The African Development Bank has signed a $20-million equity investment in the African Infrastructure Investment Fund 4 (AIIF4), reinforcing the Bank’s commitment to fostering private sector development and boosting infrastructure across the continent.
Africa’s infrastructure sector remains a significant investment opportunity driven by substantial demand deficits and a scarcity of capital. With rapid urbanisation and increasing local purchasing power, the continent requires between $130-billion and $170-billion annually in infrastructure spending. However, there’s currently a substantial yearly financing gap of $68-billion to $108-billion.
AIIF4, with a 13-year term and a five-year investment period, has completed its first closing at around $230-million, attracting international investors. To date, the fund has raised more than the $500-million target – with the final close expected to be concluded in Q3 2024.
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 also complements the bank’s “High 5” operational priorities, along with its 10-Year Strategy (2024 to 2033) relating to accelerating and scaling up its operations. Additionally, the fund pipeline aligns with the Private Sector Development Strategy (2021 to 2025), the Climate Change and Green Growth Framework, and the Strategy for Addressing Fragility and Building Resilience (2022 to 2026).
“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,” says Mike Salawou, director for Infrastructure, Cities and Urban Development at the African Development Bank. “Therefore, our confidence in AIIM as a fund manager is renewed and strong given its proven expertise and track record in driving impactful investments.”
The African Infrastructure Investment Managers have 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.