Africa’s enormous economic potential in the post-pandemic economy is being recognised by world powers, as evidenced by the recent unveiling of the ambitious Partnership for Global Infrastructure and Investment (PGII) at the 48th G7 Summit held in Germany, on 26 – 29 June.
The USD 600 billion lending initiative aims to fund infrastructure projects in the developing world, with a particular emphasis on projects in Africa. The G7 countries – Canada, France, Germany, Italy, Japan, the United Kingdom (UK) and the United States (US) – explained the PGII would help address the infrastructure gap in developing countries to grow the global economy.
The US announced it would mobilise USD 200 billion over the next five years as part of the PGII in the form of grants, financing and private sector investments. “Together with G7 partners, we aim to mobilise USD 600 billion by 2027 in global infrastructure investments. And this will only be the beginning,” said President Biden following the announcement. “The United States and its G7 partners will seek to mobilise additional capital from other like-minded partners, multi-lateral development banks, development finance institutions, sovereign wealth funds and more.”
Some deals have already been announced, including, for example, a USD 2 billion solar energy project in Angola and the building of multiple hospitals in Côte d’Ivoire.
Confirming this commitment, the European Commission announced investment funding for Africa worth EUR 150 billion.
The funding package is part of the EU Global Gateway Investment Scheme and is said to be in the form of EU combined member funds, member state investments and capital from investment banks.
Some analysts have commented that the PPII is the G7’s response to China’s 2013 Belt and Road Initiative, which seeks to connect Asia with Africa and Europe via land and maritime networks to improve regional integration, increase trade and stimulate economic growth by 2049. China lists 39 African countries as beneficiaries of the Belt and Road Initiative and is funding multiple road, rail and power infrastructure projects on the continent.
Increased interest in facilitating infrastructure development in Africa may come as a direct response to recent shifts in the geo-political landscape and global economy. It is no secret that Africa holds the world’s largest reserves of untapped natural resources, many of which are helpful in advancing green energy adoption, providing a much-needed solution to the world’s current energy crisis.
However, the continent is crippled by infrastructure deficits which have a direct and negative impact on its ability to capitalise on this potential, which, by extension, deprives the global economy of the opportunity to benefit as well.
The African Development Bank noted in early 2022 that Africa’s infrastructure investment gap is estimated at more than USD 170 billion per year. Commitments by world powers to provide the financial support to close this gap has the potential to open the doors to private and public investment in African infrastructure on a much larger scale over the next decade. The potential benefits in terms of job creation, poverty alleviation, and the emergence of a new generation of African industrialists could see the realisation of the sustainable development goals on the continent in our lifetime. However, the onus is on African leaders in government and business to ensure that Africa, and its people, remain the primary beneficiaries of these investments.
The 2022 Infrastructure Africa Virtual Conference and Exhibition, being held on 17 and 18 August, will connect industry stakeholders, foster dialogue, provide leading-edge information, promote investment and expansion, and facilitate business development around Africa’s growth and infrastructure needs.
Connect with infrastructure professionals at Infrastructure Africa, gain access to leading-edge innovation and knowledge, access infrastructure project opportunities and grow your business. Join the infrastructure industry meeting from the comfort of your office or home.
To find out more visit http://www.infrastructure-africa.com.
