on early stage

project investments, remainsignificant issues for stakeholders.

The anticipated emergence of newfunding streams, including Africa50,the Global Infrastructure Fund andNew Development Bank (formerlyBRICS Development Bank), shouldhelp to expand the pool of funding,thus increasing the ratio of financeavailable to investable projects.

Continued trend analysis of the ratioof available finance to investable and/or bankable projects is clearlydesirable.

There were otherwise few surprises inthe causes of delays to projectsreported either by ICA members orprivate sector respondents.

Both private and public sector sourcessaid the core obstacles under thebroad heading of ‘lack of institutionalcapacity’ were the creditworthinessand skills shortages – technical,financial, legal and managerial – thatstill plague many institutions,including many of Africa’s stateutilities. n

Sovereign Bond Issues

South Africa, Angola, Côte d’Ivoire, Gabon, Ghana, Namibia, Nigeria, Rwanda,Senegal, Seychelles, Zambia and Kenya have all been able to raise funds ininternational debt markets.

Internally Generated Budget Funds

Johannesburg internally generated funds of $294m for its 2014 capitalexpenditure budget, of which 45% goes on infrastructure spending.

Subnational Government Bonds

A Lagos State Government Bond in 2013 raised $561m, much of which wasintended for infrastructure spending.

Subnational Utility Investments

Morocco’s rail operator, Office National des Chemins de Fer, is putting $572minto high-speed rail infrastructure, while Namport said it would tap its cashreserves to contribute $19.45m towards the container terminal at Walvis Bay inNamibia.

Known Unknowns: New Forms of Finance Are Quietly Emerging Across Africa


Substantial shifts in sources offunds in 2014 included a $10.3bndecline in Chinese commitments.This cut the amount committed bynon-ICA public sector funders to$9.1bn in 2014, from $18.9bn in 2013.

Otherwise funding was broadlyconstant from this group, whichincludes the Arab Co-ordination Group(ACG), non-ICA member EuropeanDFIs and regional development banks,as well as commitments reported fromBrazil and identified from India andSouth Korea.

Multilateral development bankscommitted $11bn in 2014, nearly $2bnup on the previous two years andnearly double the $5.9bn committed in2011. Commitments from regionaldevelopment banks declined from$2.2bn in 2013 to $1.6bn in 2014.

Private sector funding was also down,by around $3bn at $5.1bn. Privatesector investments of around $8.7bnin 2012-13 largely comprised just a

few large port and energy (notablySouth Africa’s REIPPP programme)projects. A fourth bidding round forREIPPP was planned for 2014, butpostponed to 2015.

Commitments from Europe totalled$5.4bn, compared with a $5.1bnannual average in 2011-13. ACGcommitments in 2014 were broadlyconstant, at $3.5bn, having averaged$3.4bn in 2011-13. Funding from theAmericas was down by around $7bn,reflecting the exceptional PowerAfrica contribution in 2013.

Subnational funding is reported for thefirst time this year (see page 65). Thetotal recorded subnational financing of$9.1bn is largely accounted for by the$8.4bn raised by the Egyptian bondsissued to finance the Suez Canalexpansion; it also includes smallercommitments for Moroccan rail andNamibian port projects. The SuezCanal project may prove exceptional,but our analysis suggests levels ofsubnational investment from local

governments and public utilities arelikely to be higher than so far capturedin ICA data.

Also not yet captured in ICA data isthe increased interest from privateequity (PE) houses. Global assetmanager Blackstone in 2014 joinedwith Africa-focused Black Rhino todevelop, finance, build and operate bigSub-Saharan infrastructure projects.Blackstone and Nigeria’s DangoteIndustries then announced acommitment by Black Rhino to jointlyinvest up to $5bn over five years inenergy projects. Blackstone’s SitheGlobal subsidiary is lead investor,with the Aga Khan Fund for EconomicDevelopment, in Uganda’s 250 MWBujagali hydro-power plant.

Among other PE deals, in Ghana,Denham Capital’s portfolio companyEndeavor Energy and PE houseEranove, with General Electric andSage Petroleum, agreed in 2014 todevelop the 1,300MW Ghana 1000gas-to-power project. n

2.2 Who Is Financing Africa’s Infrastructure?

Figure 6Reported andidentifiedfinancing flowsinto Africa'sinfrastructure,2014


Figure 7

Sources offinance 2014,public externaland private

Figure 8Other nationaland subnationalsources offinance: selectedprojects

Figure 9Identified centralgovernmentbudgetallocations bysector and region,2014


Transport operations attracted themost financial commitments of anysector in 2014, totalling $34.4bntaking all sources of finance intoaccount. This was largely due to thesustained priority accorded totransport by national governments.

National government budgetallocations for transportation stood at $17.6bn in 2014, which was more than the combinedcommitments to water, energy, ICT andmulti-sector projects in the total of$34.5bn allocated to infrastructure bygovernments in 42 African countries.

In addition, $8.4bn was raised frominvestment certificates sold toEgyptian citizens for the Suez Canalexpansion, pointing to an alternativemodel for future financing.

Of ICA members that reported datafor 2014, commitments for transportamounted to $3.6bn, a decline of 32%from the previous year. Transport wastop priority for non-ICA bilateral andmultilateral agencies, but data alsoshow a decline in 2014 (68%) for thiscategory of support.

Chinese funding for transportinfrastructure – which has catalysedbig road and rail projects in recentyears – fell away in 2014 as Beijingreassessed its economic priorities.

ICA member commitments to ICTprojects increased substantially from$396m in 2013 to $506m in 2014,continuing an upward trend since2011. However, ICA member financingof water and sanitation infrastructuredeclined by 33%. Commitments fromnon-ICA bilaterals and multilateralsto water and sanitation projects rosefrom $1bn to $1.1bn, but funding toother sectors from this group declined.

$9.2bn was committed by ICAmembers to the energy sector. Basedon data reported on a like-for-likebasis, and excluding the exceptional$7bn US Power Africa contribution of2013, commitments increased by 61%in 2014.

Private Energy FinanceThe private sector financed $2.5bn ofenergy projects, accounting for 86% oftotal private participation in African

infrastructure projects during 2014.

The 1,386MW coal-fired power plant

at Safi in Morocco was one headline

energy project in 2014. This $2.6bn

project was financed substantially by

the private sector, led by France’s

GDF Suez and including support from

Japan Bank for International

Cooperation (JBIC).

Multi-Sector ProjectsMulti-sector projects saw the single

largest increase in funding during

2014. National government budget

allocations increased substantially to

$444m, while commitments from ICA

members rose by 43%, from $1.5bn in

2013 to $2.2bn in 2014.

Multi-sector disbursements made by

ICA members more than quadrupled

from $419m in 2013 to $1.8bn in 2014,

while disbursements made to

transport, water, energy and ICT

operations remained largely similar in

each of those years. n

3. Sectoral Analysis

Copyright World Bank/John Hogg

3.1 Overview


ICA member commitments to multi-sector infrastructure projects increasedsubstantially in 2014, to $2.2bn.However, commitments to North andSouthern Africa declined.

The largest recipients of ICA funding in2014 were projects in South Africa,which saw commitments rise from$215m in 2013 to $842m. Commitmentsto Central Africa are a massive twelvetimes higher, at $225m in 2014 ($18m in2013). East and West Africa also sawincreases in 2014, rising by 45% (to$45m) and 39% ($167m) respectively.

Just over $695m of total ICAcommitments in South Africa wereprovided by DBSA. Projects receivingDBSA funding included R1.6bn ($149m)for the City of Tshwane MunicipalSupport Programme, which is aimed atenhancing the greater metropolitanarea’s socio-economic development,and a R1.5bn ($139m) long-term loan tosupport capital expenditure byeThewkini Municipality.

Commitments by ICA members to multi-sector projects in 2014 included €359m($479m) from AFD and ¥30.7bn ($292m)from Japan’s JBIC/JICA, the latter beingsubstantially up on 2013 commitments,comprising the Japanese pledge for thecontinental Fifth Private SectorAssistance Loan.

Disbursements from ICA members alsorose substantially in 2014, to $1.8bn. Thetotal value of financing disbursed to

multi-sector projects in all regionsincreased. South Africa (RSA) was againthe single largest recipient of ICAdisbursements. RSA and supra-regionalprojects together received almost 71% ofICA disbursements in 2014.

Major recipients of ICA memberfinancing included a number of largefunds, such as the IFC-backed AfricaInfrastructure Investment Fund II (aMacquarie company operated by SouthAfrica’s Africa Infrastructure InvestmentManagers, which has been establishedto finance private sector projectsthroughout Sub-Saharan Africa) and thePan African Infrastructure DevelopmentFund; both of these funds were heavilyfunded by DBSA in 2014.

ICA members who disbursedsubstantially more to multi-sectorprojects than transport, water and ICTincluded JBIC/JICA and DBSA.

Despite a significant increase incommitments from non-ICA Europeanbilaterals – whose financial contributionrose from $29m in 2013 to $256m in2014, total non-ICA commitments tomulti-sector operations fell to $299m.

Commitments from Brazil were $36.9min 2014, headlined by an export creditagreement for the Kwanza Sul Villageproject in Angola. Commitments fromthe Arab Coordination Group stood at$6.5m, with co-financing for thePerseverance Island InfrastructuresProject’s second phase in theSeychelles. No financial commitmentswere made to multi-sector initiatives byChina, India or RDBs (with the exceptionof DBSA) in 2014.

The 2014 data show that ICA membersremain the driving force behind financialcommitments to developing multi-sector infrastructure projects in Africa.n

Multi-Sector Commitments Increase Substantially

Figure 10Totalinfrastructurecommitments bysector and region,2014

Figure 11Sources of multi-sectorcommitments,2013 and 2014


Total identified investments intransport infrastructure during2014 stood at $34.4bn – a little downon the $37.5bn-worth ofcommitments in 2013. Projects werefinanced predominantly by nationalgovernments (based on analysis ofthe budget allocations of 42countries), while investment frommultilaterals, bilaterals and theprivate sector fell significantly.

Following two years of sustained andsubstantial financial commitments tothe transport sector, ICA membercommitments decreased significantlyfrom $5.3bn in 2013 to $3.6bn in 2014.ICA commitments to Central Africafollowed previous years’ trends andincreased again; the infrastructure-deprived region was the single largestrecipient of ICA commitments in 2014,which at $1.8bn was almost a two-foldincrease compared with 2013.

Funds pledged to projects in EastAfrica by ICA members – the largestrecipient of commitments in 2013 –declined by over 70% to just $488m in2014. Commitments to transport in

Southern Africa also droppedsubstantially, to $168m, which cameafter a substantial rise, to $1.1bn, in2013. West African commitmentsdeclined from $1.27bn to $569m.

Some very large investments weremade by African governments. Theirsupport for infrastructure wascomplemented by substantial – andpotentially very significant – fund-raising from investment certificatessold to Egyptian citizens for the$8.4bn Suez Canal expansion andgovernment-led financing for high-speed rail networks and motorwayprogrammes in Morocco. In sub-Saharan Africa, Senegal launched aprogramme to attract PPPs, several ofwhich are in the transport sector.

Of ICA member commitments,multilaterals were again the primarysource of funds committed to transportinfrastructure, with WBG and AfDBcommitting $1.6bn and $1.4bnrespectively in 2014. Central Africawas the AfDB’s geographic focus: itssingle largest 2014 commitment in thesector was to support the Batchenga-

Ntui-Yoko-Tibati-N’Gaoundere road inCameroon. East Africa received thelargest portion of disbursements thathelped 12 AfDB-backed projects reachcompletion in 2014, including Gabon’sambitious road programme, which willenhance regional integration asdefined in the Central AfricanConsensual Transport Master Plan.

Some $1.58bn of the WBG’s totalAfrican infrastructure commitmentsof $6.48bn (including IFC) was aimedat the transport sector. Central Africawas the largest recipient at $1.2bn.Major commitments included $270mfor Tanzania’s Intermodal and RailDevelopment Project, and $215m forUganda’s North Eastern Road-corridor Asset Management. Overone-third of the WBG’s $3bn ofdisbursements in 2014 waschannelled into transport projects.

The EIB committed €53m ($71m) totransport infrastructure projects,representing just over 10% of totalcommitments in 2014. Around €21m($28m) was committed to projects ineach of the West and Southern Africa

3.2 Transport

Copyright iStock/Getty Images


regions. EIB disbursements in 2014stood at €203m ($271m), representingjust under 25% of total fundsdisbursed by the Luxembourg-basedmultilateral in 2014. Of this, €182m($243m) funded projects in NorthAfrica. A €40m loan ($53m) wascommitted to Tanger Med containerport’s €220m ($293m) expansion oftranshipment facilities in Morocco.

EC commitments for the year stood at€244m ($325m), however only €23m($32m) was directed at the transportsector. At €496.7m ($662m), over halfof the EC’s €909m ($1.2bn) ofdisbursements flowed to the transportsector, with West Africa the singlegreatest beneficiary. Among the majorEC-funded projects completed in 2014was the 243km Bitumîe Ayorou-Gao

road in Mali, at a total project cost of€82.2m ($110m).

France pledged the largest bilateralshare among ICA members, with€180m ($240m) going to transportinfrastructure (equivalent to around10% of its total commitments). Thisfocused largely on Central and EastAfrica. AFD disbursed €454m ($606m)to transport infrastructure projects in

Figure 12ICA membercommitments tothe transportsector, 2010-2014

Figure 13Totalcommitments tothe transportsector, 2013 and2014


Transport

Suez Canal, EgyptAs many as 374 vessels sailed through the Suez Canal, forthe first time in both directions, during the week after theofficial opening of the New Suez Canal on 6 August 2015. Theincreased flow of ships – including larger carriers –confirmed that one of the largest infrastructure financingsof 2014 has already started to achieve its goals.

At a cost of around E£60bn ($8.4bn), the project was initiallyto be financed through a Cairo Stock Exchange initial publicoffering, which would have introduced private capital to thestate-owned asset. But Cairo changed its financing strategy,offering only resident Egyptian citizens investmentcertificates �– which were priced at generous interest ratesbut carried no ownership rights.

Priced so that even students could afford them, at E£10($1.41), E£100 ($14.10) and E£1,000 ($141), the five-year, non-transferable certificates issued by the Suez Canal Authority(SCA) carried a 12% interest rate, around 1.5% higher thansimilar certificates issued by Egyptian banks. Investors couldborrow up to 90% from selected banks.

The investment certificates sold out in just eight workingdays. The Ministry of Finance has guaranteed the certificatesand has reserved funds to make quarterly interest paymentsof E£1.9bn. The investment certificates will ultimately berepaid from SCA revenues, which are expected to increasefrom around $5bn a year to perhaps more than $10bn a year,according to some estimates. Ship waiting times should fallfrom 11 hours to three, and the canal’s capacity has increasedfrom 49 to 97 ships a day. n

Henri Konan Bédié Bridge, Côte d’IvoireOfficially opened in December 2014, the Henri Konan Bédié(HKB) Bridge, in the Ivorian capital of Abidjan, is described bythe AfDB as “an embodiment of the promise for the country'sinfrastructure. And, looking further afield, for the whole ofAfrica”. The new bridge links the north and south of thecommercial capital, bringing Riviera and Marcory districtscloser together, cutting journey times and carbon emissions.The journey from Riviera to Marcory is now 10km shorter and30 minutes quicker than previous routes, cutting driving timesfor commuters by 260 hours a year.

The €232m ($309m) project was built in a public-privatepartnership, with the participation of DFIs that included theAfDB, BOAD, the ECOWAS Bank for Investment andDevelopment and FMO; private sector investment from theAFC (backed mainly by Nigerian investors) and Pan AfricanInfrastructure Development Fund (PAIDF – with solely Africaninvestors); and bank support from Morocco’s BMCE Bank.The project was underpinned by Multilateral InvestmentGuarantee Agency (MIGA – WBG) guarantees.

The so-called Third Bridge, which spans 1.5km, is part of anew 6.7km expressway that includes an interchange, twostretches of motorway and a 21-lane toll plaza. BouyguesTravaux Publics (BTP) and other subsidiaries of France’sBouygues Construction built the infrastructure. As the leadfirm in Socoprim, the company created to establish andmanage the project, BTP will operate and maintain theexpressway for 30 years. Socoprim’s shareholders are BTP,Total CI, PAIDF, Banque Nationale d’Investissement and thegovernment of Côte d’Ivoire. n

2014, €214m ($285m) of whichfinanced projects in West Africa.

A ¥2.8bn ($27m) commitment tofinance improvements at the Port ofBujumbura was among Japan’stransport infrastructure activities in2014. Its total commitments to thesector of ¥12.3bn ($117m) was nearly80% down on 2013, and focusedheavily on pan-African projects.Disbursements to projects in East andNorth Africa included the completionof the ¥5.9bn ($56m) Nampula-Cuamba Road Upgrading Project inMozambique.

Other ICA member commitments in2014 include $12.7m from Canada. Itagreed $12.6m for farm-to-marketroads in South Sudan.

The pan-African, multi-sectortransport-water ADF 13thReplenishment-I fund received most

transport disbursements.

The UK made bilateral commitmentsof £27m ($45m) to the transport sector(outside contributions to andinvestments in multilaterals such asAfDB and WBG); this represented justover 10% of total commitments. Fundsdisbursed in 2014 stood at £49m($81m), £21m ($35m) of which went toprojects in East Africa.

Non-ICA member commitments toAfrica’s transport infrastructure fellconsiderably, largely due to thedecline of Chinese financing, whichdropped by 80% from $10bn in 2013 tojust $2bn in 2014.

Commitments from Arab fundsincreased, from $1.1bn to $1.2bn. As inprevious years, the Arab Co-ordinationGroup focused heavily on North Africa,contributing $226.8m to thedevelopment of Sharm El-Sheikh

International Airport in Egypt and$141m to rural roads in Tunisia.However ACG financing of WestAfrican projects surpassed this,reaching a total of $554m. The largestcommitment in the region was $183.6mfor the Olama-Kribi road’s Olama-Bingambo section in Cameroon.

RDB commitments (excluding DBSA)totalled $492.4m, the majorityfinanced by BOAD ($362.9m). Amongthe many projects financed by BOADin 2014 was a $69m commitment tohighway projects in Côte d’Ivoire.Even so, RDB commitments declinedfrom $627.1m in 2013.

African national government budgetallocations identified in 42 countriesamounted to $17.6bn, an increase of20% from $15bn recorded the previousyear. n

Landmark Projects Ease Traffic Flow at Stress Points


African Transport Map

Figure 15Total transportsectorcommitments byregion, 2014

Figure 14Transport sectormap with selectedICA memberprojects


3.3 Morocco

Building a First-Class TransportNetwork

Morocco already has one of themost extensive railway networks inAfrica. But growth in tourism andthe country’s increasing role as anexport and manufacturing gatewayfrom Europe to North Africa, and asa route from the Middle East to bothEurope and Sub-Sahara Africa, areamong factors that have placedstrain on existing capacity –especially as bigger flows of cargoare being generated by the recentexpansion of ports and large-scaleindustrialisation of the north.

The number of railway passengers hasdoubled over the past decade, and isexpected to rise from 36m in 2012 to133m by 2030, according to state-owned railway operator OfficeNational des Chemins de Fer (ONCF).Even at current freight volumes,ONCF had to limit cargo traffic tonight time given rising demand.

It is in this challenging context that

ONCF is implementing an ambitiousMD32.8bn ($3.9bn) modernisationand expansion plan. A priority hasbeen the construction of the 200kmhigh-speed Tangier-Rabat-Kenitraline – which will be Africa’s fastestrailway line, significantly reducingjourney times.

The €1.8bn line was initially expectedto be operational by end-2015, butdifficulties completing land acquisitionhave caused delays. It is now expectedto open in spring 2018, at 10%-15%over the original budget. Much of thefinancing has come from Gulf Arabstates – with whom the kingdom hasclose and enduring relations – andFrance, one of its largest tradingpartners. AFD has provided a loan of€230.2m ($307m), KFAED €149.8m($200m), the Hassan II Fund forEconomic and Social Development€92.5m ($123.4m), AFESD €90.7m($121m) and ADFD €74.7m ($99.6m).

The French government will alsoprovide a grant for €78.5m ($104.7m)and loans and credit facilities totalling€654.2m ($872.5m). The remainingproject costs are being met by theMoroccan government through ONCF.

In 2010, ONCF placed a €400m($533.5m) contract with France’sAlstom for 14 TVG Duplex trains forthe high-speed line; the first two havebeen delivered. Plans are also beingdrawn up to extend the line to Agadirand to create a second high-speed linebetween Casablanca and Oujda,capital of Morocco’s Eastern region.

ONCF is also investing around €1.1bn($1.47bn) to upgrade existinginfrastructure and double sections ofthe single-line Settat-Marrakechconnection. It will also install a thirdline, dedicated solely to cargo, on thebusy Casablanca-Kenitra route, whichaccounts for almost 50% of cargovolumes and 70% of passengers.


Morocco has witnessed major investments across allinfrastructure sectors in recent years, funded heavily bynational and subnational government departments, Gulf statesand other bilateral sources, international donors and theprivate sector.

The private sector is playing a significant investment role indeveloping energy infrastructure. In 2014, the multi-billiondollar Safi 1.36GW coal-fired BOOT IPP reached financial close.Led by a consortium of the local Nareva Holding, Mitsui &Company and Engie (formerly GDF Suez), the $2.6bn projectattracted support from JBIC and IDB (see below). The projecthas a 30-year PPA with Morocco’s state utility Office Nationalde l’Electricité et de l’Eau Potable (ONEE).

Morocco is aiming to diversify its energy mix through theinclusion of renewables, especially wind and solar, to reduceits dependence on thermal generation. Some 2GW of wind and2GW of solar power is planned to meet the objective of 42% ofinstalled capacity operating using renewables by 2020. Realprogress is being made to meet this goal thanks to investmentfrom the Gulf, France and other DFIs.

In December 2014, Engie (GDF Suez) and Nareva begancommercial operation of the Tarfaya wind farm, which at301MW is Africa’s largest to date. The €450m project was builton a BOOT basis to supply ONEE. It was funded with a blend ofequity and €360m of local debt, provided by a consortium ofAttijariwafa Bank (AWB), Banque Centrale Populaire (BCP) andBMCE Bank.

Private operators are developing wind power for ONEE andindustrial operators who can build their own generation units.

Nareva subsidiary Energie Eolienne du Maroc plans to doublecapacity at its Akhfenir wind farm to 202MW. MD1.8bn ($215m)of financing is being put in place, including MD1bn ($119.5m)arranged by local banks led by BCP, AWB and BMCI, with equitycoming from Nareva and public pension fund CIMR. A further850MW of wind power is in the pipeline for ONEE.Commissioning of $1.7bn of new wind power is expectedbetween 2017 and 2020.

Huge solar plants are being built. Saudi-based ACWA Powerhas set the pace with the 160MW Noor I CSP plant atOuarzazate built for the Moroccan Solar Agency (Masen).Despite problems during the construction phase, Noor I is dueto be commissioned in Q4 2015.

ACWA and Spanish partner Sener Grupo de Ingeniería havereached financial close on two more plants for Maesen, Noor IIand III, at a total cost of more than $2bn. Noor II and III arefunded on an 80/20 debt/equity basis. A MD17bn ($2bn) debtpackage has been put together by Masen, mobilising fundsfrom DFIs including the World Bank ($400m), AfDB (€100m –$133m), AFD (€50m – $67m), Clean Technology Fund ($238m),EC (grant from the EU’s Neighbourhood Investment Facility),EIB and KfW. Noor II and III are expected to start generating in2017, with Masen planning to bring the Ouarzazate complex’scapacity up to 500MW with the 50MW Noor IV unit thereafter.

ONEE has also been preparing tenders for the construction of400MW of solar PV power, including the World Bank-sponsored 75MW Tafilalet project. Meanwhile, Spanish energyand water company Abengoa has closed financing on its$114m water desalination project at Agadir. n


Morocco has also witnessed the rapiddevelopment of urban transportation.

Tramway services in the Rabat-Salémetropolis started operations in 2011at a cost of MD4.7bn ($561.5bn), ofwhich the Hassan II bridge linkingthe twin cities cost MD1.2bn($143.4m). The project was financed

by Société du Tramway de Rabat-Salé(MD690m – $82.4m), Agency for theDevelopment of the Bouregreg Valley(MD1.25bn – $149.4m) and the EIB(MD1.88bn – $224.6bn). VeoliaTransdev operates the service under asix-year management contract worthMD792m. Two further lines are alsoat the planning stage.

