African Development Bank Invests $20 Million in African Infrastructure Fund
The African Development Bank has made a significant move to boost private sector development and infrastructure growth across the continent by investing $20 million in the African Infrastructure Investment Fund 4 (AIIF4). The deal, signed on July 31, 2024, reinforces the Bank’s commitment to fostering private sector development and accelerating infrastructure growth.
The investment, approved by the Bank’s Board of Directors on June 19, 2024, will be financed from the Bank’s ordinary capital resources designated for private sector operations. AIIF4, with a 13-year term and a 5-year investment period, has already completed its first closing at circa $230 million, attracting international investors.
Africa’s infrastructure sector remains a significant investment opportunity, driven by substantial demand deficits and a scarcity of capital. The continent requires between $130 and $170 billion annually in infrastructure spending, but currently faces a substantial yearly financing gap of $68 to $108 billion.
The Fund is projected to deliver significant development outcomes, particularly in private sector growth and household income improvement. The Bank assesses the likelihood of achieving these outcomes on time as "High."
The investment complements the Bank’s ‘High 5’ operational priorities, including its Ten-Year Strategy (2024-2033) and its Private Sector Development Strategy (2021-2025). The Fund pipeline also aligns with the Climate Change and Green Growth Framework and the Strategy for Addressing Fragility and Building Resilience (2022-2026).
Mike Salawou, Director for Infrastructure, Cities and Urban Development at the African Development Bank, emphasized the importance of the investment, stating, "By providing this scarce private equity investment to AIIM to bridge the infrastructure financing gap in Africa, the Bank is reinforcing its commitment and support to developing infrastructure in Africa to private sector participation."
The African Infrastructure Investment Managers have already transacted an initial portfolio and identified a robust pipeline of investment opportunities in renewable energy, digital infrastructure, and ports and logistics assets in South Africa, Kenya, and Morocco. They are also actively screening deals in Egypt, Côte d’Ivoire, and Senegal, among others.
The AIIF4 investment underscores the increasing role of private equity in addressing Africa’s infrastructure needs and highlights the continent’s potential for sustainable economic growth.
