A new report has called for the adoption of innovative financing solutions through domestic resource mobilisation and governance reforms to meet Africa’s infrastructure needs.

The report, The Missing Connection: Unlocking Sustainable Infrastructure Financing in Africa, released by the Africa-Europe Foundation and the African Union Development Agency, in partnership with the African Climate Foundation, comes as a response to the search for ways to bridge the significant funding gap in Africa’s infrastructure needs.

Africa’s infrastructure needs are estimated at $130-170 billion annually. Even though African governments are contributing approximately 40 per cent of the current $80 billion annual investment, the remaining gap is costing the continent a 2 per cent annual reduction in its GDP growth.

The report, launched at the 5th Finance in Common Summit (26-28 February), in association with South Africa’s Presidency of the G20, comes as an operational blueprint for African and European public development banks and regional institutions to unlock needed finance without further exacerbating the African continent’s debt crisis.

The report outlines priority areas of action, including leveraging the G20 for domestic resource mobilisation, reinforcing the Africa-Europe Partnership to unlock investment, embracing Digital and AI industry-wide to drive transformation, among others.

Commenting on the report, CEO of the African Union Development Agency (AUDA-NEPAD), Nardos Bekele-Thomas, said infrastructure development cannot succeed when sectors operate in isolation.

“Energy, transport, water, and digitalisation must function as parts of a larger whole, creating synergies that drive sustainability and long-term impact,” Bekele-Thomas said.

“Coordinating efforts across these interconnected sectors ensures that every road, bridge, or power plant becomes a vital link in a broader network that uplifts communities and fuels economic growth,” she said.

Executive Director of the Africa-Europe Foundation, Paul Walton, said the report’s focus is on concrete actions and processes needed to unlock more money to address critical challenges.

“Unlocking untapped areas of cross-continental action is in the DNA of the Africa-Europe Foundation and our joint work with AUDA-NEPAD and the African Climate Foundation. At a time when the world needs the Africa-Europe Partnership to step up, our report focuses on concrete actions and processes that will unlock more money and smarter money to address the critical challenges faced by our societies,” Watson said.

Executive Director of the African Climate Foundation, Saliem Fakir, said the Foundation works towards transforming key economic sectors in Africa through its country investment platforms.

“With that, we focus on the opportunities that can unlock the much needed investment on the continent – outlined in this report,” Fakir said.

Key priority areas outlined by the report
Leveraging the G20 for domestic resource mobilisation. South Africa’s G20 Presidency, coinciding with the defining Financing for Development Conference, is key to step up the level of ambition on internal revenue mobilisation. This includes clear actions on combatting illicit financial flows (estimated at $50-115 billion per year).

Reinforcing the Africa-Europe Partnership to unlock investment. The report evidences the scope for an effective partnership between Africa and Europe to unlock $2.3 trillion in investment, pension and sovereign wealth funds currently locked-up overseas. It also calls for enhanced co-design and co-ownership in the implementation of ‘Team Europe’ pledged financing to ensure the impact and visibility of the flagship EU Global Gateway initiative.

Embracing Digital and AI industry-wide to drive transformation. While digitally-driven approaches and organic AI solutions are emerging, accelerating growth and maturity needs industry-wide strategic and targeted interventions across the infrastructure ecosystem—from asset managers to contractors and software vendors. Investment in digital public infrastructure is the technological backbone of sustainable development, leading to transparency in financial management and accelerated regional integration.

Prioritising infrastructure investments at the energy-climate-health nexus. The African continent plays a pivotal role in the global energy transition, with significant reserves of the minerals vital for global decarbonisation and consequent health co-benefits, as well as a vast store of arable land that can enhance food security and support export-driven growth.

Standardising infrastructure-investment data collection for an industry-wide reporting standard. This reporting standard can streamline funding processes (‘smart money not only more money’), increase transparency between investors and managers, and maximise industry participation.

The report authors said collectively, these initiatives and reforms alone could generate more than enough resources to meet Africa’s infrastructure investment gap.

“They, however, require sustained governance improvements, financial transparency, and long-term equitable international collaboration. In a changing geopolitical context where development aid is contested and purse strings are tightening, it is crucial to improve the quality and efficiency of existing investments and projects,” they said.