Investment in roads contributed toMorocco’s highways networkexpanding to 1,511km in 2014,connecting 80% of industrial and 76%of tourist zones. Once completed,motorways operator Autoroutes duMaroc plans to have invested some$6.6bn in expanding the network to1,800km. n

Kingdom Investing in Infrastructure Across All Sectors

Safi Coal IPP Financing

Tranches - all have 18-year tenor Tranche currency US$m equivalent Lenders

Local MD 510 Attijariwafa Bank & LaBanque Centrale Populaire*

JBIC Euro Euro 200 JBIC

JBIC US$ US$ 720 JBIC

NEXI Covered** Euro 510BNP Paribas, BTMU, CA CIB,

Mizuho Bank, SCB, SG,SMBC, SMTB

International Uncovered Euro 100 BNP Paribas, CA CIB, SCB, SG

Islamic Euro 70 IDB

Total 2,110***

* Initial mandated lead arrangers ** Includes commercial risk and PRI cover. *** The remaining finance will be provided through equity.

The total value of financialcommitments to African waterinfrastructure projects declinedfrom $11.2bn in 2013 to $9.7bn in2014. However, the financial close ofa $114m desalination plant beingdeveloped by Spain’s Abengoa inMorocco contributed to an increasein identified private sector funding.

The Spanish water and energycompany’s wholly privately-financedproject in Morocco signals a steptowards greater private sectorparticipation in this sector. In 2013,not one private-sector water projectreached financial close, according tothe PPI database.

Other countries are contemplatingprivate sector water investments,including in Senegal, where acommercial operator is alreadyinvolved in water distribution and theauthorities in Dakar are now lookingto private developers to installdesalination plants.

ICA member disbursements to thesector in 2014 were up on the previousyear – to $2.6bn compared with$2.4bn – but commitments decreasedfrom $5bn to $3.4bn over the same

period. The trend set in 2013, whenWest African projects emerged as theprime beneficiaries of water sectorfunding commitments continued, withthe region receiving $1.5bn of the2014 total. This figure was on a parwith the previous year; it was twice asmuch as pledges to the next mostfunded region, Central Africa.

The total value of ICA membercommitments to North Africa almosthalved to $557m, the lowest since2009 (following years of sustainedinvestment at around the $1bn mark).Financing of projects elsewhere alsodropped considerably: commitmentsto Central Africa were down by 30% to$772m (although this is still above thepre-2013 figure) and East Africa fellby 54% to $375m. ICA membercommitments to Southern Africa fellby almost two-thirds, from $621m in2013 to $214m.

ICA member WBG made substantialcommitments to the water sector, at$1.9bn (up from the $1.3bn committedin 2013). WBG’s largest commitmentsin 2014 were for Nigeria – a $347mmixed funding package to transformirrigation management and $215m for

the National Urban Water SectorReform programme.

Nigeria was also a major focus of theAfDB, notably in its commitment tothe Urban Water Sector Reform andPort-Harcourt Water Supply andSanitation projects. AfDBcommitments totalled $443m in 2014,down from $547m the previous year.Some $378m was disbursed by theAfDB. A number of projects backed bythe Abidjan-based multilateral werecompleted in 2014, including the$66.4m Rural Water Supply andSanitation Programme in Ethiopia.

Commitments from France’s AFDreached €315m ($421m), making it


3.4 Water and Sanitation

Copyright: KfW Photo Archive / Kirsten Milhahn

$11.2bn

2013

$9.7bn

2014

Total commitments to the water sector


the biggest bilateral contributor towater projects for the second yearrunning. KfW’s commitments of€140m ($187m) focused on Egypt,Kenya, Uganda and DRC. The UK’sdisbursements increased significantly,reaching £153m ($252.7m).

Other institutions whose water andsanitation commitments declined in

2014 included the EC – down from€221m ($302m) in 2013 to €100,000($133,000). The EIB commitment of$170m compared to $386m pledged in2013.

Japanese commitments fell by overhalf, from $356m to $134m; NorthAfrica was the largest recipient ofJBIC/JICA funding, with the Mejerda

River Flood Control project in Tunisiareceiving a ¥10.3bn ($100m) loan fromJapan.

Financial commitments from the ArabCo-ordination Group remained stableat $621m, but Chinese funding droppedfrom $361m in 2013 to $108m.

RDBs and India each increasedcommitments to the water sector. n

Figure 17Totalcommitments tothe water sector,2013 and 2014

Figure 16ICA membercommitments tothe water sector,2010-2014


Water and Sanitation

The ICA Water Platform (WP) wasestablished in 2011. It ischampioned by Germany, whichprovides financial support and aninfrastructure expert from KfW tosupervise implementation.

The WP has the following objectives:

• to increase financing for sustainablewater infrastructure in Africa frompublic and private sources;

• to identify and promote bankablewater-related projects, with a specialfocus on regional projects;

• to facilitate dialogue on financingbetween African stakeholders,development partners and the privatesector to promote best practices; and

• to foster greater cooperation (inalignment with African priorities suchas Africa Water Vision 2025 and theSharm-El Sheikh Declaration).

In 2014, the WP supported the GlobalWater Partnership to implement theWater Climate and DevelopmentProgramme (WACDEP) approved by

the African Ministers’ Council onWater. The WACDEP supports theintegration of water security andclimate change adaptation intodevelopment planning processes andthe design of financing andinvestment strategies.

ICA helped facilitate projectpreparation and resource mobilisationfor identified climate-resilient projectsin eight countries (Burkina Faso,Burundi, Cameroon, Ghana,Mozambique, Rwanda, Tunisia andZimbabwe) and five Basins (KageraBasin, Lake Chad Basin, North WestSahara Aquifer System, LimpopoBasin and Lake Volta Basin).

Of 13 early-stage project preparationactivities (concept notes andprefeasibility), nine were nationalprojects; others were targeted atdistinct, transboundary African riverbasins. Not only did each country orregion prepare a project concept, afinancing and a bottlenecks review,the capacity-building componentsbuilt into the 16-month programmeensured that bankable project

preparation skills were embedded inpartner institutions through thetraining and mentoring of seniorplanning officials in the ministries ofenvironment, water affairs, energy,agriculture, transport, planning andfinance.

The WP also financed a study on theNexus approach, commissioned by theInternational Water Association.Nexus is a process used to allocateand use resources to ensure water,energy and food security for an ever-growing population at a time ofchanges in climate and land use,economic diversification and the needto make development pay.

The study focuses on, but is notlimited to, the Volta and Lake Victoriabasins; it will provide an overview ofselected regional challenges andopportunities. A Rapid AssessmentFramework will then be crafted toassess how current and futureinfrastructure projects deal withNexus challenges. The outcomes willbe available in the fourth quarter of2015. n

The Lake Victoria Water and Sanitation (LVWATSAN) initiativeis designed to improve the water and sanitation services in 15selected towns in the Lake Victoria Basin with a totalpopulation of 575,000.

As a major trans-boundary natural resource that is heavilyutilised by its bordering countries for fisheries, transportation,tourism, water supply and waste disposal, the reversal of thelake’s deterioration is seen as a priority by the East AfricanCommunity (EAC). Priorities include tackling the challengespresented by rapid urbanisation in the basin, the exploitationof its natural resources and the lake’s relationship tolivelihoods and poverty.

The AfDB-backed initiative aims to support water andsanitation investments, build institutional and human resourcecapacities at local and regional levels for the sustainability ofimproved water and sanitation services, facilitate the benefitsof upstream water sector reforms to reach the local level, andhelp reduce the environmental impact of urbanisation in theLake Victoria basin.

The catalogue of socio-economic benefits in the programmeincludes increased access to sufficient clean water supplies at200m properties and a reduction in water collection distancesfor local populations, who may have to walk kilometres toobtain this basic resource. This will particularly benefitwomen, children and especially girls, who mostly bear theburden of fetching water. The reduced workload will give girlsmore time to attend school and women greater opportunitiesto engage in other economically beneficial activities.

There has been progress in this major initiative. Constructionof the Kampala water component – funded by a consortium ofAFD, EIB, KfW and the EU-AITF, alongside the Ugandangovernment and National Water and Sewerage Corporation –started in 2014 with work to restore the Ggaba WaterTreatment Complex’s treatment capacity to 232,000m3/dayfrom the current 170,000m3/day. In Tanzania, work started onwater and sewerage programmes under LVWATSAN in theGeita, Sengerema and Ukerewe districts of Mwanza. n

Landmark Projects: Improving services in East Africa

ICA Water Activities

Lake Victoria Initiative


Water and Sanitation Map

Figure 19Total watersectorcommitments byregion, 2014

Figure 18Water sector mapwith selected ICAmember projects


Africa continues to face thechallenge of poor access toelectricity and insufficientgeneration capacity, particularly inthe Sub-Saharan region. The energysector once again received thegreatest attention from ICAmembers in 2014 with commitmentsreaching $9.2bn. This figure is downby almost 30% from the 2013headline amount. However, theenergy sector saw a substantialincrease in actual commitments in2014 when the previous year’sinclusion of USAID’s $7bn long-termpledge to the Power Africainitiative is excluded.

The trend of extreme fluctuations inICA members’ investment in NorthAfrican energy continued in 2014,when commitments reached $4.1bn –representing 80% of total ICAcommitments to the region. This was asubstantial increase on the $1bncommitted in 2013, and the highestsince 2010.

After West and East Africa enjoyedmajor commitments to energyinfrastructure projects in 2013, ICAmember pledges declined in 2014.Commitments to projects in West

Africa fell from $5.5bn in 2013 to just$1.1bn, a decline of 80%, while EastAfrica received only $1bn in 2014,down 77% from $4.4bn the previousyear. Central Africa attractedsubstantially more commitments, ofjust under $792m, compared with$276m in 2013 – but the regioncontinues to attract less funding thanits neighbours. Southern Africaenergy commitments rose from $638mto $1.6bn, but disbursements of just$231m were reported.

Multilaterals led the way in 2014,with WBG committing $2.3bn toenergy projects including the NoorOuarzazate Concentrated Solar Power(CSP) project in Morocco (see page 23).The WBG was also the lead disburserof funds to energy, releasing $880m.AfDB’s commitments of $1.7bnincluded $1bn for Angola’s PowerSector Reform Support Programme.

EIB commitments for 2014 stood at€374m ($498.8m), of which €150m($200m) was a loan to support theNoor Ouarzazate CSP project. Thebank’s disbursements reached €460m($613.5m) on projects such as the€185m ($246.7m) upgrade of Tunisia’snational electricity transmission

network, for which EIB provided a€15m ($20m) loan.

EU-AITF commitments for 2014 stoodat €33.6m ($45m); disbursementsreached €36m ($48m), including a€25m ($33m) equity investment in UKdeveloper Aldwych’s Lake TurkanaIPP wind power project in Kenya. TheEC committed €200m ($267m) anddisbursed €193m ($257m) to theenergy sector in 2014.

Japan’s commitments of $1.5bn werenearly treble the $584m committed in2013. They included $361m for theRades gas-fired power plant inTunisia and $165m for the Maputogas-fired power plant in Mozambique.

KfW also substantially increased itscommitments, from $352m in 2013 to$1.2bn in 2014. The German DFI’sheadline investment was also inMorocco’s Ouarzazate solar complex.France’s AFD raised its commitmentsby just under 30%, to $1.2bn. NorthAfrica received 44% of AFD’s totalcommitments, followed by East Africawith 29%. The UK’s DFID increasedits commitments to energyinfrastructure almost ten-fold from$29m to $223m.

3.5 Energy

Copyright: KfW Photo Archive / Auslöser Photographie


Canadian government commitmentsfell slightly to $343,987. DBSA alsosaw a decline, with commitmentsdown from $556m in 2013 to $189m.

Despite increased activity and interestin Africa’s energy sector, non-ICAcommitments fell from $5bn in 2013 to$3.3bn in 2014. The most noticeable

decline was in Chinese funding, whichdropped by over 80% to just $500m.Commitments from the Arab Co-ordination Group increased from$1.4bn to $1.7bn, part of which went tothe Safi coal-fired IPP in Morocco.

Energy sector projects dominatedprivate sector financing, accounting

for 85% of total commitments in 2014.The Safi and Lake Turkana schemeswere the major projects with privatesector participation to reach financialclose, as North and East Africa onceagain took centre stage – althoughtwo thermal generation projects inSenegal received $670m and $113m ofprivate sector financing. n

Figure 21Totalcommitments tothe energy sector,2013 and 2014

Figure 20ICA membercommitments tothe energy sector, 2010-2014


By the end of 2014, South Africa hadadded 1,512.72MW to its electricitygrid using renewable technologiesat costs that were increasinglycompetitive with coal-fired power.In less than three years RSA hadmobilised over R100bn ($7.7bn) inrenewable energy investment,largely from the private sector.

Projects supported by DFIs across thecontinent have become benchmarks,providing value beyond theirgeneration capacity as theydemonstrate new concepts and provethat renewable power can bedeveloped on time and on budget.

These schemes have tended to resultfrom direct bilateral negotiationsbetween private developers, their DFIbackers and national governments orutilities. The PPAs essential to bringprojects to ‘bankability’ are signedafter sometimes long periods ofnegotiation and project development.Many complex projects take years totake off, or fail.

The industry’s spotty record ofdevelopment makes projects such asUS-owned, Dutch-based developerGigawatt Global’s 8.5MW Agahozo-Shalom Youth Village solar PV facilityin Rwanda’s Rwamagana Districtparticularly important. This $23.7mproject – Rwanda’s first commissionedIPP – began commercial operations inSeptember 2014. It was financed by aconsortium of equity partners anddebt providers. Dutch developmentbank FMO and London-based EAIFwere senior lenders, with mezzaninedebt provided by Norfund.

Norway’s Scatec Solar is lead equityinvestor, EPC contractor, and O&Mprovider. There was also equity fromNorfund and KLP NorfundInvestments (KLP is Norway’s largestpension fund). Grants came from theOPIC Africa Clean Energy Financeprogramme and from the EuropeanEnergy and Environment PartnershipProgramme of Southern and EastAfrica.

Agahozo-Shalom’s developers call theplant a reference project for others tofollow. It combined private capital anddevelopment finance to bringmegawatts to the grid quickly, whileshowcasing the benefits of renewabletechnologies for developing countries.

The technology is simple and does notinvolve a complex supply chain orlogistical infrastructure. Constructionis comparatively uncomplicated,which means a greater role for localconstruction companies and workers.

The modular nature of solar and windpower plants makes them flexible interms of size and siting – plants canbe built wherever the sun shines orwind blows. This means that projectrisk is expected to drop substantiallyas the continent develops its portfolioof projects.

Construction risk is already low: veryfew projects have experienced majorconstruction delays.

Renewable Projects

Copyright: KfW Photo Archive / photothek

South Africa, Rwanda Set Benchmarks for Renewables Development


Energy Map

Figure 23Total energysectorcommitments byregion, 2014

Figure 22Energy sectormap with selectedICA memberprojects


Several projects on a similar orsmaller scale to Agahozo-Shalomreached major milestones during theyear. Projects included Tauber Solarand Sarako’s Bambous solar powerscheme in Mauritius (the island’sfirst) and a 10MW project in Rwandabeing developed by the Goldsol IIconsortium, while a MoU was signedby Gigawatt Global for a 7.5MW solarPV project in Burundi.

In Equatorial Guinea, MAECI Solar,GE Power & Water and PrincetonPower Systems won a contract in June2014 to provide a complete 5MW solarmicrogrid system on Annobon Island.Using a solar plant and battery-basedstorage system, it is expected toprovide 24-hour power to 5,000 people.

In the same month in Burkina Faso,Windiga Energy signed an agreementfor a 20MW solar project. TheCanadian renewable power developerhopes to bring more projects to WestAfrica, where similar schemes haveoften failed to find backing. Theseprojects promise to provide a stock ofexperience to inform futureinvestments and bring down the costof financing renewables projects.

Larger markets also saw some majordevelopments during 2014 in responseto domestic power crises, withrenewables increasingly seen asessential tools for restoring thedemand-supply balance.

The sophisticated institutionalcapacity available to design and runprocurement programmes and theattraction of luring private capitalinto the country was demonstratedwith surprising effect in Egypt, as itissued a request for qualification fromdevelopers on 20 October 2014 for4,300MW of renewable generation.

The Egyptian programme utilises afeed-in tariff set-up; in January 2015,110 projects prequalified to take partin procurement. Of these, 69 were forlarge solar PV plants of 20MW-50MW,28 were for large wind plants of

similar size, and 13 for small-mediumsolar PV plants of less than 20MW.Many of the world’s most significantrenewables developers were involved,and a number of contracts have sincebeen signed with developers.

In South Africa, the financial crisis atnational utility Eskom delayed theannouncement of a fourth round of theRenewable Energy IPP Procurement(REIPPP) programme in 2014. But in2015, the government announced thatnot only would a further 1,000MW be

allocated to the fourth REIPPP round,but an additional round to install1,800MW would be held later in theyear. Private sector finance is playinga crucial role in these programmes,and development finance remains animportant facilitator.

Menengai ProjectMajor renewable projects in whichICA members disbursed money in2014 included the MenengaiGeothermal Development Project in

Energy

The AUC, German Federal Ministry forEconomic Cooperation andDevelopment and EU-AITF via KfWagreed in 2012 to establish theGeothermal Risk Mitigation Facility(GRMF) to fund geothermaldevelopment in East Africa.

The programme co-finances surfacestudies and drilling projects, as a majorcontribution towards developing thislargely untapped indigenous andrenewable energy resource. The GRMFprogramme initially had €50m ($67m)available for funding, comprising €20m($27m) from Germany and €30m($40m) from the EU-AITF.

In 2014, GRMF launched its thirdapplication round, which attracted 16

expressions of interest for ten surfacestudies and six drilling programmes.Submissions were received fromDjibouti, Eritrea, Ethiopia, Kenya,Tanzania and Uganda; they weresubmitted by private as well as publicentities. Seven applicants requestedsupport to upgrade infrastructure.

In March 2015, GRMF announced thatthe UK’s DFID would also providesupport alongside the two originalfunders. DFID is making an initialcontribution of £10m ($16.5m); it willmake additional contributions of up to£37m ($61.1m) if developers showcontinued interest in geothermal andthe GRMF demonstrates it can supportmore projects that lead to geothermalinvestment. n

Geothermal Risk Mitigation Facility

Menengai Geothermal Development Project, Kenya

Sources of financeAmount

($ m)Instrument

African Development Bank 120 Loan

SREP Loan through AfDB 7.5 Loan

SREP Grant through AfDB 17.5 Grant

World Bank 100 Loan

SREP through World Bank 15 Loan and Grant

Agence Française de Développement 166 Loan

European Investment Bank 36 Loan

Geothermal Development CompanyGovernment of Kenya 284 Equity

Total Project Cost 746

Kpone IPP at Tema, Ghanareached financial closeThe financial close of Cenpower’s$900m gas-fired Kpone independentpower plant marked an importantstep towards harnessing gas to meetthe region’s growing power demand.The 350MW plant is due on stream in2017 and will be Ghana’s largestprivate power scheme, accounting forsome 10% of total installed capacityand 20% of available thermalcapacity. The plant will provide low-cost thermal power to thederegulated Ghanaian market. It willbecome one of the main off-takers ofNigerian gas via the West African GasPipeline.

The project’s $425m debt is fundedby a group including FMO, DEG, OPIC,EAIF, DBSA and RSA’s IndustrialDevelopment Corporation. Loansfrom a consortium of South Africanbanks (including Rand MerchantBank, Nedbank and Standard Bank)are backed by export credit coverfrom South Africa’s ECIC.

Equity is provided by a consortiumconsisting of lead project developerAFC, Sumitomo Corporation, AIIM,Cenpower Holdings and FMO. n

Azura-Edo IPP in BeninState, NigeriaInvestors are watching the $900mAzura-Edo IPP closely in anticipationthat an industry standard-settingproject will emerge and open the pathfor increased private sectorparticipation in Nigeria’s electricitysupply industry.

Located in Benin State, the projecttook some important steps forward in2014 and appeared to be edgingtowards financial close following thesigning of a WBG Partial RiskGuarantee in 2015.

The project is financed through$220m of equity and $530m of debt.Led by Azura West Africa, apartnership of Mauritius-basedAmaya Capital and American CapitalEnergy & Infrastructure fund, it is alsobacked by Africa InfrastructureInvestment Managers, Nigeria’s Assetand Resource Management Ltd, theNetherlands’ FMO and AldwychInternational of the UK.

The US’ OPIC has approved up to$50m in direct financing, IFC isproviding $80m of debt, and MIGA isproviding political risk insurance.n


A five-day training workshop wasorganised by the ICA Secretariat andAfrican Legal Support Facility (ALSF)for 55 senior officials representingfinance, energy and infrastructureinstitutions, and regulatory agencies, tomeet a number of African countries’need to enhance their power purchaseagreement (PPA) negotiation skills.

Participants attended from 11 French-speaking countries (Benin, Burundi,Cameroon, Republic of Congo, Côted’Ivoire, Djibouti, DRC, Morocco,Mauritania, Tunisia and Senegal).

A similar workshop was held for nineAnglophone African countries in

January 2014, in Nairobi, Kenya.

The workshop was designed to giveparticipants a better understanding ofthe PPA process, in particular forrenewable energy (RE) technologies. Itincluded such critical factors as:

• identifying and allocating the risks ofa project and reflecting them clearly indocuments such as the PPA, fuel supplycontracts and concession agreements;

• assisting African governments andinstitutions involved in RE PPAs,especially with the institutional, legaland contractual issues arising fromthe preparation, development andmanagement of a PPA;

• identifying ways to overcome the

major constraints and challenges that

impede or delay projects from

achieving financial close; and

• finding sustainable ways to improve

skills related to energy agreements.

The training sessions were based on

exchanges, practical exercises, group

presentations and the review of

previous and existing projects.

Participants gave positive feedback,

expressed by one who said: “This will

allow me to have a better approach to

the allocation of risk in practice.” n

Training Workshop on PPAs in Renewable Energy

Landmark Energy ProjectsKenya. According to the World BankSE4ALL database, Kenya’selectrification rate was just 23% in2010. This project will enableelectricity generation equivalent tothe consumption needs of up toaround 500,000 households –including 70,000 in rural areas and300,000 small businesses – as well as1,000 GWh of energy to businessesand industries. The project aims todevelop the Menengai geothermalsteam field to produce enough steamfor 400MW of power that will begenerated by IPPs.

Target completion date for theMenengai geothermal project isDecember 2016, with finaldisbursement due in June 2017. At atotal cost of $746m, and with ananticipated financial internal rate ofreturn of 8.3% and an economicinternal rate of return of 16.7%, theproject provides an example of fundersworking with a national governmentto release untapped energy potential(see table opposite, page 32). n


Total identified investment in ICTinfrastructure in Africa rose from$1.8bn in 2013 to $2.4bn in 2014. Thisgrowth was substantially boosted byprivate sector investments in mobile telephony. ICA membercommitments increased to $506m –up 28% from the previous year –continuing the upwards trendsustained since 2011. However, thisfigure is still eclipsed by the hugeamount of investments committed byICA members in 2009.

ICA commitments to Central Africarose from $39m in 2013 to $132m in2014, making the region the singlelargest destination for members’ ICTfinancing.

ICA members also reported asignificant increase in commitmentsto North Africa, which rose five-fold to$100m. Commitments in East Africaalso increased to $55m in 2014, from$16m the previous year.

However, West and Southern Africarecorded lower commitments to ICTprojects. West Africa, the largestrecipient of ICA member financing in2013, saw commitments fall from$163m to $79m. ICT infrastructureprojects in Southern Africa received$23m, down from $37m in 2013.

The World Bank Group contributedthe majority of ICA membercommitments in 2014, having pledged$331m, almost double the amountcommitted the previous year. TheIFC’s headline commitments to ICT in2014 included $85m in loans andother financing for the expansion ofIHS’s mobile network towers inNigeria, Rwanda and elsewhere inSub-Saharan Africa.

Commitments from France’s AFDincreased substantially from $44m in2013 to $97m in 2014. DBSA reporteda 33% increase in its ICTcommitments, to $20m, whichincluded $10m to O3b Networksacross the continent.

