Onome Amuge
Rising debt costs and shrinking development assistance have pushed Africa’s infrastructure investment gap into one of its most pressing economic threats. Governments now face mounting fiscal constraints just as development partners prepare for a sharp contraction in aid flows. A new report by the Organisation for Economic Co-operation and Development (OECD) and the African Union Commission (AUC) warns that only a substantial scale-up in capital spending, especially from the private sector, can avert an economic slowdown that would jeopardise long-term growth prospects.
The study, Africa’s Development Dynamics 2025: Infrastructure, Growth and Transformation, highlights the scale of the challenge; showing that African countries invested an average of $83 billion annually in infrastructure between 2016 and 2020, equivalent to 3 percent of GDP. But the report models a far more ambitious financing requirement of $155 billion per year, roughly 5.6 percent of Africa’s combined GDP in 2024, if the continent hopes to accelerate growth by an additional 4.5 percentage points annually and more than double GDP by 2040.
Several African countries, including Comoros, Lesotho, Tanzania and Zambia, already invest more than 5 per cent of GDP in infrastructure, levels approaching those seen in high-growth economies such as China and Vietnam. Yet for most countries, the path to higher investment is constrained by worsening public finances.
Between 2019 and 2023, African governments spent on average seven times more on debt servicing than on infrastructure, according to the report. This diversion of fiscal resources has left little room for the capital formation necessary to drive competitiveness, trade integration and job creation.
“With debt costs rising and public coffers stretched, African economies cannot sustain a public-led infrastructure model,” the report warns, arguing that without reforms to attract private capital, the continent will fall short of its development ambitions.
Development partners currently provide nearly half of Africa’s infrastructure financing at 48 per cent through bilateral and multilateral channels. While official development finance has risen over the past decade, from $10 billion in 2010 to nearly $15 billion in 2023, the outlook is turning negative. Official development assistance is projected to contract by up to 17 per cent in 2025, following a 9 per cent decline this year. Least-developed countries are expected to face the deepest cuts, with aid flows across sub-Saharan Africa projected to drop between 16 and 28 percent.
This tightening external environment places greater pressure on African governments to unlock private capital, which currently contributes just 11 per cent of infrastructure financing on the continent, far below other emerging regions. This is despite the fact that infrastructure investments in Africa can yield returns of up to 20 per cent, making them among the most attractive globally.
The report argues that mobilising institutional investors, improving regulatory certainty and addressing project-preparation bottlenecks must now be central priorities for policy makers. It sets out a series of recommendations aimed at improving the quality, governance and bankability of infrastructure projects.
According to the report, priority should be given to infrastructure with the highest economic returns: roads, railways, fibre-optic networks and solar energy systems. These assets, the report notes, not only reduce trade costs but also drive regional integration and create the backbone needed for participation in global value chains.
A second priority is strengthening alignment between national plans and regional initiatives such as the Programme for Infrastructure Development in Africa (PIDA). This includes mapping infrastructure development to economic corridors and rapidly growing cities, where productivity gains are highest.
The OECD and AUC also call for stronger governance frameworks, including transparent public–private partnerships, improved cost recovery and maintenance regimes, and the adoption of quality certifications such as the PIDA Quality Label to assure investors of project standards.
Regulatory reforms, especially around land, tariffs and dispute resolution, are highlighted as essential to boosting investor confidence. Better data availability and environmental and social risk assessments are also needed to support long-term planning and attract capital committed to sustainability.
The report stresses that Africa’s infrastructure financing gap is not merely a funding shortfall but a strategic crossroads. With demographic growth accelerating and urbanisation reshaping economic geography, the next decade will determine whether the continent can build the backbone required for competitiveness and inclusive growth.
