Africa’s infrastructure needs, estimated at $130-170 billion annually, are holding back the continent’s growth. Despite African governments contributing approximately 40% of the current $80 billion annual investment, a significant funding gap remains. This gap is costing Africa a 2% annual reduction in its GDP growth. Adopting innovative financing solutions through domestic resource mobilisation and governance reforms is therefore critical for governments balancing competing budget lines.
The Africa-Europe Foundation and the African Union Development Agency, in partnership with the African Climate Foundation (ACF), have released a new report The Missing Connection: Unlocking Sustainable Infrastructure Financing in Africa. Launched at the 5th Finance in Common Summit at the end of February 2025, in association with South Africa’s Presidency of the G20, the report serves as an operational blueprint for African and European public development banks and regional institutions to unlock needed finance without further exacerbating the African continent’s debt crisis.
“The ACF works towards transforming key economic sectors in Africa through our country investment platforms. With that, we focus on the opportunities that can unlock the much needed investment on the continent – outlined in this report,” said Saliem Fakir, Executive Director of the ACF.
Priority areas of action include prioritising infrastructure investments at the energy-climate-health nexus. The paper also leverages the G20 for domestic resource mobilisation. South Africa’s G20 Presidency, coinciding with the defining Financing for Development Conference, is key to step up the level of ambition on internal revenue mobilisation. This includes clear actions on combatting illicit financial flows (estimated at $50-115 billion per year).
Furthermore, the report evidences the scope for an effective partnership between Africa and Europe to unlock $2.3 trillion in investment, pension and sovereign wealth funds currently locked-up overseas. It also calls for enhanced co-design and co-ownership in the implementation of ‘Team Europe’ pledged financing to ensure the impact and visibility of the flagship EU Global Gateway initiative.
Finally, this reporting standard can streamline funding processes (‘smart money not only more money’), increase transparency between investors and managers, and maximise industry participation.
“Unlocking untapped areas of cross-continental action is in the DNA of the Africa-Europe Foundation and our joint work with AUDA-NEPAD and the African Climate Foundation. At a time when the world needs the Africa-Europe Partnership to step up, our report focuses on concrete actions and processes that will unlock more money and smarter money to address the critical challenges faced by our societies,” noted Paul Walton, Executive Director of the Africa-Europe Foundation.
Collectively, these initiatives and reforms alone could generate more than enough resources to meet Africa’s infrastructure investment gap. However, they require sustained governance improvements, financial transparency, and long-term equitable international collaboration. In a changing geopolitical context where development aid is contested and purse strings are tightening, it is crucial to improve the quality and efficiency of existing investments and projects.