Commitments from the UK’s DFIDdropped slightly from $30m to $27m,while Germany’s KfW did not commitfinancing to any projects in 2014following a busy year in 2013 when itcommitted $63m.

Three major private sector dealsreached financial close in 2014. Viettelconcluded a deal to become the thirdmobile network operator inCameroon. Smart Telecom finalisedits $300m launch in Tanzania andUganda; the mobile operator alsoplans for expansion into Burundi.

Non-ICA public sector contributions tothe sector fell considerably, from$699m in 2013 to $436m in 2014.Chinese commitments held up at$410m, but the substantial amount offinancing committed by Arab Co-ordination Group members in 2013was not replicated, with no financialcommitments in 2014). Regionaldevelopment banks increased theircommitments by 33% to $20m, whichwas provided exclusively by DBSA,but non-ICA European DFIs reporteda halving of their financing of projectsfrom $53m down to $26m.

African central government budgets(as identified in 42 countries) showedincreased ICT investments, whichreached $1.1bn in 2014, up from$806m the previous year.

ICT development drives economicgrowth, while promoting governanceand accountability. This washighlighted by Nigeria’s landmarkpresidential election, which in March2015 used electronic voter ID cards.Developed during 2014, these werecredited with preventing electoralfraud and allowing an oppositioncandidate to unseat the incumbentpresident through a popular vote forthe first time in Nigeria’s democratichistory. n

3.6 Information and Communications Technology

Figure 24Totalcommitments tothe ICT sector,2013 and 2014


ICT

Figure 27Total ICT sectorcommitments byregion, 2014

Figure 25ICA membercommitments tothe ICT sector,2010-2014

Figure 26Selected ICTsector projects


ICA members reportedinfrastructure financingcommitments totalling $18.8bn in2014, against a challengingregional and global background.While this was 25.5% down on the$25.3bn members’ commitmentsreported in 2013, that figure hadincluded an exceptional $7bnpledge from the US presidentialPower Africa initiative.

The 2014 figure represents a$500m (3%) annual increase inICA member commitments oncethis one-off allocation isexcluded, and data is analysed ona like-for-like basis withreporting by broadly similarorganisations.

The trend in disbursements showssteady improvement, reaching arecord high in 2014 – 14% up on the$11.4bn recorded in 2013.Disbursements were $9.7bn in 2010

and $8.7bn in 2011, before reachingthe previous high of $12.7bn in 2012.

Commitments of $29.1bn in 2010remain the largest total since ICArecords began. However, theconsistent reporting of disbursementsin the $11bn-13bn range over the lastthree years (which in most cases do

not reflect commitments made in thesame year) suggests that the recordcommitments declared in 2010 mayhave involved projects that areproving difficult to progress.

Excluding the US Power Africapledge, there was a substantialincrease in actual commitments to

4. ICA Member Financing

4.1 Overview

It is important to recognise thefinancial contributions made bybilateral ICA members to themultilateral development banks. Forexample, Canada, France, Germany,Japan, the UK and US contribute tothe AfDB’s African DevelopmentFund and the WBG’s InternationalDevelopment Association.

ICA members also support DFIsthrough allocations not captured inICA data, such as those made byCDC.

According to CDC’s annual review,the wholly-UK government-ownedDFI made commitments to Africa of$240.9m in 2014, of which $100.6mwas targeted on the energy sectoreither through direct investments orvia funds. CDC manages capitalprovided entirely by DFID.

Of members who have reported inthe previous three years, USagencies EXIM Bank, OPIC, USAIDand MCC, and Germany’s DEG andGIZ provided no data.n

Multilaterals and Bilaterals



the energy sector, to $9.2bn, in 2014;this represents a 61% increase on the$5.7bn committed in 2013.

Commitments to the transport andwater sectors fell by around 30%. Thisdecline was compensated, to someextent, by a substantial increase inmulti-sector commitments, whichrose by 43% from $1.5bn in 2013 to$2.15bn in 2014.

Although disbursements haveremained broadly constant for thepast three years, this masks somehuge regional and sectoral variations.Significantly more funds weredisbursed to West Africa across mostsectors in 2014 compared with theprevious year, while disbursements toRSA’s transport sector and East andSouthern Africa’s ICT sectors alldeclined. n

2014 in ContextThe sheer destructiveness of theEbola virus had the most dreadfulimpact on the people of Liberia,Guinea and Sierra Leone. As well asleaving more than 11,000 peopledead and so many families bereft, theoutbreak stretched public services tothe limit, sapped governmentfinances, disrupted the developmentagenda, caused investors to postponeplans and delayed projects, small andlarge alike. Other factors also made2014 a challenging year for Africa’sinfrastructure development,including a decline in commodityprices and government revenues,especially in resource-orientedeconomies, and the slowdown ofChina’s economy.

But alongside coping with delays inmajor projects such as the regionalCôte d’Ivoire-Liberia-Sierra Leone-Guinea connection, ICA members arealready planning to mitigate theshort- to medium-term impacts of theEbola crisis in initiatives such as theMano River Union and AfDB’s plans forpriority projects in the region’senergy, road, ICT and agriculturalsectors. n

Figure 28ICA members’ commitments by sector,2014

Figure 29ICA members’ commitments by region,2014

ICA Members’ 2014 Commitments Matrix ($m)

Transport Water Energy ICT Multi-sector TotalCommitments

North Africa 116 557 4,064 100 241 5,078

West Africa 569 1,469 1.122 79 167 3,433

Central Africa 1,819 722 792 132 226 3,692

East Africa 488 375 1,032 55 45 1,994

Southern Africa 169 211 1,597 3 16 1,995

RSA 333 3 330 20 842 1,529

Other 107 12 243 117 618 1,098

Total Commitments 3,602 3,377 9,180 506 2,155 18,819

Conventional financinginstruments remain the mostfrequently used by ICA members.Loans accounted for $14.3bn (75%)and grants for $2.7bn (14%) offinancings. This marks a distinctshift in emphasis among membersthat consistently report data to theICA. In 2013, members reportedthat loans provided $10.8bn (37%)and grants $7.4bn (25%) of funding.

Blended funding, reported for thefirst time in 2014, accounted for 7%of commitments, while guaranteesand insurance amounted to 2.3% ofcommitments. The remaining 2%was financed through equityinvestment and other forms offinancing.

No export credit financing wasreported by ICA members in 2014;this followed the $5bn reported in2013 through US presidentialinitiative pledges.

ICA members continue to financeinfrastructure projects according totheir preferences for grants, loansand/or other finance, ODA and non-ODA funding, and with differentproportions of their support directedtowards soft and hard infrastructureprojects.

Members’ FundingTotal soft infrastructurecommitments in 2014 stood at $2.3bncompared with $1.8bn in 2013. Hardinfrastructure commitments in 2014reached $16.5bn compared with$15.8bn in 2013.

This suggests little change in eitherthe absolute values or proportion ofsoft and hard infrastructurecommitments, although $700m ofcommitments in the 2013 data werereported unallocated.

Canada, the EC and the UK provideexclusively grant funding, while EU-AITF provides mostly grants. Canadacontinues to support only soft

infrastructure projects. The UK hashistorically been one of the mainproviders of grant funding to softinfrastructure projects in Africa(while also focusing on hardinfrastructure).

One of the most substantialcommitments to soft infrastructure in2014 was the AfDB’s $1bn support forthe Angola Power Sector ReformSupport Programme. Two-thirds ofthe AfDB energy unit’s commitmentsin 2014 were directed at softinfrastructure, while its transportoperations and private sectordepartment provided less than 4%and 2% respectively to softinfrastructure.

In contrast, the AfDB’s water andsanitation unit’s commitments to softinfrastructure amounted to 27% of itsallocations. This reflected the bank’sfocus on strengthening processes andsystems in the sector (includingbudgeting, monitoring and reporting,coordination and the setting up ofsustainability frameworks), and itssupport for the preparation ofbankable projects – notably throughthe AWF – and the promotion ofsanitation and hygiene.

DFID’s traditional support for softinfrastructure was underlined in2014, when some 38% of its totalcommitments were directed at softinfrastructure. The EU-AITF is asubstantial supporter of softinfrastructure financing, allocating25% of its 2014 commitments in thisdirection.

The EC’s allocation to softinfrastructure projects remained ataround 10% in 2014. France alsoallocated around 10% to softinfrastructure, which represents anincrease on the 7% allocated in 2013.

The proportion of German andJapanese soft infrastructureallocations have remained at aconstant 7% and 5% respectively over

the last two years. The WBG allocateda rather smaller proportion (5%) tosoft infrastructure in 2014 than in2013, allocating $300m comparedwith $357m in the previous year.

The DBSA provided funding forproject preparation in 2014, the firsttime the bank has reported


4.2 Types of Funding

Figure 30ICA members’ commitments by type offunding, 2014


supporting soft infrastructure sincebecoming an ICA member. DBSAprovides exclusively loan funding inits international and RSA operations.

Providers of only ODA financeinclude Canada, EC, EU-AITF,Germany, UK and the World Bank.Providers of exclusively non-ODAfunding include DBSA and IFC.

The AfDB provides predominantlynon-ODA funding. However, ODAfinance accounted for more than halfof all AfDB commitments to the waterand sanitation sector and around one-third of those in its transportoperations.

The IFC, which provides only hardinfrastructure financing, offers one ofthe broadest ranges of fundingoptions. In 2014 around 19% of itscommitments were equityinvestments while some 38% wereloans. Blended funding accounted for25% and what IFC describes as quasi-loan/quasi-equity funding accountedfor 18% of commitments.

The IFC’s quasi-equity financinginstruments, which exhibit both debtand equity characteristics, are aimedat supporting private sector projectsin developing countries. Among otherinstruments, the IFC also providesconvertible debt and subordinatedloan investments, which impose afixed repayment schedule. It alsooffers preferred stock and income noteinvestments, which require less rigidrepayment schedules. Quasi-equityinvestments are made availablewhenever necessary, to ensure that aproject is soundly funded.

France, AfDB and WB all madecommitments in the form ofguarantees or insurance in 2014.AfDB used these financing methodsin 8% of its commitments to theenergy sector. The World Bankcommitted $421m in guarantees orinsurance.

Soft infrastructure supportcommitted by the AfDB, France andthe EC in 2014 focused on capacitybuilding, with a smaller amount

directed towards project preparation.All of Canada’s soft infrastructurecommitments were directed at projectpreparation while Germanyexclusively supported capacitybuilding. Japan’s soft infrastructurecommitments were directed at bothproject preparation and capacitybuilding.

The UK employed a varied approachto soft infrastructure financing in

Figure 31ICA members’soft infrastructurecommitments bytype, 2014

Data noteJapan’s softinfrastructurecommitments alsoinclude funding forcapacity buildingand other softinfrastructurespending.

Figure 32

Soft infrastructure commitments bycategory, 2014


2014 with commitments splitbetween research and evaluation,capacity building, and projectpreparation.

The EU-AITF and EIB take abalanced approach, with softinfrastructure commitments betweenproject preparation (EU-AITF 53%,EIB 44%) and capacity building (EU-AITF 47%, EIB 56%).

Rise in Soft InfrastructureDisbursementsA substantial increase in softinfrastructure disbursements wasrecorded in 2014, up from $777m in2013 to $3.1bn. With approximately$4bn of disbursements in 2013reported ‘unallocated’ (of which anyproportion may have been intendedfor soft infrastructure), it is difficultto confirm a trend. However, it seemsthat soft infrastructure commitmentsare being effectively disbursed.

In 2012, when only a small amount ofdisbursements were reportedunallocated, total soft infrastructuredisbursements amounted to $1bn.

A departure in the soft infrastructurefigures is that in 2014, unlikeprevious years, disbursements weresubstantially higher thancommitments. (However, it isimportant to note that commitmentscannot be directly related todisbursements in any one year.)

One dynamic the data could point to isthat levels of commitments to softinfrastructure need to be increased tosustain the flow of disbursements. Onthe other hand, the figures may alsosuggest a delay in disbursementsanticipated for 2013.

Shifts in commitmentsThere has been a considerable shiftin the application of softinfrastructure commitments in 2014,when the majority of funds wereaimed at capacity building.

Figure 33ICA members’ hard and soft infrastructure commitments, 2014

Figure 34ICA members’ hard and soft infrastructure disbursements, 2014


However, a decline in commitmentsfor project preparation was reported.In 2013, 32% ($560m) of softinfrastructure commitments targetedproject preparation. In 2014, thisfigure reduced to 16% ($362m) of totalsoft infrastructure commitments.

Commitments to capacity buildingmeanwhile nearly tripled from $493min 2013 to $1.4bn in 2014. Thisrepresented 29% of total softinfrastructure commitments in 2013,increasing to 63% in 2014.

A new category of soft infrastructureinvestment considered in this year’sreport is research and evaluation, forwhich ICA members reportedcommitments of $116m.

‘Other’ soft infrastructurecommitments amounted to 16%($367m) of all such commitments in2014, compared with 23% ($402m) in2013.n

Figure 35Index of ICA members’ hard infrastructure commitment trends,2010-2014

Figure 36Index of ICA members’ soft infrastructure commitment trends,2010-2014

Reported Soft Infrastructure Commitments and Disbursements ($bn)

2012 2013 2014 Total Annual average

Commitments 1.18 1.75 2.26 5.19 1.73

Disbursements 1.03 0.77 3.12 4.92 1.64


The trends reported in bothcommitments and disbursements inthis section are based partly onaggregated data, reflecting thetechnical difficulties experiencedby some ICA members in terms ofdisclosing disaggregated financialinformation from grouped data setsand evolving financial reportingsystems.

Key trends observable from ICAmembers’ data for 2014 and previousyears include a shift towards multi-sector projects, growing attention toCentral Africa, the energy sector’scontinued ability to attractcommitments, and a very sharpdecline in pledges to regional projects,including PIDA/PAP projects.

Multilateral and bilateralcommitments were largely balancedin 2013, reported at $14.1bn and$15.4bn respectively. But there was asharp swing in 2014, when at$12.4bn, multilaterals provided two-thirds of all commitments.

Bilateral development institutionscommitted $4.6bn. The apparent fallin bilateral commitments can againbe explained with reference to theexceptional US Power Africa pledge in2013. Without this contribution, theratio of multilateral to bilateralfinancing has remained constant ataround 2:1 in both years.

In 2014, the ratio between ODA andnon-ODA funding was approximately2:1. Overall, non-ODA commitmentlevels were up by more than 50% onthe previous year, whereas ODAfunding declined by $1bn (7%).

Three institutions exclusively fundednon-ODA projects during 2014: IFC,DBSA (for the second year running)and Japan (which had the highestshare of non-ODA funding amongbilateral members). The EIB, with noaccess to grant funding, reported a64% non-ODA share, compared with68% in 2013.

4.3 Trends in Commitments and Disbursements

Figure 38ICA members’ infrastructure disbursements by sector and region, 2014

Figure 37

ICA members’ infrastructure commitments by sector and region, 2014


The sectoral distribution of ICAmembers’ commitments in 2014 wassimilar to 2013. The energy sectorreceived 49% of ICA commitments(2013: 54%), while transport sectorreceived 19% (2013: 22%) and water &sanitation 18% (2013: 17%). ICTreceived just 2.7% of ICAcommitments.

The trend towards multi-sectorproject commitments appears to begaining momentum. In 2013,commitments to multi-sector projectsdoubled from the previous year to 5%,and in 2014 accounted for more than11% of commitments.

North Africa received 27% ($5bn)commitments in 2014 to become thelargest recipient of ICA memberfunding. It overtook West Africa,which had received pledges worth$8.5bn in 2013 (including a $3.5bncontribution from Power Africa), equalto 29% of overall commitments. In2014, West Africa received $3.4bn inICA commitments, a fall of 60%.

East Africa’s share of commitmentsdeclined by 71% from $6.7bn in 2013(which also included a $3.5bn pledgefrom Power Africa) to just under $2bnin 2014. Excluding these exceptionalcontributions, commitments to bothregions declined by around $1.5bn.

Central Africa received 19.6% ($3.7bn)of total commitments, more than a 50%increase on the $2.4bn it received in2013. Southern and East Africa eachreceived fractionally less than 10.3%($2bn) of total commitments.Meanwhile, pledges of $1.5bn to RSAtotalled 8.1% of member commitments.

West Africa received the highestcommitments from Canada, IFC, DFIDand the AfDB’s water and sanitationoperations. North Africa received thehighest commitments from EIB, JICAand KfW, while East Africa was thelargest destination of financialcommitments from AFD and EU-AITF.

AfDB’s Private Sector Departmentand DBSA’s 2014 commitments were

Figure 39ICA members’ infrastructure commitments by donor and region, 2014

Figure 40ICA members’ infrastructure disbursements by donor and region, 2014


dominated by projects in RSA, whileDBSA’s international division andAfDB’s energy division’s investmentshad a significant focus on projects inSouthern Africa.

Central Africa appears to beattracting more support from anumber of financing sources, resultingin significantly more commitments inall but the region’s water sector. Theregion accounted for the highestcommitments from WB and theAfDB’s transport operations; it wasalso the second highest recipient ofinvestments from the EC.

Of the total $18.8bn in ICA membercommitments reported in 2014, $16.5bn(88%) was directed to hardinfrastructure, while $2.3bn (12%) wasaimed at soft infrastructure. Of thecommitments to soft infrastructure,

two-thirds ($1.4bn) went to capacitybuilding, some 16% was directed atproject preparation and around 5% atresearch and evaluation, with 16% ofcommitments aimed at other softinfrastructure projects.

Five-Year TrendsICA member commitments haveaveraged $20.8bn per year in the lastfive years, albeit with some very sharpfluctuations in distribution by sectorand region.

The first decline in commitments inthree years was registered in 2014,down to $18.8bn from $25.3bn in 2013.However, when the $7bn contribution ofPower Africa in 2013 is excluded, ICAmembers have reported a sustainedhigh level of financial commitments forthree years running – at $18bn-19bn.

2010 remains the strongest year forcommitments over the five-yearperiod, while 2011 was the weakest.

Figure 42ICA members’ disbursements by sector,2012-2014

Figure 41

Disbursementrates per sectorfor projectscompleted in 2014

Some 83% of commitments made to projects reported ascompleted by ICA members in 2014 were disbursed over theproject lifetime, regardless of the year in which the originalcommitment was made. This is an increase on the 77%disbursed on projects completed in 2013.

However, disbursement rates for transport sector projectscompleted in 2014 slowed to 65%, compared with 77% in 2013.For the second year running, the sector had both the lowest

disbursement rate and the largest share of ‘commitmentsoutstanding’. Disbursement rates in all other sectors standmuch higher at 90% or more.

Disbursement rates are generally higher for ODA than non-ODA operations, with the exception of ICT activities (where adisbursement rate of 100% was achieved for non-ODAprojects). At just 21%, non-ODA multi-sector projects appearto have a very slow disbursement rate. n

Disbursement Rates


A fall off in energy allocations wassubstantially responsible for therelatively low commitments of $11.9bnreported in 2011. The energy sector hasbeen the most significant contributor tothe recovery in commitments, which, at$18.3bn in 2013 were bolstered by the$7bn contribution of Power Africa.Without any such contribution in2014, energy commitments reached$9.2bn – effectively a rise of around50% from $6bn when the 2013 PowerAfrica figure is excluded.

ICA members reported fewercommitments in the transport sectorin 2014 than in any of the last fiveyears, with $3.6bn committed.

Regional CommitmentsCommitments to West Africaincreased by 53% between 2010 and2013, but ICA members reported a60% decline in commitments in 2014,to $3.4bn. This reflects a strong 2013,when commitments rose by 158% to$8.5bn. Taking a five-year perspective,commitments reported for 2014 are

40% up on the pledges made to WestAfrica in 2010.

In 2013, East Africa was the secondfastest growing region, with 44%CAGR; its commitments peaked at$6.9bn before falling to $2bn in 2014.

Commitments to Central Africareached their five-year peak at $3.7bnin 2014. This made it the secondlargest recipient of ICA commitmentsafter North Africa, which was pledged$5bn in 2014 (broadly on a par with2012).

ICA commitments to Southern Africadeclined by 20% in 2014, but pledgesto RSA almost doubled from figuresreported in 2013. RSA was the onlyregion to witness an increase incommitments in 2014, pointing to arecovery in confidence. AlongsideNorth Africa, RSA saw a significantdecline in commitments in 2013, butthe $1.5bn committed in 2014 is stillsome way off the $6.7bn committed in2010.

Pattern of DisbursementsComparing broadly like-for-like ICA

member data, disbursements across

sectors have been particularly even in

terms of transport and water in 2013-

14. Disbursements to projects in the

transport sector fluctuated between a

very narrow margin of $4.1bn-4.2bn

per year, and water between $2.4bn

and $2.6bn during the period.

Energy disbursements of $3.9bn in

2014 remained level with that reported

in the previous year. This followed a

decline from $4.8bn in 2012.

Disbursements to ICT remained at

$400m in 2013 and 2014 (an increase

from the $200m reported as paid to

projects in the sector in 2012).

Disbursements for multi-sector

projects nearly quadrupled in 2014 to

reach $1.5bn, having grown to $500m

in 2013 from $400m in 2012. n

Figure 43

ICA members’commitments bysector and region,2010-2014


4.4 ICA Member Activities

DBSA’s international operations focused entirely on theenergy sector, with 72% of commitments focused onSouthern Africa and the remainder targeted at West Africain 2014.

Countries benefitting from commitments in 2014 includedZambia and Ghana.

Disbursements were made to Zimbabwe for its transportsector and, at a regional level, network communicationsservice provider, O3b Networks. O3b is building a satelliteconstellation aimed at connecting the world’s 3bn as yetunconnected people in emerging markets to world-classmobile and Internet communications networks. AlongsideDBSA, O3b’s financial backers include HSBC and Google.The network launched its first constellation of eightsatellites in 2013 and four more in 2014.

Non-ODA loan commitments by DBSA to RSA in 2014focused on multi-sector projects implemented at city- ormunicipality-level. Major beneficiaries included the citiesof Tshwane and Johannesburg. Disbursements in 2014were made to several renewable energy projects, includingmainly solar PV and some wind projects. Some 88% ofDBSA’s commitments to RSA went to multi-sector projects.Smaller amounts were committed to ICT and transportoperations.

Conversely, DBSA’s spending on project preparationfacilities focused entirely on energy operations, suggestinga strong interest in future investments in this sector.Projects that received commitments in 2014 included theNgonya Hydro facility in Zambia and the regionalMozambique-Zimbabwe-South Africa interconnector,which between them received commitments of $1.78m. n

Canada committed or disbursed grants or contributions to141 projects in 2014, with nearly 60% of its commitmentsdestined for water and sanitation projects. Multi-sectorand ICT account for most of the remaining 2014commitments.

West Africa benefits from nearly two-thirds of Canada’scommitments. Canada’s commitments are up around 30%compared with 2013, when multi-sector projects received

46% of commitments, and the water and energy sectorsbenefitted from around 26% and 18% respectively.

Canada disbursed some $138.7m in 2014, more than half ofwhich went to the water and sanitation sectors, while multi-sector and transport projects received around 26% and 19%respectively. In 2013, Canada disbursed $201m, with water,sanitation and multi-sector projects benefitting from morethan half of that amount. n

Central Africa features as the prime destination of AfDBfunding for transport, receiving nearly one-half of the bank’s2014 commitments to that sector. Key AfDB transport sectorproject commitments in West Africa included a regionalinvestment in the Mano River Union’s programme to facilitatetransport links within Cote d’Ivoire, Guinea and Liberia. Thebank’s largest commitment in the sector went to theBatchenga-Ntui-Yoko-Tibati-N’Gaoundere road project inCameroon. Overall, the AfDB committed around 20% less totransport in 2014 than it did in 2013, while disbursements tothe sector increased by 8%.

AfDB commitments to the energy sector are up by aroundone-third in 2014 compared with the previous year. Overalldisbursements to the sector, however, showed a decreaseof nearly 30%. The bank’s energy unit focused strongly onSouthern Africa, which received around three-quarters ofall commitments in that sector in 2014, whereas in 2013,West Africa had received slightly more than half of thebank’s pledges to energy projects.

