AfDB Invests $20m in Infrastructure Fund to Accelerate Africa’s Development

The African Development Bank (AfDB) has signed a $20 million equity investment in the African Infrastructure Investment Fund 4 (AIIF4), which reinforces the bank’s commitment to boost private sector development and boosting infrastructure across the continent.

The AfDB, in a statement, said the deal, signed on July 31, 2024, was to reinforce the Bank’s commitment to fostering private sector development and boosting infrastructure across the continent.

The investment, approved by the Bank Group’s Board of Directors on 19 June 2024 and on 31 July 2024, will be financed from the Bank’s ordinary capital resources designated for private sector operations.

According to the AfDB, Africa’s infrastructure sector remains a significant investment opportunity, driven by substantial demand deficits and a scarcity of capital.

“With rapid urbanization and increasing local purchasing power, the continent requires between $130 and $170 billion annually in infrastructure spending. However, there’s currently a substantial yearly financing gap of $68 to $108 billion,” the statement reads in part. 

AIIF4, with a 13-year term and a 5-year investment period, has completed its first closing at circa $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 Ten-Year Strategy (2024-2033) relating to accelerating and scaling up its operations. Additionally, the Fund pipeline 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). 

“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. Therefore, our confidence in AIIM as a fund manager is renewed and strong, given its proven expertise and track record in driving impactful investments,” said Mike Salawou, Director for Infrastructure, Cities and Urban Development at the AfDB.