The African Development Bank (AfDB) has signed a $20 million equity investment deal with the African Infrastructure Investment Fund 4 (AIIF4). This deal shows the Bank’s commitment to supporting private sector growth and enhancing infrastructure in Africa.
This investment was approved by the Bank Group’s Board on June 19, 2024. It comes from the Bank’s ordinary capital resources meant for private sector projects. Africa faces a huge investment need in infrastructure, with demands reaching between $130 and $170 billion annually.
Currently, there’s a financing gap of $68 to $108 billion each year. AIIF4, which has a 13-year term and a 5-year investment period, has completed its first closing at around $230 million. It has attracted international investors and surpassed its $500 million target. The final close is expected by Q3 2024.
The Fund aims to achieve substantial development results, especially in growing the private sector and improving household incomes. The Bank rates the chance of meeting these goals on time as “High.”
This investment supports the Bank’s ‘High 5’ priorities and its Ten-Year Strategy (2024-2033) for expanding operations.
It also aligns with the Private Sector Development Strategy (2021-2025), the Climate Change and Green Growth Framework, and the Strategy for Addressing Fragility and Building Resilience (2022-2026).
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Strengthening Private Sector Involvement in Africa’s Infrastructure Development
In his remarks, Mike Salawou, Director for Infrastructure, Cities, and Urban Development at the Bank, stated, “By providing this scarce private equity investment to AIIM, the Bank is bridging the infrastructure financing gap in Africa.
“This move reinforces the Bank’s commitment and support for developing infrastructure and encouraging private sector participation.
“Therefore, we renew and strengthen our confidence in AIIM due to its proven track record in driving impactful investments.”
The African Infrastructure Investment Managers have begun building a portfolio and found promising investment opportunities.
They focus on renewable energy, digital infrastructure, and ports in South Africa, Kenya, and Morocco. They are also exploring deals in Egypt, Côte d’Ivoire, and Senegal.
The AIIF4 investment highlights the growing role of private equity in solving Africa’s infrastructure challenges and demonstrates the continent’s potential for sustainable economic growth.