A landmark announcement of 2014 was AfDB’s $1bncommitment to the Angola Power Sector Reform SupportProgramme, whose overarching objective is to promoteinclusive economic growth by improving operational andcost efficiency in the sector and consolidating publicfinancial management reforms. This was the bank’s largest

commitment to the energy sector, which also saw supportfor projects to benefit Ghana, Burundi, Mauritius, Kenya,Morocco, Swaziland, Zambia and Zimbabwe.

The AfDB reported a 15% increase in commitments to thewater sector in 2014 compared with 2013. More than half ofthis went to West Africa, where a single commitment – of anon-ODA loan of $205m for the Urban Water Sector Reformand Port-Harcourt Water Supply and Sanitation Project inNigeria – made up more than 40% of the bank’s 2014 watersector commitments.

The Port-Harcourt project also has a focus on capacitybuilding for effective maintenance and support to sectorreforms. The project aims to provide residents of Port-Harcourt city in Rivers State with sustainable access to safedrinking water and sanitation, and to strengthen thefederal government’s capacity to reform and scale upwater supply and sanitation service delivery across thecountry.

In 2013, the AfDB’s private sector department focused onthe energy sector, but commitments in 2014 were firmlyfixed on the transport sector. Three non-ODA loans – forLekki Tolorom Port in Nigeria, Transnet’s expansion and theXina Solar One Project, both in South Africa – account formuch of the department’s 2014 commitments. n

African Development Bank

Canada

Development Bank of Southern Africa


AFD committed most to the energy sector in 2014, whenNorth and East Africa received the most across all sectors.Around one-third of all AFD disbursements went to West

Africa, while around 22% went to North Africa, the regionthat received the most funding in 2013. AFD reporteddisbursements up by 67% in 2014 compared with 2013. n

The EIB committed €701m ($935m) in 2014, up from€660m ($880m) in 2013. Levels of commitment werebroadly the same over the two years in the transport sectorat €53m ($71m) in 2014 compared with €52m ($69m) in theprevious year. Commitments in the water and sanitationsector more than halved from €283m ($377m) in 2013 to€122m ($163m).

Energy sector commitments increased from €310m($413m) in 2013 to €374m ($499m) in 2014. While the EIBcommitted no funds to multi-sector operations in 2013, thebank made commitments of €152m ($203m) to theseprojects in 2014. No funds were committed to the ICTsector in 2014; that sector received commitments of €15m($20m) in 2013.

In 2014, the EIB disbursed €822m ($1.1bn), 29% more thanin 2013 (€637m – $850m). This is substantially due toincreased disbursements in the energy sector, whichtotalled €461m ($615m) compared with €286m ($381m) in2013. Disbursements to the transport sector fell from€257m ($343m) in 2013 to €203m ($271m), while the waterand sanitation sector saw an increase from €92m ($123m)to €119m ($159m) in 2014.

Notable activity included EIB participation in theLOGISMED initiative to develop the logistics sector inMediterranean Partner Countries (some in North Africa). Itenvisages the creation of a network of Euro-Mediterraneanlogistics platforms to support the modernisation essentialfor the development of a Mediterranean free trade area. n

Grants of €60m ($80m) were committed in 2014, withmost EU-AITF grant funding going to energy (€34m –$45m), followed by transport (€21m – $28m) and waterand sanitation €5m – $7m). All water and sanitation

commitments went to East Africa, where grants also wentto transport and energy. Grants were also committed totransport and energy in Southern Africa; €15m wasgranted on a non-region specific basis. n

Commitments by KfW increased by 57% in 2014, up from€636m in 2013 to €1bn. This was due to a more thanthreefold increase in commitments to energy operations,to €892m ($1.2bn), from €216m ($288m). Commitments tothe water sector declined from €407m ($543m) to €140m($187m) in 2013. KfW made no new commitments to othersectors.

KfW’s largest commitment was €654m ($860m), for twomajor energy projects in Morocco. Other commitmentswent to Benin, Burkina Faso, DRC, Egypt, Kenya,

Mozambique, RSA, Senegal, Togo, Uganda and Zambia.

KfW also substantially increased its disbursements in 2014,by around 55%. This was largely due to an increase in fundsflowing to water and sanitation projects, up from €97m($129m) in 2013 to €169m ($225m).

Support for the energy sector increased from €113m($151m) to €183m ($244m) in 2014.

There were no new disbursements in 2014 to multi-sectorprojects, compared to €4m ($5m) in the previous year. n

Disbursements increased by 15% year-on-year in 2014,when for the second successive year, transport sectorprojects and programmes received the largestdisbursements, worth €497m ($663m) (2013: €436m –$581m). Water and sanitation operations received €219m($292m) (2013: €230m – $307m), while the energy sectorreceived €193m ($257m) (2013: €139m – $185m). ECdisbursements to ICT rose around seven-fold on 2013, at€10.3m ($13.7m).

Total EC commitments declined substantially in 2014,after relatively very large sums went to the transport andwater and sanitation sectors in 2013. Transport received€23m ($31m) and water and sanitation only €100,000($133,000) in 2014 compared with €726m ($968m) and€221m ($295m) in 2013. The energy sector received€200m ($267m) in 2014 (€246m in 2013). Commitmentsof €20m ($27m) were made to ICT in 2014, whereas nofunds were committed to this sector in 2013. n

European Commission

European Investment Bank

European Union–Africa Infrastructure Trust Fund

France – Agence Française de Développement

Germany – KfW Development Bank


The World Bank reported substantial increases in bothdisbursements and commitments in 2014, whencommitments rose by 42% from $4.1bn to $5.9bn, whiledisbursements increased by 28% from $1.8bn to $2.3bn.

The WB, which makes significant commitments anddisbursements to Africa year after year, is keen to point outthat almost all of its projects are characteristically multi-sectoral with a regional impact. According to its allocationto sectors and regions as defined by the ICA, it is clear thatthe bank’s strategy is impacting positively across allsectors.

In 2014, WB commitments to transport more than doubledto $1.55bn (from $703m in 2013). Commitments increasedto water and sanitation (by 40% from $1.3bn to $1.9bn),energy (by 56% from $1.3bn to $2bn) and ICT (by 32% from

$103m to $136m) as per ICA definitions.

By the same definitions, the WB’s disbursements alsoincreased across all sectors, with a doubling ofdisbursements to energy operations, to $434m in 2014from $216m in 2013. For the second year running, the WBdisbursed most to the transport sector. Central Africantransport projects received commitments of $1.2bn, morethan any other region.

In the water and sanitation sector, the bank made somevery large commitments to Nigerian water supply, floodmanagement, irrigation and drainage operations. But WB’slargest commitment in 2014 was a $500m loan to expandnatural gas access to 1.5m Egyptian households in elevengovernorates. n

UK direct grant commitments for Africa’s infrastructurereduced substantially from 2013 when, exceptionally, some£513m ($847m) was made available for a range of critical,time-sensitive and high-value water programmes. In 2014,the value of grants committed to the sector amounted tojust short of £24m ($40m). Other sectors with fewer grantcommitments in 2014 were transport at £27m ($45m)(2013: £47m – $78m), energy at £18m ($30m) (2013:£135m – $223m) and ICT at £16m ($26m) (2013: £18m –$30m). However, UK multi-sector commitments increasedfrom £62m ($102m) to £63m ($104m).

Disbursements made by the UK declined from £407m($672m) in 2013 to £336m ($555m) in 2014. This waslargely due to fewer disbursements made to the transport,energy and ICT sectors. Disbursements to multi-sector, aswell as to water and sanitation projects, remained broadlythe same in 2013-14. Multi-sector projects received £79m($131m) in 2014 (2013: £81m – $131m) and water £153m($253m) (2013 also £153m).

UK data for 2014 does not include any direct payments orcommitments to the EU-AITF and IPPF. n

Japanese commitments increased by 43% over 2013, from¥152bn ($1.45bn) to ¥217bn ($2bn), but with fundsallocated to different sectors in each year. While ¥57bn($542m) was committed to transport and ¥36bn ($342m)to water and sanitation in 2013, transport received ¥12bn($114m) and water ¥14bn ($133m) in 2014. Conversely,energy commitments more than doubled in 2013-14, fromY59bn ($561m) to ¥160bn ($1.5bn). Commitments toenergy in 2014 were more than to all sectors in 2013.

Disbursements from Japan were, at ¥110bn ($1.05bn), upnearly 20% on the amount disbursed in 2013. There were

substantial shifts in the sectoral pattern of disbursements:transport and energy operations received less than in 2013,while disbursements to the water sector rose from ¥12bn($114m) to nearly ¥16bn ($152m) in 2014.

¥44bn ($419m) went to multi-sector operations, which in2013 received no disbursements. Japan’s Fifth PrivateSector Assistance Loan funds were channelled into the(Enhanced Private Sector Assistance) EPSA for AfricaInitiative, signed by JICA and AfDB in September 2014. This¥30.69bn ($292m) loan is to support entrepreneurship, jobcreation and growth across the continent. n

IFC’s commitments and disbursements rose substantially,by 55% and 65% respectively, in 2014. The increase incommitments to $621m was driven by $397m allocatedto the energy sector (up from $293m in 2013) and the$195m for ICT operations in 2014, which was more thandouble the $62m committed in 2013. Energy was key to the increased volume of disbursementsat $447m in 2014, up from $262m in 2013. Over the same

years, there were increases in disbursements for thetransport sector, from $33m to $79m, and for multi-sectoroperations, up from $36m, to $87m. ICT projects received$87m in 2014, compared with $36m in 2013.

Major projects that received IFC commitments in 2014include five loans of $50m-75m to energy projects inNigeria, Gabon and North Africa. Regional ICT projects alsofeatured, alongside commitments to Nigeria, Rwanda andChad in the same sector. n

International Finance Corporation

Japan International Co-operation Agency

United Kingdom – Department for International Development

World Bank


4.5 Strategic Issues

Early Stage Project Development andFinancingEarly stage project development and financing are citedby ICA members as posing an important issue. Severalidentified the earliest stages as the most challenging timein a project’s lifespan (although some members said theyhad experienced more difficulties in the developmentphase). Some members are assessing how early in theproject preparation process they can provide support.

Concerns were expressed over the existing portfolio ofproject preparation facilities, in particular an apparent“disjoin” between some of these funds.

Members anticipated that the InternationalInfrastructure Support System (IISS) will make adifference. Due online in 2016, IISS aims to provide publicand private sector users with a platform to enable aconsistent and systematic approach to early stage projectdevelopment.

Some suggested capital markets could play a role, butconceded there is much work to do to harness this form offinance. As one member put it, “the huge challenge isengaging with and using capital markets and findingmechanisms to provide a decent rate of return for earlystage investments.” Members may become involved beforeprojects are bankable, but not yet at the point where apotential project is what one member described as “astatement of need.” n

Corridor DifferencesCorridors are seen, in some quarters, as the ‘holy grail’of infrastructure development, but some membersquestioned whether they can provide an effectivecatalyst. One pointed to the effective takeover of astate-owned railway by a natural resource company,which maintained the infrastructure sufficiently toserve its mineral extraction purposes but left the lineall but unusable for other freight or passenger uses.

Another member said the success of corridor projects,particularly those with a natural resources-road and/orrail-port configuration, can be subject to the vagaries ofcommodity price fluctuations, which impact on initialand current costs. Conflicts of interest betweendifferent public sector and commercial entities, andsummary decisions made in the boardrooms ofmultinational resource companies – for example tomothball assets – also cause problems. Infrastructureowned and operated by big commercial entities, knownas ‘anchors’ – for example mining operations whichown railways – pose risks to smaller businesses andlocal populations, who might also take advantage ofsuch infrastructure, particularly if the anchor pulls outof business in that location.

The reality is that major projects even in maturemarkets take a long time to roll out. n

Organisational DifferencesOne particular set of dynamics was highlighted as abrake on arranging finance and implementing projects:the unsurprising and unavoidable fact that each partyin a project may operate under different conditions.Each of the financiers and local stakeholders in afinancial package has different requirements; there areas many sets of rules as there are financiers andstakeholders. And within the ICA, members observethat they sometimes have different mandates andcultures from their peers.

It is not easy to change procedures within and amonglarge, tightly regulated institutions. Severaldevelopment partners said they were continuing workto harmonise financing and procurement procedures –which has been on the agenda for many years. n

Demand-driven StrategiesMembers’ operate under considerably differentmandates. Thus, the EIB operates under the CotonouAgreement, generally focusing on infrastructureinitiatives that facilitate the development of small- andmedium-sized enterprises, while JICA works under plansagreed between Japan and African states at the five-yearly Tokyo International Conference on AfricanDevelopment (TICAD). But whatever mandate memberswork under, there is clearly a recognised need to bedemand-driven.

The 2014 Ebola virus prompted various projects, fromthe EIB’s support for the urgent rehabilitation of energyinfrastructure in Guinea and Liberia to JICA’s provisionof emergency relief goods such as generators and waterpurifiers to compensate for the lack of power and waterin hospitals and clinics stretched to capacity. n

ICA members shared their views on a number of major strategics issues andconcerns during the preparation of the Infrastructure Financing Trends in Africa –2014 report


Strategic Issues

Members consistently stressed a preference for regionalprojects. One bilateral emphasised that it takes a 100%regional approach in its operations, focusing exclusivelyon cross-border infrastructure. All members canvassedexpressed a preference for regional initiatives, includingnational projects with a regional dimension.

Members all recognised the well-known catalogue ofdifficulties in implementing larger regional projects,notably cross-border political, technical, legal andregulatory differences. One recurring view is that some ofthe very large regional projects tend to involve countrieswhere credit and political risks are perceived to be high,thus making it hard for donors to take more than aproportionally small amount of risk unless several donorsare involved, which in itself compounds difficulties.

Some members found it useful to work with regionaleconomic communities (RECs), power pools and otherregional organisations, but navigating through thepolitical environment in which these entities operate canbe very challenging. However, one member said it wasoften more productive to work with RECs – and NEPADespecially – because it was easier to consult on and resolveissues with these entities than with local stakeholders. Butthe general view is that navigating the political landscapefor regional projects is difficult; more focus is needed toconvene and coordinate activities to bring stakeholderstogether to make ambitious projects a reality.

All members canvassed recognised that internal

challenges added to the difficulties inherent in puttingtogether large regional projects. Some members reportedfacing challenges in aligning an increasingly regionalapproach with their own in-country representatives andlocal partners who are accustomed to operating on acountry basis.

Suggestions for improving the chances of implementingregional initiatives included developing strategies forstakeholder ‘buy in’ to cross-border infrastructuredevelopment. Another approach suggested was to designand build complementary suites of ‘smart’ nationalprojects linked by relatively small cross-borderinterconnection schemes. It was suggested that, toachieve financial close on large regional projects, nationalgovernments could be encouraged to acquire equitystakes, to cement relations and align objectives. However,this suggestion tended to be qualified by the notion thatthere is no pre-set formula for government equity stakeswhich can be applied across all projects.

It was recognised that enabling mechanisms for regionalintegration and trade, such as Trademark Africa and theOne-Stop Border Post (OSBP) initiative, are useful inpromoting the increasingly regional approach toinfrastructure development. Concerns were expressedover an apparent lack of commitment to regionalinitiatives from donor-supported quasi-private sectorinvestors, some of whom appear strongly focused onnational projects with little or no regional impact. n

Project ShortagesA lack of bankable projects is a major constraint,particularly for development partners deployingrevolving funds or with sizeable minimum funding levels.Challenges include the creditworthiness of state-utilitiesthat may be the ultimate beneficiaries of finance and alack of local lawyers able to work on legal agreementsdrawn up to the standards required by internationaldevelopment partners.

A big issue for several members concerned utilities’ lackof financial stability, for example in the power sectorwhere tariffs do not cover electricity production costs.Compounding this are the difficulties utilities face inretaining experienced technical and managerial staff.Some members are supporting initiatives to amelioratethis situation, for example by providing support for‘training the trainer’ initiatives to ensure a sustainablesupply of capable technicians.

In terms of development partnerships, there was somerecognition that donors tend to work with each other andcould perhaps focus more on bringing countryrepresentatives, local stakeholders and the private sectorinto the infrastructure development process. This calls fora more effective use of convening powers.

Several members suggested mechanisms to promotesmaller projects, particularly in areas such as renewableenergy, where a strong flow of small-scale projects couldmake a big difference as off-grid technologies becomeincreasingly affordable and practical solutions. Theeffectiveness of the African Renewable Energy Fund(AREF) – launched in March 2014 with $100m ofcommitted capital to support small- to medium-scaleIPPs – is being keenly watched by some members, whosay momentum is gaining in small-sized, sometimesdistributed, power solutions. Of the committed capital,the AfDB-hosted Sustainable Energy for Africa (SEFA)facility contributed $20m. n

Strategies for Implementing Regional Projects


Bilateral and Multilateral FinancingICA members – notably the EC, Germany, Japan, SouthAfrica, the UK and US – contribute to infrastructurespending in Africa both bilaterally and through theirfunding of multilaterals. Bilateral commitments areincluded in the Infrastructure Financing Trends inAfrica 2014 report. However, their contributions tomultilaterals are not included to avoid double counting.

Some ICA members make significant contributions tothe African Development Fund (the concessionalwindow of AfDB) and WBG, as shown in the tablesbelow and opposite. France, Germany and the UK makeup three of EIB’s four largest subscribers alongsideItaly.

Additionally, bilateral members support a wide varietyof funds. The donors that support the EIB-managed,EU-AITF include the EC, France, Germany and UK,along with nine other European donors. Canada,Germany and the UK contribute to the NEPAD IPPF,which is hosted by AfDB, which alongside Denmark,Norway and Spain is also a contributor. Canada, Franceand the EU alongside 13 other donors contribute to theAWF.

Other vehicles used by bilateral donors include thewholly UK government-owned CDC, which in 2014made commitments to Africa of $240.9m, of which

WBG Funding From Sovereign Countries and EC (in $m)

Fiscal year2013

Fiscal year 2014

United Kingdom 1,010 1,126

United States 424 626

European Commission 327 531

Norway 400 371

Australia 433 358

Germany 212 349

Netherlands 355 271

Japan 291 248

Sweden 270 231

Denmark 115 197

Switzerland 153 156

Canada 266 150

Other sovereign DPs 463 410

Total 4,719 5,024

Pledges by ICA Members and Other Contributors to the 13th Replenishment of the African Development Fund ($m)

ContributionPercentage of

totalcontributions

United Kingdom 995 15.9

Germany 618.7 10.5

United States 582 10

France 549.3 9.5

Japan 409.8 7.6

Canada 296.4 5.5

Saudi Arabia 35 0.6

South Africa 21.4 0.4

Brazil 15.5 0.3

Kuwait 11.8 0.2

$100.6m targeted the energy sector either through directinvestments or via funds. CDC manages capital entirelyprovided by DFID and now has an energy portfolio of nearly$1.3bn. n

Financing MixMembers did not expect any significant changes in themix of financiers of Africa’s infrastructure in next yearor so, but they are anticipating that funds from Africa50and the Global infrastructure Fund (GIF) will make adifference to funding scenarios, when they start to flow.

It remains an open question whether these new sourcesof finance will eventually attract finance frominstitutional investors and private equity, either asinvestors in the funds themselves or as co-financiersalongside them. But private equity is already lookingfor investment opportunities, and competing for the fewbankable projects that come into the market; pensionfunds are looking to invest in East Africa, according tomembers. The introduction of new funds without asignificant improvement in early stage projectdevelopment and financing may result in an evengreater over-supply of funds for a relatively smallnumber of projects.

Members also felt the private sector was often unawareof the offerings available to help them invest in Africa’sinfrastructure. There is a lack of structured informationon what is available; development partners couldconsider engaging more with the private sector andimprove the marketing of facilities.n


Disbursements to regionalinfrastructure projects by ICAmembers remained broadlyconstant at $1.8bn in 2014 comparedwith $1.9bn in 2013, sustained bythe increasingly large sumscommitted to regional projects in2012 and 2013 when commitmentsto the sector topped $4bn each year.

The sustained level ofdisbursements is good news for thecontinent, and underlines ICAmembers’ efforts to meet the cleardemand for projects that promotesocial and economic growth on aregional basis.

There was however a decline in theamount of money committed toregional projects by ICA members in2014, which appears to reflect themyriad challenges in maintainingmomentum in the development ofcomplex regional initiatives such asthose in the Programme forInfrastructure Development in AfricaPriority Action Plan (PIDA/PAP).

Overall regional infrastructurecommitments declined in 2014 to$1.8bn compared with $4.2bn in 2013.The amount of money committed toPIDA/PAP in 2014 was $161mcompared with the $1.3bn achieved in

2013. The amount disbursed toPIDA/PAP projects declined from$688m in 2013 to $501m in 2014.

The lower level of overall regionalcommitments appears to be due toseveral reasons: notably fewercommitments were made in 2014 bymembers responsible for the verysubstantial upwards drive in regionalcommitments of $4.5bn in 2012 and$4.2bn in 2013. In the previous threeyears, regional infrastructurecommitments broadly followed thepattern of overall commitments.

Japan’s regional commitmentsincreased to $591m in 2014 from$553m in 2013, although still short ofthe $1.1bn committed in 2012.

Comparing 2014 with the previousyear, the WBG’s regional portfolioshrank to $449m, a 44% decline on the$803m committed in 2013, which initself was almost half of the $1.5bncommitted in 2012.

The AfDB’s regional commitmentspeaked in 2013 at $1.1bn but fell to$288m in 2014. In the same yearsFrance’s regional commitments fellfrom $967m to $195m.

Commitments to PIDA/PAP projectsin 2014 included DFID’s £5.5m ($9m)

to energy projects (based on a sample

of projects due to a lack of project level

data), the EC’s €64m ($85m) to the

same sector and €12m ($16m) for

transport projects, while the EU-AITF

and JICA committed €21.2m ($28m)

and ¥3.7bn ($35m) respectively to the

transport sector.

The share of pledges to PIDA/PAP

projects as a proportion of total

regional project commitments in 2013

was 31% ($1.3bn) but fell to 9%

($161m) in 2014.

PIDA/PAP projects received 27.8%

($501m) of total regional project

disbursements in 2014, a decline from

36% ($668m) in 2013.

In a mid-2014 survey of ICA members,

several respondents expressed high

levels of interest in PIDA/PAP and

regional water and sanitation projects,

however there were no PIDA/PAP

commitments in that sector in 2014

although other regional commitments

made by ICA members in the water

and sanitation sector did come from

AFD, EC, EU-AITF, AfDB, Canada

and WBG. n

5.Regional Projects

5.1 ICA Members’ Regional TrendsCopyright iStock/Getty Images


Trends in Regional Infrastructure Portfolios

Figure 44Trends in ICAmembers’regionalinfrastructureportfolios, 2010-2014

Figure 45PIDA/PAP andother regionalcommitments anddisbursements bysector, 2014


ICA members continue to be activein regional initiatives. The AfDBmade disbursements in 2014 to avariety of cross-border projects,including the Lake Victoria Waterand Sanitation project and studiesfor the long-awaited Inga III hydroproject.

The bank’s private sectordepartment made some sizeabledisbursements to the Rift ValleyRailway project and O3b, thesatellite communications networkthat aims to connect emergingmarkets in Africa and beyond tomobile phones and the Internet.

Canada was active in regional projectsacross all sectors except energy in2014, while DFID’s bilateral regionalactivities focused mainly on energy.The EIB focused on transport andmulti-sector operations while the IFCmade its largest regional commitmentto the ICT sector and also allocatedfunds to projects in the energy andtransport sectors. Germany reportedno new regional commitments in 2014but disbursed €252,906 ($338,302) inthe water and sanitation sector.

Japan’s support for PIDA/PAPprojects in 2014 includedcommitments to improve the Port ofBujumbura in Burundi and theTazara Intersection in Dar es Salaam,Tanzania. Disbursements, all in theform of grants, were made to a bridgerehabilitation project in the Republicof Congo and on four preparatorysurveys on a road flyover constructionproject in Côte d’Ivoire, the expansionof the Port of Bujumbura, the GreaterKampala Road Network ImprovementProject in Uganda and flood protectionmeasures on Tanzania’s centralrailway line.

The majority of the EC’s commitmentsin 2014 were on regional projectsacross all sectors, but made no multi-sector commitments. It committed€13.8m ($18m) to transport, €100,000($133,371) to water and sanitation,€94.5m ($126m) to energy and €20m($30m) to ICT.

One of the most substantialcommitments of 2014 was $141m fromAfDB for a project to improve roadsand facilitate transport connectionswith the Mano River Union, approvedin December. The project will see theasphalting of 276km of road –140.6km in Côte d’Ivoire, 39.75km inGuinea and 96km in Liberia – as wellas making space for fibre optic cablesand alleviate pressure on border posts.After years of conflict, such regionalinitiatives anticipate an increase intraffic volumes as the region begins tomove towards its economic potentialas well as rehabilitate infrastructurewhich has fallen into disrepair or isnot accessible in all seasons.

The intervention of multilaterals andbilaterals at an early stage can becrucial in moving large projectsforwards. Multilaterals help establishthe technical capacity of theimplementing agencies as well ascontributing to the enablingenvironment necessary for difficulttransactions to take place.

2014 saw WB join AfDB in supportingthe development of the 4,755MW IngaIII hydropower plant in the DRC. The

hugely complex project will see part ofthe Congo river diverted via a 12kmtransfer canal into the Bunditributary and a 100-metre-high roller-compacted concrete dam built acrossthe Bundi valley and a 1,850kmtransmission line to the Zambianborder via Kolwei in Katanga. Thetotal cost is expected to be as much as$11bn.

From ICA members, $73m wascommitted to providing a range oftechnical assistance to the DRCgovernment alongside funds fromAfDB as well as support to developingmid-size hydropower plants in thecountry. Support for Inga III willinclude the preparation ofcomplementary studies identified inthe feasibility study funded by AfDB,transaction advice and procurementsupport, and institutional support andsector strengthening. Support for thedevelopment of mid-size hydropowerplants will involve an analysis of theinstitutional, regulatory and legalframework and preparation of legaltexts and regulations to go alongsidethe electricity law to regulate theprivate sector.n

5.2 ICA Members’ Regional Activities

Data submitted by ICA members doesnot always reveal the sometimes verylarge extent to which several domesticprojects have real regional significance.One important example in 2014 was thecommitment of $244m by WB to the$380m Uganda North Eastern CorridorRoad Asset Management project.

The project will finance a ten-year pilotOutput and Performance based RoadContract (OPRC) for the 400km Tororo-Mbale-Soroti-Lira-Kamidini-Gulutransport corridor. This contract willcover the rehabilitation and upgrading ofparts of the road, routine and periodicmaintenance of the whole corridor, roadsafety and traffic management, and axleoverload control.

Furthermore, a consultant willundertake technical and financial auditsand a project manager will beresponsible for the overall

administration and supervision of thecontract. The project will also provideinstitutional support to Ugandaninstitutions.

The project is located entirely withinUganda but, as the main access route tonorthern Uganda, Kenya, south easternDRC and South Sudan, and part of theroute from Mombasa port to all threecountries, it is expected to havesubstantial regional benefits byfacilitating increased trade within theEast Africa Community. As a result it willreduce the cost of doing business insome of the poorest regions of Ugandaand its neighbours, improve access toservices and markets – particularly foragriculture in the region – and reducethe cost of cross-border trade.

Tourism benefits are also expected byimproving access to the Murchison Fallsand Kidepo national parks.n

Regional and Local Dimensions


Mano River Union

The Ebola virus wrecked much ofthe economic and social progresswhich had been made in three ofthe Mano River Union countries;Liberia, Guinea and Sierra Leonecausing economic decline, withannualised GDP growth ratesfalling from 4.5% in Guinea, 5.9% inLiberia and 11.3% in Sierra Leone inearly 2014 to an estimated 0.5% inGuinea and Liberia and 6.5% inSierra Leone by December.

Short term measures to return thecountries to their former levels ofeconomic growth will also be taken byrelaunching economic programmes,improving state revenue generationand restoring public investments.

The Mano River Union, with fundingsupport from the AfDB, is lookingfurther ahead with its ambitiousinfrastructure initiative. The projectsspan several infrastructure sectorsand aim to give rise to a truly regionalresponse to the crisis by developingcloser ties between the countries as

well as developing a strong basis foreconomic growth.

Priority projects have been identified inthe energy, road, ICT and agriculturalsectors. The active co-operation ofinternational donors, governments,multilateral institutions and theprivate sector will be critical for thesuccess of the initiative. With the ManoRiver Union and the AfDB already onboard, discussions with the private

sector are underway to identifypotential investors, drum up interestand work together to move the projectsforwards. A range of differentstructures are being considered,including public private partnershipsand build, operate, transfer schemes.

In energy, two large hydroelectricpower projects have been identified.The 180MW Mano Kongo project willbe based on the Mano River on the

Mano River Union’s Ambitious Infrastructure Initiative

As a result of very substantial regional commitments made byICA members and others in recent years – notably in 2012 and2013 – several major transnational projects are progressing.One of these is the $469m Rusumo Falls transboundaryhydroelectric power project, financed by a mix of multilateralsand bilaterals with construction slated to begin in 2016. Thefirst phase of the project, an 80MW power plant in a run-of-river configuration designed to reduce social andenvironmental impacts, is due for completion in 2018.

AfDB and WB approved loans totalling $340m and $113mrespectively to provide the majority of financing for the PIDApriority project. The International Development Association –WBG’s fund for the poorest countries which provides zero-interest loans and grants – is financing the construction of thepower plant to be located on the Kagera River on the Rwanda-Tanzania border, some 2km downstream from the tripointborder with those two countries and Burundi. The project is thefirst operation under WBG’s Great Lakes Regional Initiativeestablished in 2013 and will be prepared and implemented bythe Nile Basin Initiative’s Nile Equatorial Lakes SubsidiaryAction Program Coordination Unit (NELSAP-CU).

The AfDB’s African Development Fund and the Nigeria TrustFund (80.42%), EU-AITF (13.22%) and the governments of

Tanzania, Rwanda and Burundi (6.35%) financing associatedtransmission lines and substations. An additional $16m has alsobeen granted by the Sustainable Energy for All (SE4ALL)window of the EU-AITF to help finance the transmission lineconnecting Burundi to the power plant.

In order to help relieve the power deficit, the project will supplyclean, sustainable, low-cost electricity equally to Tanzania,Rwanda and Burundi. At just over 26MW per country, this isequal to roughly half the current installed capacity in Burundiand a third of that in Rwanda.

The new transmission infrastructure will allow the import andexport of electricity between the three countries and helpimprove the poor levels of electricity access – a definingconstrain in the region – which as of 2012 stood at 16%, 18%and 6% in Rwanda, Tanzania and Burundi respectivelyaccording to AfDB. In addition, Rusumo Falls will promoterenewable power, spur job-led economic development andpave the way for more dynamic regional cooperation.

The Rusumo Falls Hydroelectric Project is a successful case ofcooperation leading to investment in transboundary waterresource development and serves as a model project foractivities in the WBG’s Cooperation in International Waters inAfrica (CIWA) programme. n

Landmark Regional Projects: Rusumo Falls

Copyright World Bank/Francis Ato Brown


Infrastructure development has been at the core of theJapanese government’s development approach in Africa forover four decades. Since the early 1970s, flagship projectshave included airport developments in Mombassa, Kenya andAddis Ababa, Ethiopia; telecommunications systems inMadagascar and Algeria, and the deepening and widening ofthe Suez Canal in Egypt.

In 1993, the government hosted the first Tokyo InternationalConference on African Development (TICAD), inviting Africanheads of states and development partners to discuss keydevelopment issues. Four more conferences followed, thelatest, TICAD V in 2013, hosted representatives from 51 Africanstates (including 39 heads of state). Since the first TICAD,regional integration has been a main theme.

TICAD V aimed to promote investment as well as aid. Heads ofstate and partners reaffirmed the private sector’s central role inboosting and sustaining economic growth in Africa, positioningODA as a catalyst for more private sector investment.

At TICAD V, the Japanese government announced that it willcontribute to African growth through ¥3.2trn ($30.4bn) ofpublic and private investment, including ODA of around ¥1.4trn($13.3bn). JICA is implementing various activities to supportsustainable growth in Africa in line with these commitments.

One of the six priority areas of the TICAD V Yokohamadeclaration is “Accelerating Infrastructure and CapacityDevelopment”. Several initiatives support this:

a) capacity building for 300 people in 20 countries tooperationalise One Stop Border Posts (OSBPs) and to facilitateregional trade;

b) financial assistance of around ¥650bn ($6.2bn) using ODAand JBIC loans for infrastructure development;

c) development of five clusters of economic growth corridorsin each sub-region, and

d) formulate 10 regional initiatives, or Strategic Master Plansfor urban transport/infrastructure planning.

Strategic Master Plans (SMPs) announced at TICAD V areconsidered regional programmes that include suites of JICAtechnical co-operation studies, projects on developmentplanning and capacity development in various areas rangingfrom infrastructure and agricultural development tocommunity and local development. SMPs are essentiallyregional, providing policy assistance that contributes toprivate sector-led infrastructure development. Theyincorporate long-term development planning spanning 10years or more to identify development potentials. They are alsocomprehensive, combining various sectors to aim for moresynergy.

Eight master plans are so far being implemented or prepared.In East Africa, JICA is supporting development of the NorthernCorridor, focused on the formulation of master plans along thecorridor and developing Mombasa port at its gateway. JICA isalso conducting a feasibility study on flood countermeasuresfor the central railway line and assisting in the construction ofOSBP facilities at the Rusumo border between Rwanda andTanzania. In East Africa, JICA also supports geothermaldevelopment in the Great Rift Valley.

In South-east Africa, JICA supports the Nacala Corridor, takinga comprehensive approach and implementing variousprojects. Highlights include projects at Nacala Port and roadsextending inland to Malawi that are co-financed with AfDB.JICA is also implementing an agriculture development projectto unlock the area’s agricultural potential.

In West Africa, JICA supports what it calls the West AfricaGrowth Ring which aims to unlock potential along the corridorsthrough Cote d’Ivoire, Burkina Faso, Ghana, Togo, and theLagos-Abidjan corridor.

In the run up to TICAD VI, JICA will focus on continuing tocontribute to increasing the quantity as well as the quality ofinfrastructure developments that are resilient, long lasting, andmatch the needs of governments. In the transport sector, JICAwill build on its strengths, which include port development,bridges, urban transport, urban planning, climate resilientinfrastructure, geothermal power generation, power networksystems, and capacity development. n

JICA’s Contribution to Africa’s Infrastructure Development as Part of TICAD V Commitments

border between Sierra Leone andLiberia. Mano Kongo has been on thetable for some time and a feasibilitystudy has already been completed,although it now needs to be updated.It is expected to cost $450m to buildand will be able to deliver 795GWh ofelectricity each year directly into aWest African Power Pool (WAPP) line.

The second project is the 225MWCavally dam on the Cavally Riverbetween Côte d’Ivoire and Liberia.This project is less well developed andno studies have yet been carried out.It is expected to cost $610m, including

the cost of building a transmissionline between Abidjan, San Pedro,Tiboto and Buchanan.

Electricity is a huge constraint on theeconomies of the Mano River states,particularly in those countries affectedby Ebola. In Guinea, the national utilityElectricité de Guinée’s power plants areavailable only 68% of the time and inany case serve only 227,027 registeredcustomers, although an estimated100,000 more are connected illegally.

Sierra Leone has installed capacity ofonly 82.5MW – and around 20MW less

in the dry season – to serve its 6m inhabitants while procurement forthe project to expand output atLiberia’s 64MW Mount Coffeehydroelectric power plant to 80MW hasbeen delayed for more than a year.

Mano Kongo and Cavalla will helpprovide a long term solution to theseproblems, facilitated by the CLSGinterconnection; a 1,360km 225kVtransmission line connecting all of theMano Rivers Union countries.

Transport is another critical sectortargeted by the initiative and five


Within the context of the significant mobilisation of resourcesrequired for PIDA/PAP, and in alignment with its mandate ofresource mobilisation for infrastructure development in Africa,the ICA in partnership with the AfDB, at the request of the AUC,NPCA and the RECs, commissioned the PIDA FinancialStructuring Plan with the following objectives:

A.To develop a PIDA financial resourcing plan that will assistthe RECs, national governments of member countries andother project sponsors such as power utilities to accessfinance for the PIDA/PAP;

B.To identify existing and planned financing vehicles andsources (including private and public sector, international andlocal, and regional development banks) in and for each regionthat could be eligible for regional PIDA/PAP projects;

C.To recommend the optimum financing structure(s) for theidentified PIDA/PAP projects for both public and private sectorfinancing arrangements; and

D.To provide advice on the various infrastructure financing andregulatory frameworks in the countries where PIDA/PAPprojects are to be implemented, and recommend the optimumenabling environment (legal, financial, etc).

The Plan is meant to serve as a blueprint to informgovernments, state agencies/utilities and private projectsponsors as well as prospective lenders/investors of:

• Which financing structures/forms have been applied totransnational infrastructure investments (preferably in Africa)and their key features in terms of investment volumes,financing sources and the financing capacity of operators; andwhat structures should be applied for PIDA/PAP;

• What challenges (regulatory and/or financing) ariseregarding such transnational infrastructure projects; and

• The key success factors; for example, which regulatorymeasures and financing options/instruments should beimplemented.

The Plan’s Key Recommendations Include1. De-risking projects – including the unbundling/phasing ofprojects where appropriate, effective and thorough projectpreparation, adequate inter-governmental agreements forcross-border projects and the establishment of independentimplementing authorities;

2. Improving the availability of public sector financing – theestablishment of national infrastructure funds, the design anduse of effective blending mechanisms and, where appropriate,the establishment of Viability Gap Funding; and

3. Mitigating private sector risks – through the use of creditguarantee instruments, political risk insurance andcurrency/inflation risk mitigation instruments. Specificrecommendations for PIDA projects were establishing a PIDAGuarantee Facility and Regional Power Deposit Facilities, withthe sub-regional development banks acting as credible off-takers for regional power generation projects.

The Plan concludes with recommendations for the structuringof five showcase PIDA/PAP projects:

1. Abidjan-Lagos Highway

2. Trans-Saharan Gas Pipeline

3. Batoka Gorge Hydropower Project

4.Zambia-Tanzania-Kenya Power Transmission Line

5. Inga III Hydropower Project

The report can be downloaded from the ICA website aticafrica.org/en/knowledge-publications n

priority road interconnection projectshave been picked out for investment.

The first, a 130km link from Guinea toSierra Leone will connect Kailahun,Koindu, Nongoa and Guekedou at acost of $125m. Another will crossLiberia and Sierra Leone, covering284km at a cost of $383m to connectGbarnga, Zorzor, Voinjama andMendikoma. The third, expected to cost$180m, will run 150km from Liberia toCôte d’Ivoire via Ganta, Tapita, Tobliand Touepleu. A further 145km roadconnecting Guinea to Côte d’Ivoire willpass through Mandiana, Saladou,Minignan and Odienné.

The final priority project will passfrom Guinea to Liberia, running 85kmbetween N’Zérékoré, Youmou andGbanta.

Better road connections are intendedto improve trade between Mano RiverUnion states, allowing the freemovement of people and goods in orderto support the economy of the union.

A broader sub-regional roadinterconnection programme wasagreed during the 22nd Summit ofHeads of State and Government inApril 2013 in Monrovia, the Liberiancapital. The programme envisages2,492km of new roads – including theEbola recovery priority projects above– built at a cost of $2.7bn.

In ICT, the Mano River Union andAfDB initiative is prioritising thedevelopment of a sub-regional fibreoptic backbone, built at a cost of$346.6m, of which $343.5m would bespent on the physical interconnectionof national networks while the

remaining $2.6m will build a centre ofexcellence. ICT is increasinglyimportant in Africa and is beingviewed not only as an economicnecessity, but as central to having abetter informed and better connectedpopulace.

Improving electricity access willprovide the region with the powerneeded to restore and improveessential services and stimulate socialand economic growth.

Better transport links will enhanceprospects for intertrade within theregion and open up businessopportunities beyond, a process thatcan only be enhanced once the peopleand businesses of the Mano RiverUnion countries are connected to thewider region and the world via robustand reliable ICT linkages.n

PIDA Financial Structuring Plan


6.Other Public Sector Financing

6.1 Overview

A total of some $52.8bn of non-ICApublic sector funding has beenidentified as commitments made in2014 to develop Africa’sinfrastructure. Of this total, 65% ofthe commitments identified arebudget allocations made by Africannational governments in 42countries.

Double counting may be an issuewhere allocations contain externalfunding from infrastructurefinanciers, including ICA membersand others, or may partially fundactivities that fall beyond the ICAdefinitions of infrastructure.Conversely, the national governmentallocations do not present a country’stotal public sector budget allocationsif these are made at a subnationallevel by, for example, localgovernments or state utilities.

Commitments from China reducedsubstantially in 2014, largely due tothe absence of large-scale road andrailway projects, which attracted

significant financial commitments inprevious years. Fewer Chinesecommitments may also reflect China’srepositioning among Africaninfrastructure financing entities. TheChinese economic slowdown andlower commodity prices may also haveslowed the pace of Chineseinvestments.

Support from non-ICA memberEuropean DFIs appears to bestrengthening while significant publicsector commitments to Africa’sinfrastructure in 2014 were seen fromBrazil, India and South Korea. TheArab Coordination Group (ACG)continues to support infrastructuredevelopment with $3.5bn ofcommitments in the year.

While this report captures ACG data,additional commitments are reportedin the media from Gulf countries forprojects or programmes, for examplein Egypt and the Seychelles, thatcannot be verified sufficiently forinclusion in the report.

Included in the total non-ICA membercommitments of $52.8bn is the $8.4bnraised by Egypt from its own citizensto fund the Suez Canal expansion.Resident Egyptian citizens financedthe scheme to enable, for the firsttime, two-way traffic of ships up anddown the canal. Egyptians boughtinvestment certificates carryingpreferential interest rates to raise thefunds in just a few weeks (see page 20).

This chapter opens up some of thecomplexities of capturinginfrastructure financing data usingonly aggregated data. For example,Morocco’s 200km €1.8bn ($2.4bn)Tangiers-Rabat-Kenitra high-speedtrain line comprises financing of€1.3bn ($1.7bn) from both ICAmembers and Arab Co-ordinationGroup (ACG) funds that shouldappear in aggregated data submittedby ICA or ACG members, but cannotbe verified without project level data.We have captured however the€92.5m ($123.4m) from the Hassan IIFund for Economic and Social



Development in this report and theestimated €429m ($572.2m)contribution of costs to be met by thegovernment of Morocco through railoperator Office National des Cheminsde Fer du Maroc. Similarly, Namportsaid it would tap its cash reserves tocontribute $19.45m towards the

container terminal at Walvis Bay: theport operator’s commitment would nothave been included in any singlesource of aggregated infrastructureinvestment financing.

There may well be other projects onthe continent where off-nationalbudget public sector financing

features in a country’s totalinfrastructure spending. This may bethe case, as discussed later in thischapter, especially in economies wheresubstantial amounts of infrastructurespending are devolved to subnationalentities, including utilities and localgovernments. n

$52.8bn

$34.5bn65.3%

6.6% 5.9%$0.9bn

1.7%

$3.1bn$3.5bn

Arab Co-ordinationGroup

$9.1bn17.2%

IdentifiedSubnationalFinancing

IdentifiableAfricanNationalBudgetAllocations

China Non-ICAEuropean

commitments

$0.6bn1.1%

RegionalDevelopmentBanks

(ExcludingDBSA)

Total Non-ICA Public Sector Funding in 2014

of Which

Data Note

After China, the country with the largest non-ICAcommitments in 2014 was Brazil ($503m), followed byIndia ($424m), Netherlands ($418m), Norway ($293m),and South Korea ($206m).

The Netherlands, and other EU-member, non-ICA Europeansalso contribute through the EC and EIB.


The total amount of identifiableinfrastructure allocations from 42African countries in 2014 amountedto $34.5bn. The majority (27countries) allocated most totransport spending. Allocations tothis sector, at $18.7bn, represented57% of the total infrastructurespending budgeted for 2014. Sevencountries put water at the top oftheir agenda, including Botswana,DRC, Liberia, Madagascar andMozambique, all of whichcommitted more than 50% ofallocations to that sector.

Five countries allocated most infavour of energy spending, withAlgeria, Angola, Kenya and Tanzaniaeach investing more than $500m inthis sector. In line with ICA members’commitments, there has been asubstantial increase in governmentallocations to multi-sector projectsover the last three years.

In the transport sector, roads receivedthe most allocations based on data in

budgets that named individualprojects. Ethiopia, which allocatednearly $1bn in transport spending in2014, invested in nearly 300 road andbridge projects, with the remainingcommitments going to the aviationsector.

Transport allocations were alsosignificantly bolstered by majorprojects such as the containerterminal at Walvis Bay. AfDB isproviding a $335m loan for the project(as well as a $1.5m grant for logisticsand capital building), the Namibiangovernment is providing $28m, whileport operator Namport is putting up$19.45m from its own cash reserves.

Renewable energy endeavours werenoticeable in several countries’allocations. Tanzania for examplededicated around 40% of its $549menergy budget to renewables.

With the largest of all centralgovernment budget allocations toenergy, Angola is focused strongly on

developing its power sector. Some$3bn (40%) of its 2014 budgetallocations go to this sector. Angola’sEnergy and Water Sector Action Planfor 2013-17 estimates financing needsof $23bn to implement ambitiousreforms and investments in the powersector, which the government’s ownresources will not be sufficient tomeet. Accordingly, Angola has securedfrom AfDB, budget support in the

6.2 African National Budgets for Infrastructure

MethodologyThe 2014 data for budget allocationsof 42 African countries is based onthe analysis of published allocationsidentifiable as infrastructurespending as per the ICA definitions.Data is primarily sourced fromfinance ministries as well as centralbanks and personal enquiries atrelevant ministries and embassies. Ofthe 42 countries, three years of datahas been collected for 28 countries.For five countries two years of datawas collected while for nine countriesdata was acquired for one year.



form of a $1bn loan which the banksays will enable the country to moveaway from expensive bilateral exportcredit lines which do not providelonger term financing.

Botswana allocated more than 50% ofits infrastructure budget to the watersector, providing particular supportfor its long-running Water Planningand Development Programme of1.38bn pula ($133m).

Allocations by national governmentsto the ICT sector were almost all forsoft infrastructure such as e-government programmes or trainingand capacity projects.

Three-Year Trend AnalysisAlthough overall allocations haveremained constant, there is a verywide annual variation in budgetallocations to infrastructure in eachcountry. Countries with the highestCAGR over the period were Tunisia(187%), Angola (59%), Uganda (69%),Tanzania (43%) and Cote d’Ivoire(29%). Angola, with an annual averagespend of $7.5bn between 2012 and2014 reported the highest overallallocations, suggesting a much greateruse of centralised infrastructurespending than other large economiessuch as Nigeria and South Africawhere subnational financing plays alarge role.

Angola committed 40% ofinfrastructure allocations to theenergy sector while 37% was allocatedto transport infrastructure. Mostcountries committed the majority oftheir budgets to the transport sector.South Africa allocated 73% ($2.5bn) ofits $3.4bn budget in 2014 to transport.

Although double counting and thecapture of recurrent spending in thedata may inflate the figures forAfrican national governmentspending on infrastructure, because ofsubnational spending the figures maywell be under-reported.

In addition to the absence ofsubnational financing data, there are

unique bilateral arrangements bywhich external governments fundspecific infrastructure projects orprogrammes, not all of which arecaptured in official budgets.

The Gulf states for example pledged

billions of dollars to Egypt in 2014 fora sovereign fund to financeinfrastructure projects. In a muchsmaller economy, the UAE hasprovided the Seychelles with nearly$54m of financial aid over the past 10years. n

Figure 46African nationalbudgetallocationsgovernmentcontrol group(largereconomies),2012-2014

Figure 47African nationalbudgetallocationsgovernmentcontrol group(smallereconomies), 2012-2014

Figure 48IdentifiableAfrican nationalbudgetallocations by sector andregion, 2014

The following figures represent African national budgetcapital expenditure allocations that identifiably fit withinthe ICA definitions of infrastructure. While revenuespending has in most cases been removed from thefigures, there may be amounts included in the figuresthat are not allocated to capital expenditure.

Countries for which no data was available or in whichthere were no identifiable budget allocations toinfrastructure were:

Central African Republic, Comoros, Djibouti, EquatorialGuinea, Eritrea, Libya, Malawi, Niger, São Tomé andPríncipe, Somalia and Sudan. n


Internal and External Funding

The methodology for establishingAfrican national budgets has beenrefined compared with previousyears to reduce – but not entirelyremove – double counting andrecurrent spending wheneverpossible.

This process allows some light to beshed on the balance between internaldomestic funding and external

funding where data was provided.Based on allocations from fourcountries, the following table suggestswide variations in the balance ofinternal and external funding indifferent countries.

External funding is not alwaysnecessarily double counted: forexample, some loans or grants allocatedby financiers are not captured

elsewhere in the report.

Capital expenditure is clearlyidentifiable in around half of thecountries analysed. However, wherecapital expenditure could not beidentified, total budgets for therelevant departments for each ICA-defined infrastructure sector wereused. External funding was removedwhere possible.n

Identifiable African National Budget Allocations ($m)

North Africa

Algeria 1,395

Egypt 2,117

Mauritania 459

Morocco 1,069

Tunisia 520

West Africa

Benin 53

Burkina Faso 176

Cape Verde 56

Gambia 7

Ghana 430

Guinea 0.12

Guinea Bissau 39

Côte d'Ivoire 1,834

Liberia 0.02

Mali 19

Nigeria 788

Senegal 259

Sierra Leone 136

Togo 324

Southern Africa

Angola 7,597

Lesotho 34

Madagascar 29

Mauritius 133

Mozambique 166

Namibia 271

South Africa 3,384

Zambia 1,090

Zimbabwe 132

Central Africa

Burundi 22

Cameroon 698

Chad 454

Congo 242

DRC 11

Gabon 2,688

Rwanda 158

East Africa

Ethiopia 1,098

Kenya 2,553

Seychelles 21

South Sudan 148

Tanzania 2,324

Uganda 1,121

Country Number ofallocations

100%internal

funding

100%externalfunding

Mixedfunding

Range ofinternal funds in mixedfunding

Notes

Averagepercentageof internalfunding (allprojects)

Tunisia 11 0 4 10 18-88% Entirely water sectorallocations

33.6%

Mozambique 16 7 0 9 8-88% Allocations to allsectors

64.1%

Uganda 11 6 0 5 49-77% Allocations to allsectors

84.1%

Ethiopia 22 18 0 4 14-72% Water and energysector allocations

90.1%


Per capita & GDP analysisAbsolute capital expenditureallocations vary significantly betweenAfrica’s largest and smallesteconomies. For this reason,approximate national governmentbudget allocations for infrastructureare shown on an allocation per capitabasis and as a percentage of GDP toindicate the relative amounts nationalgovernments allocate toinfrastructure as a proportion of theirpopulation and economy.

South Africa for example makesmodest national budget allocations toinfrastructure on a per capita basisand as a proportion of GDP based onnational government data, but thisignores most of the country’s totalpublic spending on infrastructure atthe subnational level, which isdiscussed in the following section.

Conversely, external funding maysubstantially increase the proportion ofinfrastructure spending on a per capitabasis and as a proportion of GDP. Togo’sroad development programme forexample has been supported by BOAD,Kuwait and China while Mauritaniareceived significant commitmentsfrom ICA members in 2014 for theBanda gas-to-power project. n

Figures 49-50Allocations to infrastructure in national budgets, 2014,by US$ per capita (top left) and percentage of GDP(top right); Percentage of infrastructure allocations bysector, 2014 (below)


African National Budgets for Infrastructure

In 2013/14 Tanzania increased itsbudget allocations to the energyand minerals sectors by 78% fromthe previous year to 1.3trnTanzanian shillings (TShs. 1.3trn –$790m). Around three-quarters ofthis was destined for energyprojects:

• TShs. 339.9bn ($210m) has beenallocated to the Rural Energy Agencyand Rural Energy Fund to facilitatedistribution of power to DistrictHeadquarters and other rural areas;

• TShs. 19.8bn ($12m) is set aside forrehabilitation of power transmissionand distribution lines in order toimprove power supply reliability inDar es Salaam;

• TShs. 20.0bn ($12.1m) wascommitted to facilitate the

implementation of Kiwira Coal Minesand construction of power plantstotalling 200MW;

• Tshs. 3.1bn ($1.9m) is budgeted fordevelopment of the Liquid Bio-EnergyPolicy and procurement andinstallation of equipment andmaterials to facilitate the promotionof new and renewable energy sources;

• Tshs. 12.5bn ($7.6m) was spent onthe construction of a 220kV powertransmission line from Makambako toSongea;

• TShs. 5.4bn ($3.3m) is allocated forconstruction of a 400kV powertransmission line from Iringa toShinyanga and the expansion of fourgrid substations in Iringa, Dodoma,Singida and Shinyanga;

• TShs. 22.2bn ($13.5m) has beenallocated for the construction of powerdistribution lines in Shinyanga andMwanza;

• TShs. 8.9bn ($5.4m) has been setaside for the rehabilitation of the HaleHydro Power Plant;

• TShs. 22.0bn ($13m) forimplementing the Rusumo FallsHydro Electric Project;

• TShs. 109.9bn ($66m) and 208.0bn($126m) has been allocated for theconstruction of the 240MW Kinyereziand 150MW Dar es Salaam gas firedpower plants; and

• TShs. 273.2bn ($166m) has beenallocated to TANESCO to facilitatepower generation. n

PPPs to Bolster Zambia’s Budget Allocations

Tanzania’s Budget Allocations to Boost Power Sector

Infrastructure development is one ofthe Zambian government’s priorityareas, and is specifically addressed inboth the Sixth National DevelopmentPlan (SNDP) and the National Vision2030. But the government recognisesthat there is a huge infrastructurefinancing gap and is aware thatresources from the public sector anddevelopment partners are limited andcan only cover part of the financingneeded.

Figure 46 (right) shows thegovernment’s estimated need forinfrastructure finance (includingspending beyond ICA definitions ofinfrastructure, including healthcareand housing) of 60.196bn ZambianKwacha (K60.196bn – $7.2bn ataverage end-2013 exchange rates).Given that the government expects toallocate 27% or K16.3bn ($2bn); DFIs

and bilaterals 17% or K10.4bn($1.25bn), and the private sector 4% orK2.2bn ($260m) during the periodcovered by the SNDP, leaving afinancing gap of 52% or K31.26bn($3.7bn).

The government recognises the needto mobilise private sector financing tosupport public infrastructuredevelopment through PPPs as analternative financing forinfrastructure development, and isnow facing the challenge ofintroducing PPPs into theinfrastructure financing mix. Thischallenge is being addressed byZambia’s ministries with support fromthe British Council in terms oftraining while the WBG is workingwith the ministry of agriculture andlivestock on PPP arrangements forthree irrigation infrastructure

projects in Zambia. The three projectsare part of the Zambian government’saim to attract private resources andexpertise into irrigation developmentand management for the benefit ofsmallholder farmers.n

Figure 51Financing of Zambia's infrastructureneeds


6.3 Subnational Financing

South AfricaIn 2013, South Africa’s financeminister, Pravin Gordhan said thecountry would invest R827bn ($81bnat average 2013 exchange rates) overthree years from 2013/14, implyingan average annual infrastructurespend of R276bn ($27bn).

These investments go beyondinfrastructure as per the ICAdefinition, including, for example,healthcare facilities and schools, whilethe depreciating rand over the last twoyears will have diminished the value ofannual commitments when convertedinto US dollars. Despite this it is safeto assume that the overall annualcapital expenditure on ICA-definedinfrastructure sectors announced by

South Africa is much higher than theR36.5bn ($3.4bn at average 2014exchange rates) identified in SouthAfrica’s national budget.

Subnational financing means thefigures for national government budgetallocations do not capture the budgetallocations of entire countries. In SouthAfrica for example, where tax raisingpowers are devolved to localgovernments and infrastructure ismanaged at a sub-national level (bycities, municipalities, provinces andstate utilities), the total fundingdeployed is not purely sourced fromcentral government. The followingtable shows sources of funding for thecity of Johannesburg’s capitalexpenditure according to its original2014 budget.

The largest proportion ofJohannesburg’s capital expenditure issourced from internally generatedfunds, which, when topped up bypublic contributions and donations,means that approaching half of thecity’s budget revenue is generatedwithin Johannesburg, and is notincluded in national government data.The city’s revenues come primarilyfrom power, water and seweragetariffs, property taxes and businesstaxes.

Applying the proportion of fundsallocated to infrastructure frominternally generated revenue at thesubnational level in Johannesburgwould increase South Africa’s totalpublic sector budget allocations forthe year by R3.2bn ($297m). The same

South Africa: Sources and Application of Infrastructure Funds, Johannesburg, 2014 (R ‘000s)

Infrastructure expenditure as per ICAdefinition

Other capital expenditure Total capital expenditure

3,419,920 ($318m)(45% of total capital expenditure)

4,175,153 ($388m)(55% of total capital expenditure)

7,595,073 ($705m)

Funded by: Amount (% of total capital expenditure)

National government 2,524,734 (33%) ($234m)

Public contributions and donations 448, 870 (6%) ($42m)

Borrowing 1,458,631 (19%) ($135m)

Internally generated funds 3,162,829 (42%) ($294m)

Source, Johannesburg Original Budget, 2014

In parts of Africa, as the examples fromNigeria, Morocco and South Africa in thefollowing discussion show, resourcesare being successfully mobilised at asubnational level by local governments.Revenues for subnational infrastructuremay be internally generated, frompower, water and sewerage tariffs,transportation fares or tolls, propertytaxes and business taxes. South Africahas for years deployed borrowings formunicipal and other local-levelfinancing, drawn from several sourcesincluding municipal bonds, commercialpapers, and medium-term notes.

But the difficulties of mobilisingmunicipal borrowings have beenunderlined over recent months by thepostponement of the city of Dakar’splans to launch its inaugural $41.8m

municipal bond in 2015 and itsambitions of becoming the first city infrancophone West Africa to tap capitalmarkets to provide urban infrastructuredue to concerns raised by Senegal’sfinance ministry. Elsewhere in Africa,other governments appear reluctant toencourage sub-national debt.

At a national level, bond issues for Africaninfrastructure appear successful enough.Rwanda’s $20m bond, the third in a seriesto fund infrastructure projects, wasoversubscribed by 232%, the highest eversubscription recorded by anygovernment bond, while demand forKenya’s latest 12-year infrastructure bondwas double the $177m offered accordingto the Central Bank of Kenya.

Yet municipal debt appears to be more

difficult from several perspectives,notably in respect of sovereignguarantees required by internationalfinancial institutions. Clearly, asubnational entity and its governmentneed to be thinking along the same linesfor as long as such guarantees arerequired, which can be a challenge ifpolicies, strategies and priorities aredifferent at the central and subnationallevels.

Nevertheless, with increasingurbanisation across Africa and the hugedemand for infrastructure to sustain itsfast-growing mega-cities, the challengeof mobilising resources at thesubnational level by entities that are intouch with and focused on localinfrastructure needs would seem to be achallenge worth rising to. n


Subnational Financing

NigeriaNigeria’s states also play a significantrole in the provision of infrastructure,although a substantial amount ofstate funding still comes from thefederal government.

At end 2013 federal transfers to thestates accounted for more than 80% ofthe revenue for 32 out of 36 states.

While the federal government is themajor source of raising revenue,predominantly through oil receipts,the state governments havesubstantial autonomy ininfrastructure spending. Statebudgets are formulated andimplemented without approval of thefederal government.

Lagos state, with an estimated

population of 21m – 85% of which livein Africa’s largest metropolis – spentaround 1.1bn naira ($700m) a year oninfrastructure over the last eightyears according to StateCommissioner for Budget andEconomic Planning, Ben Akabueze.With a disbursement rate of around80%, this is consistent with the state’s2014 budget, which allocates the

calculations could be applied usingpublic contributions and donations toJohannesburg’s budget.

In other areas of the country thefunding mix varies considerably. In thecity of Tshwane’s original 2014 budget,national government contributionsaccounted for 47% of its capitalexpenditure requirement whileinternally generated funds amountedto only 13% of the requirement.

Subnational borrowings – which

accounted for 37% of Tshwane’s and19% of Johannesburg’s capitalexpenditure requirements – areextended to South African subnationalinfrastructure developers by some ICAmembers, notably DBSA, opening upthe risk for double-counting whenassessing total spending. Johannesburghas also looked to bond markets forinfrastructure funding with supportfrom DBSA and IFC for water andwastewater, electricity and roadsprojects.

Subnational spending among SouthAfrica’s utilities is also significant,although again some funding comesfrom government and ICA members.Eskom’s accounts for 2014 indicatecapital expenditure of around R60bn($5.6bn) per annum for the threeyears to March 2014. Transnet’s 2014accounts indicate capital investmentof R31.8bn ($3bn) in the year, of which77% went to South Africa’s railinfrastructure.n

Nigeria’s Use of Municipal Bonds for 2013 and 2014

State/LocalGovernment

Amount in millions of naira

(aprox $mequivalent)

Year ofissue

Year ofmaturity

Couponrate Project

Lagos StateGovernment BondSeries 2

87,500 ($561) 2013 2020 13.5%

Infrastructure developments: roads, rail, buildingsand bridges, health facilities, construction ofAdiyan Water Project Phase II and shorelineprotection works.

Niger StateGovernment Series 1

12,000 ($77)2013 2020 14.0%

For the construction of roads, completion of ShiroroBridge, development of the Garam site & servicesScheme, construction of an international marketand the completion of Three Arms Zone

Nassarawa StateGovernment Series 1

5,000 ($32)2013 2021 15.0%

For various development and infrastructuralprojects of the State- Education Project and MarketDevelopment Project.

Kogi StateGovernment Series 1

5,000 ($32)2013 2020 15.0%

To finance infrastructure projects including waterworks, housing units, multi-lane carriageway,construction of hospitals, development of KogiHouse and car parks.

Ekiti StateGovernment Series 1

5,000 ($32)2013 2020 14.5%

For bridge and road construction, rehabilitation ofIre Burnt Bricks Limited and the construction of ofEkiti-Kete Pavillion

Bauchi StateGovernment Series 1

15,000 ($96)2014 2021 15.5%

Part financing of Bauchi Specialist Hospital ,completion of Sir, Abubakar Tafawa BalewaInternational Airport and refinancing of bank loan

Source: Securities and Exchange Commission, Nigeria


Morocco The advanced regionalisationinitiative promoted by KingMohammed VI and endorsed inMorocco’s 2011 constitution sets outambitious plans to rebalance therelationship between centralgovernment and several levels oflocal administration. Reforms haveemphasised local governmentpromotion of private enterprise andpublic investment in critical sectorsincluding water and energymanagement, transportation,environmental improvements,education and health.

Central government views advancedregionalisation as a tool of economicgrowth. Morocco had alreadyembraced the concept of subnationalgovernment financing andmechanisms for subnationalinfrastructure funding throughstructures such as the Fondsd’Equipement Communal (FEC),which provides loans for specificinvestment projects and lines of creditfor financing longer-term developmentprogrammes. Credit lines have provedattractive to borrowers because theyprovide flexibility in terms of multi-year distribution.

Some of FEC’s financing activitiestarget infrastructure as defined by theICA, as it supports basic services thatmeet citizens’ daily needs, includingdrinking water and electricity, liquid

and solid waste purification,communal roads and urban transport,including the construction of roadsand public lighting. Borrowers includeprefectures and provinces, regionalbodies known as collectivitésterritoriales, metropolitan andautonomous (sectoral) authorities.

Borrowers from FEC must fulfilcertain conditions, including a debtratio of less than 40%; they must haveidentified sufficient revenueimprovements or expenditure controlsto service the debt, and shouldnormally participate by financing 20%of the project’s cost (although FEC canfinance up to 100% of the project costsfor some rural drinking water, roadsand electrification programmes).Fixed or variable interest rates startfrom 6.25%, on loans of up to 15 yearstenor.

FEC has held bank status since 1996,so it can act as a financialintermediary between the borrowerand financial markets. The bank isfinanced through credit lines, bondsand certificates of deposit. It can alsooperate beyond banking activities insome infrastructure areas and has aSupport Fund to mobilise expertise forurban transport, ICT and solid wastemanagement projects.

Morocco’s commercial metropolis,Casablanca, has obtained a MD930m($100m) FEC credit line to help fundits ambitious 2015-20 development

plan. The bulk of this will go to thesecond tramway (MD336m – $35m)and MD317m ($33m) for roads,notably work to convert the 45kmMohammedia-Berrechid road dualcarriageway (half funded by theregion and half by the Ministry ofInfrastructure). The rest of the FECfunding is allocated to spending oninfrastructure and other needs in 72less-developed areas of Casablanca,including linking main roads,electricity, potable water and sewageconnections to marginalisedneighbourhoods.

Casablanca has been looking to othersources, including the World Bank, topart-finance its 2015-20 developmentplan. The Urban Commune ofCasablanca has requested a $200mloan from WB, to be complementedwith around $350m from its ownfunds.

Moroccan utilities have long been theresponsibility of local administrations,with some major servicesconcessioned to private operators,such as the Casablanca power, waterand sewerage company Lydec – whichmanages a large investment budget –or its counterparts in Rabat, Tangierand Tetouan. Others regions havesuccessfully managed their servicesvia autonomous local agencies, forexample in Fes and Marrakech.n

equivalent of around $850m toinfrastructure projects. However, aportion of the $474m allocated ascapital expenditure to Lagos Office ofInfrastructure may fall beyond theICA’s definitions, but the remaining$376m pertains to ICA-definedinfrastructure projects.

State governments have historicallytapped what is the largest municipaland subnational bond market inAfrica, however, only one such bond

was issued in 2014. In 2013, theLagos State Government Bond –Series 2 propelled Nigeria into thenumber one position of Africancountries tapping this market. Thetable opposite (page 66) showsNigeria’s use of municipal bonds for2013 and 2014.

Other subnational infrastructureinvestors in Nigeria include AfricaFinance Corporation (AFC), owned bythe Central Bank of Nigeria and a

group of, mainly Nigerian, banks andinstitutional investors. In 2014, AFCcommitted to investments in MainOne – Tier III Data Centre in Lagos.The $52m data centre caters forgrowing local demand for cloud,colocation and disaster recoveryservices for high growth SMEs andlarge multinational corporationsoperating in the region. AFC alsoinvested in the construction of theHenri Konan Bedie Bridge, in Côted’Ivoire. n


6.4 China

At $3.1bn, Chinese lending to Africaninfrastructure projects in 2014 wassubstantially lower than in each ofthe previous three years, when itaveraged $13.9bn. The significantreduction in China’s commitmentsmay indicate a recalibration ofChinese investments in Africa’sinfrastructure.

One significant shift in China’sinvestment strategy was noticeable inMay 2014 when the AfDB and thePeople’s Bank of China (PBOC)entered into an agreement toestablish the $2bn co-financing AfricaGrowing Together Fund (AGTF). Thethen President of the AfricanDevelopment Bank Group, DonaldKaberuka, commented that “theAGTF will operate within thestrategic framework, policies andprocedures of the AfDB, including itsintegrated safeguards, therebyleveraging on the AfDB’s strengths.”

Resources from the AGTF are nowbeing used alongside the AfDB’s ownresources to finance eligible projects

in Africa. For example, in 2015 a$44.3m AGTF loan has been approvedalongside a $97.4m loan from theAfDB market window to supportTanzania’s efforts to ease congestionin the city of Dar es Salaam via thesecond phase of the Bus Rapid Transit(BRT) project.

Consistent with 2012 and 2013, asubstantial share of China’s totalcommitments went to transportprojects. China, primarily through itsExport-Import Bank, committed$2.1bn to transport, representingalmost 68% of its total lending for theyear. As a percentage share, thisfigure is consistent with previousyears’ lending.

In 2013, China lent $10bn to Africantransport infrastructure projects, justover $7bn of which went to railprojects in Kenya and Ethiopia.

However, the two largest Chinesecommitments in 2014 did go totransport projects. These were an$875m loan for the expansion of Côte

d’Ivoire’s Autonomous Port of Abidjanand a $700m loan to financeconstruction of a new airport inKhartoum, Sudan.

China committed $477m to energyprojects – about 15.4% of its totalcommitments in 2014. This figure isfar lower than both 2013 and 2012,when China lent $2.6bn and $5.2bnrespectively. It included a $41m loanto the Zambian government toconstruct electricity transmissionlines and a $136m loan to theTanzanian government for theconstruction of the 50MW Singidawind farm project. The largest loan,$299m, went to the Jerada coal-firedpower plant in Morocco.

At $411m, just over 13% of totalChinese commitments were committedto ICT projects. This is consistent with2013, when $424m was committed, buta substantial increase on 2012, whenChina lent only $148m.

In 2014, China lent just $108.5m –3.5% of its total lending – to water

Figure 52Chinesecommitments bysector, 2011-2014


projects. During the past severalyears, water projects on the continenthave not been a priority for Chineselending, and the 2014 figure issubstantially lower than 2013’s$361m, and 2012’s $1.3bn.

At $1.5bn West Africa accounted forthe greatest share (47%) of Chineseinfrastructure commitments in 2014.This was followed by East Africa,which received almost a third of totalcommitments with approximately$1bn. Southern Africa received some$259m (8%), while only $40m went toCentral Africa.

In 2014, China financed projects inNorth Africa whereas in the precedingtwo years there were no Chineseinvestments in the region. Aside fromthe Jerada power plant, Chineseinvestments in North African projectsincluded $17m to a water project inNouakchott, Mauritania.

Notably absent as investmentdestinations in 2014 were the largerresource-rich countries of Angola,DRC and Nigeria, which havepreviously been a focus for Chinesefinancing in Africa. Instead,Cameroon and Côte d’Ivoire, which

received $401m and $966.5mrespectively, benefited heavily fromChinese lending.

On an official visit to Ethiopia in May2014, Chinese premier Li Keqiangsaid in Addis Ababa that China wouldincrease loans to African countries by$10bn, on top of the $20bn alreadypledged, and that the China AfricaDevelopment Fund would be

expanded from $3bn to $5bn.

Keqiang also explicitly pledged toincrease investment in road, rail,telecommunications and powerprojects, and said that Chinesecompanies would be urged to workmore closely with Africangovernments and companies indeveloping the continent’s aviationindustry. n

China is working with severaldevelopment partners in the multi-donor $1.25bn Organisation de Mise enValeur du Fleuve Gambia (OMVG –Gambia River Basin DevelopmentOrganisation) Project to improveelectricity access and providerenewable, clean and affordable energyin the region. Export-Import Bank ofChina is supporting the projectalongside AFD, AfDB, BOAD, EIB, IDB,JICA, KFAED, WBG and thegovernments of Gambia, Guinea,Guinea-Bissau and Senegal.

Electricity supply in the OMVG region islimited, unreliable and costly accordingto AfDB. It says access rates vary from12% in Guinea, 19% in Guinea-Bissau,35% in Gambia to 60% in Senegal,

placing a huge burden on consumers inplaces with high unemployment andlimited prospects for growing newelectricity-dependent businesses. Theobjective of the project according tothe bank is, by 2020, to raise electricityaccess rates to 20% in Guinea, 42% inGambia, 65% in Guinea Bissau, and 75%in Senegal.

This project aims to help establish thebackbone infrastructure necessary, notonly for the OMVG region’s powerindustry, but also for the wider WestAfrican region. The progressiveintegration of isolated national gridsinto a unified interconnection systemaims to help make electricity moreaccessible, reliable and affordable forthose living in the region. n

OMVG Electricity Access Project

Figure 53Chinesecommitments byregion, 2011-2014


Members of the Arab Co-ordinationGroup (ACG) have consistentlyreported data for the ICA’s reports,notably the Islamic DevelopmentBank, OPEC Fund for InternationalDevelopment and the Saudi Fundfor Development. The data, whichprovides clear insights about thegroup’s activities each year, is a richaddition to the store of data onAfrica’s infrastructure financingand is gratefully received by theICA Secretariat.

The group committed almost $3.5bn toAfrican infrastructure projects in 2014,compared to $3bn in 2013. Consistentwith previous years, the IDB was thebiggest lender to infrastructureprojects, committing almost $1.3bn, orabout 37.4% of the group’s total toinfrastructure. In 2012, the IDB’scommitments amounted to some 31% ofthe group’s total, and in 2013, thisfigure was around 49%.

The IDB only made commitments toprojects in West and North Africa. The

split was weighted marginally infavour of North Africa, which receivedjust under $669m. West Africareceived about $624m (48.3% of totalfunding).

In terms of sectors, the IDBcommitted some $635.3m to energyprojects (just over 49% of totalfunding), $599.3m to transportprojects (46.3%) and $58.3m to waterprojects (4.55%).

In 2014, the AFESD was the secondbiggest funder, making $881m ofcommitments, equivalent to 25% ofthe ACG’s total. The AFESD made sixloans, all larger than $100m.Consistent with previous years, theinstitution lent only to projects inNorth Africa.

Overall, North African projectsreceived the majority of funding fromthe ACG, with just over $2bn, or 58.4%of the group’s total. This is consistentwith previous years: $1.6bn in 2013and $2.6bn in 2012.

West Africa received $908m, just over26% of the group’s total, and EastAfrica received $362m (10.5%). Eastand West Africa have receivedsubstantial commitments from thegroup in previous years.

Commitments from the group toCentral and Southern Africa were$79.2m and $85.7m respectively,representing a commitment of about2.5% of the group’s total. This issubstantially less than the sameregions received during the previoustwo years.

In terms of lending to sectors, energyprojects received the most in 2014,with $1.6bn (48.1%). Historically, thepower sector has been a major focusfor lending from the ACG. During2013 and 2012, energy projects alsoaccounted for the largest amount ofArab financing with 42.6% ($1.4bn) in2013 and 46.2% ($1.8bn) in 2012. Inpart, this is a consequence of Arabianprivate sector interest in Africa, withcompanies such as Saudi-based

6.5 Arab Co-ordination Group

Figure 54Arab Co-ordinationGroup (ACG)commitments 2012-2014, bysector and region

Arab Co-ordinationGroup Members

Arab Fund forEconomic and SocialDevelopment,Islamic DevelopmentBank, Kuwait Fund forArab EconomicDevelopment,Abu Dhabi Fund forDevelopment,OPEC Fund forInternationalDevelopment,Arab Bank forEconomicDevelopment inAfrica, andSaudi Fund forDevelopment.


ACWA Power undertaking substantialpower generation projects on thecontinent.

Transport projects received the nextlargest amount, at $1.2bn, or 33.7% oftotal commitments. This was followedby water projects, which received$621.4m (around 18%). These figuresare consistent with those in 2012 and2013, when the group committed28.2% and 31.9% of the totalsrespectively. Water accounted for19.5% in 2012 and 18.5% in 2013.

Conversely, and notwithstandingArabian private sector investments inAfrican telecommunications, ICT hasnever featured prominently in thegroup’s lending to the continent. In2014, the group made no commitmentsto African ICT projects. Only $207mwas committed in 2013, and $15.6m in2012.

The funding focus of the ACGcontinues to expand beyond the NorthAfrican countries with which it hascultural and linguistic ties. West andEast Africa have now emerged asmajor focus points. n

Figure 55Arab Co-ordinationGroup (ACG)commitments2010-2014, byinstitution

Arab Co-ordination Group Selected Commitments 2014

Project Institution Country Sector Commitment($m)

Development of Sharm El-Sheikh Int'l Airport (Phase I) IDB Egypt Transport 226.8

Assiut (El-Walidia) ThermalPower Plant Project OFID Egypt Energy 220

Asioud Power Station AFESD Egypt Energy 193.9

Olama-Kribi Road Project –Olama-Bingambo Section IDB Cameroon Transport 183.6

Actouka Ait Baha Irrigation AFESD Morocco Water 176.3

Egypt-Saudi Arabia PowerInterconnection AFESD Egypt Energy 158.7

Maria Gleta Power Plant IDB Benin Energy 157.9

Nouakchott Solar Power Plant AFESD Mauritania Energy 105.8

Expansion of Cairo WestThermal Power Station KFAED Egypt Energy 105.8

Financing of Assuit (Walidia)Thermal Power Station KFAED Egypt Energy 105.8

Road projects in Amhara andOromia Regions ADFD Ethiopia Transport 96.4

Upgrading of Kantchari-Diapaga-Benin Border Road IDB Burkina

Faso Transport 84.4

Investment by non-ICA memberEuropean bilaterals in Africa wassubstantial in 2014 at more than$1.3bn, around $300m of which wasinvested in funds. Of totalinvestment, 66.6% ($876.8m) wascommitted to infrastructureprojects.

Investment in infrastructure was notevenly spread across sectors, withenergy again the focus havingaccounted for 68% of infrastructurespending, while only 3% wascommitted to ICT projects, downsignificantly from the previous year.The remaining 29% was committed tomulti-sector projects, a significantincrease from the previous year. Like2013, no investments were made inwater projects by non-ICA memberEuropean countries in 2014, whiletransport also did not attract anyinvestment.

West Africa attracted the greatestamount of financing from non-ICAbilaterals in 2014, which at 20.2% wassignificantly up on the previous year.Both East and Southern Africa saw10-11% of commitments, while verylittle was invested in Central Africa

(3.8%). Investments in North Africawere minor at less than a percent,while there was no investment madein South Africa.

Some 54.7% of investments weremade in Pan-African projectsincluding Netherlands developmentbank FMO’s investments in regionalfunds Investec Africa Private Equity($35m) and Emerging AfricaInfrastructure Fund ($25m). A majorregional investment saw Norfund andBritish development financeinstitution CDC take control of Africa-focused UK power developer Globeleqfrom private equity investor ActisInfrastructure II Fund with CDCtaking a 70% stake and Norfund 30%following a $285.6m equityinvestment from the Norwegian DFI.

Among Globeleq’s portfolio is itsrecently acquired 216MW Kribi and88MW Dibamba power plants inCameroon. It has 1,095MWgeneration capacity across Cameroon,Côte d’Ivoire, Kenya, South Africa andTanzania.

The Netherlands and Norwaydominated investments in

6.6 Non-ICA Member European Sources


Figure 56

Non-ICA member Europeancommitments by sector, 2014

Figure 57

Non-ICA member Europeancommitments by region, 2014


infrastructure projects in 2014,accounting for 48% and 33%respectively. Finland’s FinnFundcommitted $75m (9%), while BIO-Invest of Belgium accounted for 6% ofinfrastructure investments, all withinthe energy and ICT sectors. Belgiancommitments included Bharti AirtelAfrica and a $13.3m investment in theAfrica Renewable Energy Fund.

Investments in energy in 2014 mainlycomprised a small number of largeprojects. 19 investments in energyprojects were made with an averagesize of $28.9m, compared with anoverall average of $13.2m.

DFIs have assumed an increasinglyimportant role in supportinggroundbreaking projects intended toset precedents in the energy sector,with three particularly importantprojects committed to in 2014. FMOprovided $35m to the 300MW LakeTurkana wind power project in Kenya(see page 85), alongside $4.7mcommitted to the project through theInteract Climate Change Facility.

The DFI also committed $40m to the450MW Azura-Edo gas power plant inNigeria, a project which is showing

the path for future power plantdevelopments in the country. It issupported by an impressive range ofprivate sector and DFI sponsors,including Nigerian-led Amaya capital,US investment fund American CapitalEnergy & Infrastructure, MacquarieGroup, Old Mutual’s AfricanInfrastructure Investment Fund 2,UK-based developer AldwychInternational, Nigeria’s Asset andResource Management Ltd and theEdo State government. The WorldBank approved two partial riskguarantees for the project.

Belgium’s BIO-Invest is investing$14.3m in a greenfield hydropowerproject in Uganda which is expected toproduce 28GWh each year. The damwill cross a narrow valley and create anumber of local jobs. As one of the firstprivately owned power developmentsin the country, the project will play animportant role in increasing the flowof private investment into the sectorby providing proof of concept.

Only a small number of investmentswere made in the ICT sector in 2014.FMO invested $20m a piece in EconetGlobal Ltd in Zimbabwe and IHSRwanda Ltd. The financing provided

to Econet will be used to expand two ofEconet’s subsidiaries in Zimbabwe,EcoCash and Solarway, while theinvestment in IHS Rwanda will gotowards rehabilitating and expandinga large number of cellular telecomstowers and rooftop antennaspurchased from MTN Rwandacell.

The DFI is also contributing $6.6m tothe expansion of the mobile phonetower network in the DRC. Around60% of the new sites will be located inrural areas, making the project animportant step forward in ruraldevelopment. n


Figure 58Non-ICA memberEuropeancommitments bycountry andsector, 2014

Figure 59

Non-ICA European commitments bycountry, 2014

Africa’s regional developmentbanks committed $1.6bn toinfrastructure projects across thecontinent in 2014. This is a decreaseon 2013’s $2.2bn.

The biggest contribution from anAfrican regional development bankcame from the DBSA, which committeda total of $978m in 2014. The biggestchunk of this ($789m) was directedtowards projects in RSA, while theremaining $189.2m was committed toprojects elsewhere in Southern Africa($136.2m) and West Africa ($53m).

DBSA’s pan-African outlook isdemonstrated in its commitments anddisbursements in 2014 such as itsproject preparation funds forinfrastructure development or projectpreparation in Zambia, Mozambique,Zimbabwe, DRC, Rwanda and Burundi.

In 2014, the EADB emerged as afunder of the Lake Turkana WindProject (LTWP), providing $6.7m ofmezzanine finance to what will beAfrica’s largest wind farm. The EADBcommitted $38.8m to infrastructureprojects in 2013.

PTA Bank, which in 2014 became anew institutional member of theInternational Development Finance

Club, committed $13.3m of senior debtand $13.3m of mezzanine finance toLTWP. In November 2014, PTA Bankconcluded a milestone internationalsyndicated loan with leadinginternational banks. Launched inFrankfurt with a target of $200m, thefacility closed at $320m, 1.6 timesoversubscribed, and yielding morethan double the $150m raised in thebank’s 2012 debut facility. The facilitywas priced about 25% below the 2012issue, reflecting the bank’s improvedcreditworthiness.

The bank’s international syndicatedloans and Eurobond issues are part ofits wider resource mobilisation thrustthat entails short to medium-termfundraising from international capitalmarkets for cross-border and othertrade as well as longer term fundingfrom specialised developmentfinancing partners for high impactdevelopment financing in areas suchas renewable energy and cross-borderpower and transport infrastructure.

On the back of its syndicated loan, PTABank closed a new and substantialfunding partnership with the EIB topromote private sector lending. TheEIB and PTA Bank will each provide€80m ($109m) for the new initiative

that represents the largest singleprivate sector lending scheme everbacked by the EIB in Africa.

In January 2014, Germandevelopment bank KfW and PTABank signed an agreement underwhich KfW will provide PTA Bankwith a $60m loan to help the latterfund companies in the COMESA,SADC, and EAC member states tohelp them finance climate-friendlyinvestments in renewable energy andenergy efficiency measures.

BOAD, with total commitments of$447m, committed $363m or 81% ofits infrastructure financing to thetransport sector. Around $61m (17%)was committed to energy projects,while some $23m (6.3%) wascommitted to water projects. BOADmade no commitments to ICT projectsduring the year under review.

The ECOWAS Bank for Investmentand Development (EBID) committed$76.6m to West African infrastructureprojects in 2014. Of this, some $56.6m(74%) went to transport projects, andalmost $16m (21%) went to energyprojects. The bank made just onecommitment of $4m (5.2%) to waterprojects. n


6.7 Regional Development Banks

Figure 60Regionaldevelopmentbankcommitments,2014


IndiaIn 2014, Indian loans to Africaninfrastructure projects, all ofwhich are extended via lines ofcredit from the country’s Export-Import Bank, amounted to$423.9m, substantially less than in2013 and 2012, when it extended$761m and $667m respectively.

Indian funds went only to Central andWest African countries, which received$171.9m (40.6%) and $252m (59.5%)respectively.

Exim Bank extended eight lines ofcredit in 2014. The largest of thesewas $100m for power infrastructure inNigeria. It also extended an $89.9mline of credit aimed at improving thetransport system in Republic ofCongo.

Consistent with Indian lending in2012, when Africa’s energy sectorreceived the majority of funding,energy projects benefited from$286.5m in lines of credit in 2014.Transport projects, which hadreceived the lion’s share ($450m) in2013, received just $89.9m. Water

projects received $47.5m in lines ofcredit during 2014.

The Indian government had plannedan India-Africa Summit in New Delhifor December 2014, but the event waspostponed due to concerns about thespread of the Ebola virus. The summit,which included a number of Africanheads of state, was held in lateOctober 2015.

BrazilBrazilian development bank BancoNacional de DesenvolvimentoEconômico e Social (BNDES)committed $503.4m to Africaninfrastructure projects in 2014. Thebank made no commitments in 2013,but lent $530m in 2012.

BNDES’s 2014 figure was comprisedof three fairly large individual loans:a $146.5m export credit facility to thegovernment of Angola for the2,067MW Lauca hydropower project,a $36.9m export credit facility forAngola’s Kwanza Sul ruraldevelopment project, and a $320mloan for Mozambique’s Moamba-Majorhydro project.

Consistent with 2012’s lending,BNDES extended finance only toLusophone countries, where themajority of Brazil’s private sectorinvestment is focused.

South KoreaSouth Korea’s Export-ImportBank made loans to Africaninfrastructure projects via itsEconomic Development Co-operation Fund.

In 2014, it committed some $206m inthe form of two loans: almost $115mfor the modernisation of Egypt’srailway signalling system, and $91mfor the construction of SelanderBridge in Dar es Salaam, Tanzania.

The 2014 figure is higher than the$175.4m (two loans) committed in2013, but significantly lower than the$677m committed in 2012.

South Korea has consistently targetedtransport projects, with its 2013 loansgoing to road projects in Mozambiqueand Ethiopia. n

6.8 Other Sources of Finance

Figure 61Commitments byBrazil (2012 and2014) and India(2012-2014)


The number of projects with privatesector participation reachingfinancial close as recorded in thePrivate Participation inInfrastructure (PPI) ProjectDatabase, a joint product of theWorld Bank’s InfrastructureEconomics and FinanceDepartment and the PPIAF,declined from $8.8bn in 2013 to$5.1bn in 2014. Of this, $2.9bn wasfinanced by the private sector withthe remainder financed bydevelopment finance institutions.

Contributing to the decline are twofactors: the absence of large portinvestments in Nigeria reported in2013 and the postponement until 2015of the fourth bidding round of South Africa’s Renewable EnergyIndependent Power ProducerProcurement programme, scheduledfor 2014.

However, the attractiveness of powerprojects held up, with the energysector the major recipient of financefor infrastructure projects closed in2014. Total investments reaching

financial close in the sector grewslightly from $4.5bn in 2013 to $4.8bnin 2014.

There was a resurgence in ICTprojects in 2014, with Viettel startingoperations in Cameroon, and Kenya’sAga Khan Fund for EconomicDevelopment-backed and IndustrialPromotion Services (IPS)-ownedSmart Telecom opening subsidiariesin Tanzania and Uganda as part of its$300m East Africa expansion,according to IPS. This figure, however,was not entered in the PPI database.

Of the power projects involvingprivate capital that dominatedinfrastructure investment in 2014, thelargest single investment was inMorocco’s 1.3GW coal-fired IPP atSafi, which is estimated to cost $2.6bn.Project owner Safi Energy, whoseequity is owned by Japan’s Mitsui,France’s Engie (formerly GDF Suez)and Morocco’s Nareva Holding, raisedprivate debt finance through anumber of Japanese and Moroccanbanks supported by donor fundingfrom the IDB and JBIC.

Japanese commercial banks alsohelped finance Cenpower’s 340MWKpone IPP in Ghana. SumitomoCorporation is a major shareholderin the $900m greenfield project,alongside Lagos-based AFC,Australia’s Macquarie InfrastructureGroup and South Africa’s Old Mutual.

According to the PPI database, eightpower projects reached financial close,half of them in East Africa. GigawattGlobal closed a $23.7m financing inFebruary 2014 for the 8.5MW solarPV plant at the Agahozo-ShalomYouth Village in Rwanda, withcommissioning of the plant achievedin a record 12 months. Private debtwas provided by FMO and London-based Emerging Africa InfrastructureFund. Finance from Norway played aprimary role in the project, withNorfund providing mezzanine debtand equity investment. Otherinvestors included EPC contractorScatec Solar and Norway's largestpension fund KLP through a jointventure with Norfund. Grants werereceived from OPIC’s Africa CleanEnergy Finance Initiative and from

7 Private Sector Financing

7.1 OverviewCopyright The World Bank Group/Rob Beechey


Finland’s Energy and EnvironmentPartnership.

After years of development, theAldwych International-led 300MWwind farm project at Lake Turkana inKenya finally closed at €623m. (seepage 85). Kenya also saw the year’sonly wholly domestically owned powerplant reach financial close. Localcompanies Gulf Energy Limited(GEL) and Multiple Hauliers secured$95.5m, according to the PPIdatabase, to build, own and operate an80MW heavy fuel oil plant on the AthiRiver, 25km from Nairobi. Thegreenfield project was awarded a 20-year PPA and obtained a €20.7m($27.6m) loan from the IFC whicharranged a further €20.7m ($27.6m)loan from Standard Bank.

Gigawatt Moçambique’s 100MW gas-fired power plant at Ressano Garciaclosed at $212m, with equityownership from South Africa’sGigajoule, Old Mutual andconstruction company WBHO.

Senegal was the location of choice forContourGlobal, which closed a 53MWgas-fired project at $172m, whileLebanon’s Matelec closed the 96MWTaiba Ndiaye power plant at €123mwith the help of the equity holder IFCInfraVentures and IBRD.

Only one water infrastructure projecton the PPI database reached financialclose in 2014. Spanish energy andwater outfit Abengoa’s $114mdesalination plant at Agadir inMorocco was financed alongside localpartner InfraMaroc (part of the CDGCapital Infrastructures group) andwith €82m ($109.4m) of debt raisedfrom a consortium of local banks ledby Banque Marocaine du CommerceExtérieur. The project will be operatedon a 20-year build, own, transferbasis.n

*The PPI database was used for projectidentification, however technical and financialdetails were sourced, where possible, fromproject participants’ data in an endeavour tobe accurate and as consistent as possible withdata presented elsewhere in the report.

PPI Projects Database

Figures 62-64Private sectorprojects reachingfinancial close in2014 (top); Privatesector financingby region, 2014(left); Privatesector financingtrends by sector,2010-2014 (right)

Figures 65-66Total value of projects with private sectorparticipation, 2010-2014 (top); Sources offinancing of projects with private sectorparticipation, 2014 (bottom)


This is the third year the ICAAfrican Infrastructure InvestmentSurvey has sought to gauge theviews of the private sector towardsinvesting in infrastructure projectsin Africa. A total of 69 respondentsparticipated in the survey.

Investment DestinationsKenya and South Africa ranked jointfirst as the most attractivedestinations for private capital inAfrica’s infrastructure. The twocountries have occupied two of the topthree slots for three years now, withSouth Africa consistently top of therankings while Kenya has tradedplaces with Nigeria for second.

Nigeria maintained its high averageranking, but fell to third mostattractive country for investment,with other established markets suchas Botswana and Tanzania appearingin the top ten. Signifying the appeal ofEast Africa, Ethiopia again rankedhighly, while Uganda re-entered thetop ten in 2014 after an appearance in2012 and an absence in 2013.

Ghana, which ranked third in 2012and fourth in 2013, dropped down theorder slightly. Both Rwanda and therapidly recovering Egypt, which is

seeing ever increasing levels of foreigninvestment, continue to rise in theopinions of private investors, andappear to be contenders to break intothe top ten in the coming years.

ChallengesWhen asked to rank their topconsiderations when deciding toinvest, respondents continued, as theydid in 2013, to rank project feasibilityand risk as their top considerations,while country and political risk wasonce again in the top three.

In naming the greatest challengesfacing private sector investors,respondents to the 2014 surveycontinued to rank political will andpolicy uncertainty (17.4%) andcorruption and transparency (15.1%)in their top three. However, thedifficulties of obtaining finance was nolonger their greatest concern, which atonly 6.9% dropped out of the top four,perhaps indicating an increasingavailability of finance for Africaninfrastructure projects.

The majority (19.5%) consideredbureaucracy and delays the singlegreatest challenge, a significantincrease from the previous year whenonly 9.9% ranked this as their main

concern. A lack of institutionalcapacity was deemed the fourthgreatest challenge.

Consistent with 2013, credit andpayment concerns remained thegreatest risks in 2014 for privateinvestors to mitigate in order to ensurefinancing. Corruption and lack oftransparency was deemed the secondgreatest risk in need of mitigation,having ranked fifth last year.

Despite the need to mitigate creditand payment risk, sometimes this isnot possible. Respondents to thesurvey provided examples of a rangeof risks that could not be mitigated,from sourcing finance to the paying ofpenalties.

One respondent called for a rethink ofhow lenders look at Africa if access tofinance is to become easier.“Perceptions by international andmultilateral agencies tend to makeAfrican projects even more costly tofund, particularly the debt funding forproject finance of an SPV,” therespondent said, and suggested that,“the solution was to increaseparticipation of local investors to helpreduce risk perceptions and allayfears.” But another private investorsaid that the “lack of local expertise

7.2 Private Sector Survey: Investment Considerations

Figure 67Countries mostattractive forinvestment: Top10 countries (left),and top three firstchoice investmentdestinations(right)


coupled with local content demandsare unachievable.”

Delays outside of the private sectors’control are a major challenge. “We endup paying penalties under the PowerPurchase Agreement if the CommercialOperation Date is extended beyondwhat was agreed in the PPA,” onerespondent said. “Currency fluctuationsimpact negatively on long term equityinvestments,” according to anotherrespondent.

Despite the challenges faced by theprivate sector when it comes toinvesting Africa’s infrastructure whichcannot be overcome, most surveyrespondents said that these risks werenot deal breakers, and instead factoredthem in to the project costs.

Project DelaysAlmost half of respondents to thesurvey reported delays in projects ofover one year, with less than 3%

saying they had experienced nodelays. While some private sectorinvestors said delays are not unusualin infrastructure projects, manycauses were given reflecting thecommon challenges facing Africa.These range from mismanagementand corruption, to a lack ofgovernment will and insufficientinstitutional capacity, leaving privatesector players with the additionalchallenge of “educating localparticipants in the requirements forsuccessful project development”.

With infrastructure investmentrequiring input from so many publicand private sector parties, thealigning of interests continued to be afrequent cause for delays in theimplementation of projects in 2014.Political support for a projectcontinues to be crucial if it is toprogress sufficiently smoothly andefficiently to meet set timeframes.

One investor was particularlyfrustrated by the lack of support forprojects not deemed a ‘priority’, saying“project progress tends to becontingent upon political support,rather than simply institutionalcapacity. Priority projects get done,lower priority projects don't even getpermitted.” n

Figure 70Delays experienced in Africaninfrastructure projects

Figure 68Greatestchallenges facingprivate sectorparticipants inAfricaninfrastructureprojects

Figure 69Risks whichinvestors wereunable to mitigate


Public Private Partnerships (PPPs)are becoming increasingly viewedas an effective way to mitigate someof the risks associated with purelyprivately backed projects in Africa.By involving public sector partners,some of the bottlenecks leading todelays and difficulties can beunblocked.

Some 40% of respondents to the 2014African Infrastructure InvestmentSurvey revealed they haveparticipated in PPP infrastructureprojects in Africa. Encouragingly, themajority (66%) of this group describedtheir participation in PPPs as “apositive experience.” Some 24%described their PPP experience asbeing mixed, while only less than 10%felt their circumstances in PPPs wereless than ideal. Despite this generallypositive view, some private sectorparticipants described a wide range ofexperiences. “Some have been verypositive, others challenging to thepoint of being incapable of execution,”one respondent said.

Respondents to the survey certainlyagreed that obtaining public sectorsupport helps expedite a privatesector-backed project, however a lackof political will or policy uncertaintywas the number one barrier in theimplementation of PPPs (see Figure71). Major constraints identified byrespondents included establishing a“clear distinction of roles andresponsibilities”, “poor governmentreaction”, and a “lack of mutual trust”.One respondent highlighted “gettingall interests aligned, particularlybetween public and private sectors” asa major barrier in progressing andestablishing a successful PPP project.

A lack of institutional capacityfeatured high on the list of privatesector concerns. “Unrealisticgovernment expectations”, a “lack of

skilled manpower”, and a “lack ofunderstanding of risk allocationbetween both the private and publicsector” were given as constrainingfactors by respondents, with oneprivate sector investor arguing that“building institutional capacity ingovernment is key” to resolving thisconcern.

Reaching common ground andunderstanding the financingstructures in projects are alsochallenges.

“Government understanding of thefiscal implications of a PPP model – forexample a public sector comparator”—a tool used by governments todetermine an appropriate serviceprovider for a public sector projectestimating the cost the governmentwould pay if it delivered a service itself– was “particularly important to getprojects moving.”

Financial risk was the third greatestchallenge faced by private investors inPPPs according to surveyrespondents. Lack of financial supportfrom government along with, typically,a “lack of a suitable currency for thefinancing to match the currency ofincome from the project” werefrequently noted as major concerns.The precarious financial state of someAfrican public sector utilities anduncertainty over receipt of paymentsare also factors that need to beaddressed for investors to becomesufficiently confident they will get areturn on their investment.

The regulatory environment andcorruption and transparency were ofless of concern to investors in PPPswhile bureaucracy – often viewed as aserious challenge to private sectorinvestors in Africa – was of leastconcern in PPPs compared to otherfactors according to survey responses.

According to the majority ofrespondents, “realism”, “honesty” and“transparency” are the mostimportant qualities they expect frompublic sector partners. The “appetiteto execute” and for “projects to not bepolitically controlled” also featuredprominently. “Predictability” and“consistency” were unsurprisinglyalso common demands.n

7.3 Private Sector Survey: Public Private Partnerships

Main Factors Affecting PPPSuccess or Failure:

“Uncertainty that the projectswill be ring-fenced by thegovernment, i.e. no change inpolicy towards the project bynew policy makers”

“Taking the right amount oftime to structure a deal”

“Governments can be over-ambitious and the projectsbecome too complicated and donot succeed”

“Sustainable and long-termagreements are crucial”

“The need for financiallysound off-takers”

Figure 72Experience ofparticipating inPPPs according tosurvey respondents

Figure 71Main factors affecting implementation ofPPPs


The 2014 African InfrastructureInvestment Survey providesinsights into potential trends ofprivate capital flows to the variousinfrastructure sectors over the nexttwo years. The energy sector looksset to continue as the major area ofactivity with 88.7% of respondentssaying they intend to increase theircommitments in that sector, while75% also said they would investmore in transport.

Of the remaining two ICA-definedsectors, 64.3% of respondents saidthey would invest more in water andsanitation and 50% intend to increasespending on ICT. Few investors intendto be less active – just 9.1% ofrespondents said they would investless in ICT while fewer than 5% planto decrease investments in water andenergy operations. No respondentssaid they expected to reduce spendingin transport.

In line with 2013 findings, debt/equityand corporate finance remain thegreatest sources of financing forprivate sector projects, althoughbilateral/multilateral and officialdevelopment assistance was bothavailable to and used by many privatesector investors. Public sector supportwas readily available to a largepercentage, but only two-thirds tookup this option.

Almost one quarter of respondentssaid they intended to remain in theirinvestments for the long run and hadno exit strategy planned. However, themost popular exit strategy amongsurvey respondents was an initialpublic offering on a stock exchange.Some 23% looked to exit fully to a newinvestor, while 18% planned a gradualsell down of equity.

Investors continue to experiencesimilar internal rates of return (IRRs)as they did in 2013. The majority of

investors report experienced IRRs asbetween 15-20%. The averageexpected IRR for future projects is20%, slightly higher than experiencedand equal to the percentageanticipated by respondents in lastyear’s survey. However, the rangebetween the lower and upper quartilein terms of anticipated IRRs haswidened slightly to between 13-25%.Respondents were also asked for theirideal IRRs on future projects, which,at an average of 20%, interestinglymatched the rates they anticipate onprojects in their current portfolio. n

7.4 Private Sector Survey: Market Trends

Figure 73African portfoliointentions overthe next two years

Figures 74-75Sources of projectfinance (left);Equity exitstrategies (right)

Figure 76Internal rate ofreturn on Africaninfrastructureinvestments(below)


Public-private partnerships (PPPs)are central to Senegal’s endeavoursto establish and sustain aninvestment environment conduciveto private investors and DFIsparticipating in the country’sambitious $25bn infrastructuredevelopment programme.Comprising road, rail, energy andwater projects, it aims to sustainablydouble economic growth from anannual 3.5% in 2013 to an average of7% in the period 2014 to 2035, andcreate 600,000 formal jobs.

To attract investors to around twodozen major infrastructure projects,Senegal has made substantialreforms, including the enactment in2014 of a law on PPPs. This led to thecreation of a Directorate of Fundingand PPPs and a National PPPCommittee, both falling under theauspices of the new Ministry ofInvestment Promotion andPartnerships. The InvestmentPromotion Agency is located in thesame ministry.

Senegalese officials anticipate thatone of the first PPPs to beimplemented under the new law willbe a desalination facility just outsideDakar, which should attract acombination of DFI and privatefunding. The facility has targeted acapacity of at least 50,000m3 per dayagainst a current estimated supplygap of 18,000m3 per day in Dakar.Production of up to 88,000m3 per dayis anticipated by 2020, even with noadditional investment. Thegovernment is selecting a potentialsite with the support of externalconsultants funded by the WorldBank. Senegal aims for the new plantto be on line by 2019. This shouldprove attractive to investors, as large

water equity investments have anaverage 35% return, according to aSenegalese official.

National water company SociétéNationale des Eaux du Sénégal(SONES) undertook a preliminarymarket sounding and the response waspositive, with many expressions ofinterest.

Senegal already has a model PPP in itswater sector with Sénégalaise des Eaux(SDE). The company does not own thewater system but produces anddistributes potable water under a leasegranted by the government in 1996.Senegal has a relatively high level ofwater access for sub-Saharan Africa,and the PPP is seen by the World Bankas “a model of public-privatepartnership in sub-Saharan Africa”.

A track record in establishing PPPsshould stand Senegal in good stead inits search for private sector partners.In 2013, the Dakar-Diamniadio tollroad became the first highway fundedunder a PPP arrangement in sub-Saharan Africa. The PPIAF providedtechnical assistance to the governmentand played a decisive role in thefinancing and execution of the highwayproject. Several other PPPs are up andrunning in the ports, aviation and roadmanagement sectors.

Regional PIDA DimensionsSenegal’s current raft of around 18prospective PPP projects aims to fulfilnational objectives and fit withregional and pan-African ambitions. Anew Dakar-Bamako southern railwayline is part of a PIDA project, theDakar-Niamey Multimodal Corridor.It aims to facilitate the movement ofpeople and goods across the borders ofSenegal, Mali, Burkina Faso andNiger, and will assist in the

modernisation of the multimodalAfrican Regional TransportInfrastructure Network (ARTIN)Corridor in West Africa. ARTIN’spurpose is to link large Africancentres of consumption andproduction with the rest of the worldvia modern and efficient regionaltransport infrastructure networksand gateways. The project falls withinthe scope of the ECOWAS.

From a continental perspective, theDakar-Bamako southern railwayproject fits NEPAD’s objective toimprove landlocked countries’ accessto seaports to increase intra-Africantrade and regional integration. At aregional level, it aims to increases theuse of railways as a proportion of allmeans of transportation in order toreduce transport costs and improvethe region’s competitiveness.

For Senegal, the railway is part of anintegrated railway-port-miningproject that aims to enable theexploitation of 2m tonnes per year ofphosphates and 15m tonnes per yearof iron ore in Eastern Senegal. Therailway would transport minedmaterials to a greenfield multi-commodity bulk port inBargny-Sendou, south of Dakar.Senegal has prioritised the portdevelopment to increase its importcapacity for bulk materials includingcoal for energy generation, and toserve as the export terminal for thefuture development of phosphatereserves in Senegal and bauxitereserves in Mali. The railway mayeventually run deeper into thecontinent to enable bauxite fromGuinea to reach the bulk port.

The West African Economic andMonetary Union (WAEMU) iscommitted to financing preliminary

8.1 Senegal

Harnessing Public-PrivatePartnerships


studies, and two round tables ofinvestors were organised by WAEMUin Dubai in September 2014 and inDakar in February 2015. Senegal andMali are also discussing proposals forcollaboration and funding withprivate companies. Senegaleseofficials hope that a PPP model can beemployed to realise the project.

A PPP model is also envisaged for anew Bus Rapid Transport system inDakar with two intersecting lines.

Also in the transport sector, Senegal islooking for investors for its RapidRegional Train system that willprovide a semi-direct service betweenDakar and the new Blaise DiagneInternational Airport. The projectincludes the renovation andconstruction of infrastructure.

Renewable energy projects leveragingprivate capital are emerging inSenegal too. American Capital Energy

& Infrastructure (ACEI) hasannounced a landmark commitmentto invest in Senegal's first industrial-scale wind power project, producing151.8MW of electricity. The facility atTaiba Ndiaye, 75km from Dakar, is thelargest wind farm planned in WestAfrica. Total capital cost is estimatedat €305m, with ACEI anticipating anequity investment of €76m and theremainder expected from senior andmezzanine lenders.

InfraCo Africa is also developing twowind farms in Senegal, each with anominal capacity of 50MW. Theelectricity will be sold to nationalpublic utility SENELEC. Theapproximate cost of the project is$150m, with capital provided by theWorld Bank alongside developmentagencies in Austria, Ireland, theNetherlands, Sweden, Switzerlandand the UK.n

PPP Model : New Bus Rapid Transport System, Dakar

Estimated Investment Costs ($ m)

Red Line (19km) Green Line (34km)

Low Estimate

High Estimate

Low Estimate

HighEstimate

Infrastructure & Equipment(State) 125 182 163 250

Rolling Stock(Private Operator) 46 67 54 83

Figure 77Senegal’s existingand proposed railinfrastructure


Kenya is adding extra generationcapacity to its power sector withsome landmark large-scalerenewable energy projects. With only5% of the rural population able toaccess electricity, a steadily growingportfolio of – often innovative andlocally created – off-grid solutionsare also playing a key role in Kenya’srenewables programme.

Currently, Kenya’s energy mix reliesheavily on climate-dependant,therefore erratic, hydro (48%) toproduce much of the nation’selectricity. Fossil fuels account for anadditional 38%, while geothermalprovides 12%, bagasse 2% and wind0.3%, according to the KenyaRenewable Energy Association.

This mix will change substantiallywhen a raft of landmark projects comeonline, including the Lake TurkanaWind Project (see right), which in 2014reached financial close.

Other recent landmarks include a$2.2bn agreement to develop solarprojects with combined capacity of1GW. The deal between Canada-basedSkyPower and the Kenyan Ministry ofEnergy is structured in four phases tobe rolled out over the next five years.Social and economic impacts arecritical components: the deal aims to

create more than 25,000 total jobyears and includes 200MW offabrication and assembly facilities.SkyPower will also donate – under theKenyan government’s guidance – 2mhome solar kits comprising a solarpanel and inverter, as well as LEDbulbs, a fan, USB-chargingcapabilities and a radio. Theagreement includes a $173mcommitment to education, training,and research and development.

General Electric Africa has signed upto a $155m deal with Kipeto EnergyLtd to develop a 100MW wind farm inKajiado County, 50km north ofNairobi. Kipeto Energy will build, ownand operate the plant under the termsof a PPA signed with national utilityKenya Power. GE will provide 60 windturbines and has signed a 15-yearservice agreement. Kipeto is owned byAfrica Infrastructure InvestmentManagers, Craftskills Wind EnergyInternational, the InternationalFinance Corporation and the Maasaicommunity of Kipeto. OPIC is the solelender, agreeing to provide $233m.

OPIC is providing a $950,000 grant toKenya-based renewable energydevelopment company Akiira One Ltdto finalise preparation for a geothermalpower project with an initial

generation capacity of 40MW. Theproject, to be sited next to the Olkariageothermal fields, could ultimatelyproduce up to 140MW. The grant willfacilitate the procurement ofconsultants to complete technical andlegal work required ahead of drilling.

In late 2014 Kenya ElectricityGenerating Company (KenGen) said ithad added another 70MW of energy tothe grid from the Olkaria geothermalproject, as part of plans to increaseoutput by 280MW during the year. Afirst 70MW was added in July, anotherin August and a third in September.Unit 5, the last phase of the singlelargest geothermal project in Africa,was commissioned in December 2014and is now adding 140MW to thenational grid according to KenGen.

KenGen said in its 2014 annual reportthat it planned to develop 700MW ofgeothermal power, plus two windfarms in Ngong and Meru with a totalcapacity of 120.4MW. Aeolus Kenyahas contracted Iberdrola Ingeniería yConstrucción to build a 61MW windfarm at Kinangop.

Kenya, through its ruralelectrification programme, is workingto implement both grid extension andoff-grid systems solutions.

Investing in Innovative RenewablesProjects and Off-Grid Solutions

8.2 Kenya



Kenya plans to generate at least5,000MW from hydro, geothermal,solar, wind and coal by 2016. The2014-15 budget has allocatedKSh43.6bn ($497m) for moregeothermal power, new transmissionlines and rural electrification.According to finance minister HenryRotich, KSh10bn ($114m) has beenallocated for development ofgeothermal energy, KSh23bn ($262m)towards investment in powertransmission to reduce technicallosses, and KSh10.6bn ($121m) toexpand access to power in rural areas.

Among smaller-scale innovativesolutions, Tropical Power EnergyGroup has brought online what it saysis Africa’s first grid connected biogasfacility fed by gas from an anaerobicdigestor plant. The $6.5m Gorge Farmfacility, with installed capacity of2.2MW, took less than 12 months to

construct, and the developer estimatesits payback period to be around fiveand a half years.

Projects supported by the US PowerAfrica initiative’s Beyond the Gridprogramme are emerging. Theprogramme’s Off-Grid EnergyChallenge – a GE, USAID and USAfrican Development Foundationinitiative – offers $100,000 grants tosmall-scale renewables projects inPower Africa’s target countries. EightKenyan start-ups have now eachreceived support for their projects.

Such programmes may be critical inproviding the small-scale solutionsrequired to improve Kenyans’ accessto electricity. With a nationalelectrification rate of around 23%,access to electricity in rural areas isestimated at just 5%, which meansthat the vast majority of ruralhouseholds cook with biomass or coal,

often with serious health impacts.

The government, in collaboration withdevelopment partners and the privatesector is promoting the use ofsustainable wood and biomassresources for cooking, and is alsoworking on strategies for substitutingrenewable energy for kerosene inlighting applications.

Mibawa Suppliers provides pay-as-you-go lighting in rural western Kenya,supplying solar kits to Kenyans at acost of KSh6,500 ($74), which can bepaid in instalments. The solar kits canalso charge small electrical appliancessuch as mobile phones.

Afrisol Energy is developing bio-digesters in Nairobi’s slums. Thecompany has constructed one facilitythat converts faecal sludge intoelectricity for a primary school andaround 30 households. n

Lake Turkana Wind In July 2015, Kenya’s President UhuruKenyatta officiated at the ground-breaking ceremony for the 310MWLake Turkana Wind Power (LTWP)project, which stood out as one of themost impressive financial closes of2014. The LTWP project company saidin a statement that between 50MWand 90MW of capacity would be readyfor commissioning by September2016, with full commercial operationby June or July 2017.

Evacuation of power from the €623m($690m) project is dependent on thecompletion of a 428km 400kVtransmission line being built byKETRACO using €110m ($146.7m)concessional funding from theSpanish government and €32m($42.7m) from the Kenyan nationalbudget. Power will be sold to the gridat 8.42c/kWh. ($11.23USc/kWh)

The UK’s Aldwych International, whichwill oversee construction andoperation of the facility, is co-developerof the project as well as investor.

Businesses near the wind farm areexpected to receive cheaperelectricity tariffs similar to those forcompanies near the Olkariageothermal sites. n

Lake Turkana Financing

Senior Debt €436m ($582m), of which

Tranche A – AfDB €115m ($153m)

Tranche B – ECA facility covered €20m ($27m)

Tranche B – ECA facility uncovered €100m ($133m)

EIB senior loan A €50m ($67m)

EIB senior loan B €50m ($67m)

Tranche C – DFI facilities: FMO (€35m – $47m), Proparco (€20m – $27m), ICCF(€30m – $47m), PTA Bank (€10m – $13m), Tridos(€6m – $8m)

€101m ($135m)

Mezzanine Finance €62m ($83m), of which

Subordinated debt: DEG (€20m – $27m), EADB (€5m –$7m), PTA Bank (€10m – $13m), AfDB (€2m –$3m) €37m ($49m)

ITF preference share €25m ($33m)

Equity €125m ($167m), of which

Aldwych €38m ($51m)

KP&P €31m ($41m)

IFU €7.5m ($11.3m)

Norfund €16m ($21m)

Finnfund €16m ($21m)

Vestas €16m ($21m)

Sandpiper €0.5m ($0.7m)

Total €623m ($831m)


1. General RemarksICA member commitments anddisbursements should be viewed inperspective given the very differentstrategies and purposes of eachmember. While, for example, DBSAprovides nearly 100% non-ODA loan-based funding, Canada, the EC, theEU-AITF, and the UK are pure ODAgrant funders which means that theirfunding volumes are naturally muchlower.

In describing the way ICA membersdeploy funds the distinction should bemade between donor support that isattributed to them in this report andthe considerable support bilateralsprovide to multilaterals, which is notattributed to them in this report. Forexample, ICA Members such as UK,Canada, France, Germany, Japan andthe US contribute to the AfDB’sAfrican Development Fund (ADF) andthe World Bank’s InternationalDevelopment Association (IDA).

Other contributions not captured inthe report include those made byCDC, the UK’s wholly government-owned DFI. According to CDC’sannual review, its 2014 commitmentsto Africa were $240.9m of which$100.6m targeted the energy sectoreither through direct investments orvia funds. CDC manages capitalentirely provided by DFID.

This year’s report covers data from theAfDB, DBSA, EU-AITF, EC, EIB,France, Germany, IFC (which togetherwith the World Bank is described asthe World Bank Group (WBG)), Japan,UK, and WB.

For the 2014 report, no data wasreceived from the US, Germany’s GIZand DEG, all of which have provideddata in one or more of the last threeyears.

2. Exchange RatesThe exchange rates used forconversions into US Dollars whencontemplating 2014 data are the

averages of the respective currency ofthe year 2014 as reported in thepublicly available AfricanDevelopment Bank FinancialInformation .(http://www.afdb.org/en/documents/financial-information/exchange-rates/).

For ICA members the followingexchange rates were used:

1$ = 0.65652 AfDB Unit of Account(UA)

1$ = 0.74979 Euro (€)

1$ = 0.60536 British Pound (£)

1$ = 1.09852 Canadian Dollar (C$)

1$ = 0.76775 South African Rand (R)

1$ = 105.12881 Japanese Yen (¥)

3. Soft InfrastructureAs mentioned by some ICA members,the distinction between hard and softinfrastructure is sometimes difficultto make and might therefore not befully accurate. Also the judgement ofwhether a part of the project isdedicated to capacity building orproject preparation can sometimes bea challenge.

4. Project SpecificInformationInformation on projects completed in2014 was provided by the AfDB,Canada, the EC, the EIB, the EU-AITF, France, Germany, the IFC, andJapan.

Project-level information aboutcommitments and disbursements in2014 were provided by the AfDB,Canada, the DBSA, the EIB, the EU-AITF, Germany, the IFC, and Japan.

5. Strategic PerspectivesThe strategic perspectives provided insection 4.5 are based on interviewswith selected ICA members.

6. Other Specific ICAMember Data NotesAfDB

Overall AfDB data consists of datagathered from the Energy,Environment and Climate ChangeDepartment (ONEC), the Transport &ICT Department (OITC), the PrivateSector Department (OPSM) and theWater & Sanitation Department(OWAS).

ONEC data reported includes theTransition Support Facility (TSF), theNigeria Trust Fund (NTF), and theMiddle Income Country TechnicalAssistance Fund (MIC TAF).

OWAS data includes RWSSI TrustFund (RWSSI-TF), the African WaterFacility (AWF) Trust Fund, the MultiDonor Water Partnership Program(MDWPP), the Nigerian Trust Fund,the Fragile States Facility (FSF), theMiddle Income Countries (MIC) Fund,and the OPEC Fund.

OPSM data includes a Dutch Grant,the Clean Technology Fund, and theFunds for Africa Private SectorAssistance (FAPA).

DBSA

DBSA data includes South Africanoperations, International Financedata, and data from the AFD/DBSAProject Preparations and FeasibilityStudies Fund (PPFS).

ECEC data consists of data from theEuropean Development Fund (EDF,for sub-Saharan Africa countries) andfrom the Development CooperationInstrument (for Northern Africacountries).

The EC stated that the consolidationof their interventions in 2014 is notyet fully approved by management. Inconsequence small discrepancies mayappear between the figures in thisreport and figures in the EC’s yearlyreport.

France

French data consists of data from AfD,Proparco and the Fonds Français pour

Annex 1 – Data Notes


l’Environnement Mondial.

Germany

This year, German data consists onlyof KfW data whereas in the 2013report data was also provided by DEGand GIZ. Since KfW stated that thefigures provided by them do notinclude funds which are managed onbehalf of other donors under delegatedcooperation agreements, theircontribution is likely underestimated.

Japan

Japanese data includes data fromJICA (ODA portion) and JBIC (non-ODA portion).

Japan’s soft infrastructurecommitments also include funding forcapacity building and other softinfrastructure spending.

EIB

The EIB stated that in the ACP regionthe Investment Facility managed byEIB is used to finance operationsalongside EIB own resources.

WBG

Overall WBG data consists of datagathered from the WB and IFC.

WB figures comprise data fromIDA/IBRD, Guarantees, the GlobalEnvironment Project, Carbon Offset,Special Financing, Recipient ExecutedActivities, and the InstitutionalDevelopment Fund.

7. African NationalGovernment BudgetAllocationsData used for the 2014 budgetallocations by 42 African countries issubstantially drawn from officialbudget statements or expenditureframeworks or other officialgovernment documents. Figures forEgypt and Morocco are derived from amixture of official documents andpersonal enquiries of governmentofficials while data for Algeria wasobtained entirely by personalenquiries of government officials.

The data reflect budget allocations not

outturns so the figures representintended rather than actual spendingon infrastructure. The choice ofallocations rather than outturns ispartly a matter of expediency giventhe relative lack of availability ofoutturn figures for 2014 and partlybecause budget allocations areessentially commitments and treatedas such in this report.

There is significant potential fordouble counting in the data for budgetallocations by African countries due tolevels of support from sources whosecommitments are reported elsewherein this report.

Where possible, external funding hasbeen excluded from budgetallocations, but this has not beenpossible for every country’s projects.Wherever possible, only capitalexpenditure has been captured andrecurrent expenditure has not beenincluded in the data. n

Annex 2 - Credits and AcknowledgementsText, Data Analysis andLayoutCross-border Informationwww.crossborderinformation.com

PhotosCover: iStock/Getty Images.

Pages 12, 18, 21, 36, 52, 58, 60, 72, 84:iStock/Getty Images.

Page 16: World Bank/John Hogg.

Page 24: KfW Photo Archive / KirstenMilhahn.

Page 28: KfW Photo Archive / AuslöserPhotographie.

Page 30: KfW Photo Archive /photothek.

Page 55: World Bank/Francis AtoBrown.

Page 76: The World Bank Group/ RobBeechey.

For World Bank photos, see licence:https://creativecommons.org/licenses/by-nc-nd/2.0

African InfrastructureInvestment Survey 2014The ICA would like to thank thefollowing organisations for theirsupport and co-operation in promotingthe 2013 ICA Survey of Private SectorInvestors:

African Energywww.africa-energy.com

Business Council for Africawww.bcafrica.co.uk

CBL-ACPwww.cblacp.eu

ESI Africawww.esi-africa.com

Invest in Africa Nowwww.investinafrica-now.com

www.investinafrica-now.com

Norwegian-African BusinessAssociation –

http://norwegianafrican.no

US Chamber of Commerce –Africa Business Initiativewww.uschamber.com/africa

http://www.uschamber.com/africa

http://norwegianafrican.no

http://www.investinafrica-now.com

www.esi-africa.com

http://www.cblacp.eu

http://www.bcafrica.co.uk

http://www.africa-energy.com

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