Bolstering AfCFTA Infrastructure: The Role of African IFIs

This policy brief examines the critical role of African international financial institutions (IFIs) in addressing the continent's infrastructure deficit to ensure the success of the African Continental Free Trade Area (AfCFTA). It highlights the gap between annual infrastructure financing needs ($130–$170 billion) and actual funds raised (approximately $80 billion), advocating for a more institutionalised coordination framework among IFIs to better mobilise private capital and improve project bankability.

• Africa faces a severe infrastructure deficit, with its total physical capital stock estimated at only 7.4% of that in advanced economies, 16% of China's, and 46.4% of South America's. The annual financing need for infrastructure is estimated between $130 billion and $170 billion, but only about $80 billion is currently raised.
• Infrastructure deficiencies significantly hinder intra-African trade, with transport costs in Africa estimated to be 50% to 175% higher than global averages. High transport costs are reported to account for 40% of the final price of goods on the continent.
• African IFIs have provided substantial investment: the African Development Bank (AfDB) has invested approximately $184 billion since its inception, the Africa Finance Corporation (AFC) about $15 billion, and Afreximbank disbursed over $104 billion between 2016 and 2023.
• The AfCFTA Adjustment Fund, established in 2023 through a collaboration between Afreximbank, the AfCFTA Secretariat, and the AU Commission, is designed to mitigate economic disruptions and facilitate transitions. While Afreximbank has committed $1 billion, the fund requires an estimated $10 billion over the next 5 to 10 years.
• Private sector investment in African infrastructure remains low; for example, the private sector contributed only 3% of overall investment in the Programme for Infrastructure Development in Africa (PIDA). Barriers include concerns over sector creditworthiness, political risk, and bureaucracy.
• Project bankability is a major hurdle, with over 80% of infrastructure projects failing to progress past the feasibility stage. The document suggests establishing a dedicated infrastructure development think tank of project finance experts to identify and prepare bankable projects aligned with AfCFTA goals.
• The author recommends a shift toward an institutionalised, results-oriented coordination model among major IFIs (AfDB, AFC, Afreximbank), sub-regional banks, national development banks, and governments to reduce information asymmetry and harmonise project pipelines.

APA

MOPIPI, K. N. (2025). Bolstering AfCFTA Infrastructure: The Role of African IFIs. South African Institute of International Affairs. https://saiia.org.za/wp-content/uploads/2025/06/SAIIA_PI-163_RoleOfAfricanIFIs.pdf

Chicago

MOPIPI, KESAOBAKA NANCY. Bolstering AfCFTA Infrastructure: The Role of African IFIs. South African Institute of International Affairs, 2025. https://saiia.org.za/wp-content/uploads/2025/06/SAIIA_PI-163_RoleOfAfricanIFIs.pdf.

Wikipedia

{{cite report |last1=MOPIPI |first1=KESAOBAKA NANCY |title=Bolstering AfCFTA Infrastructure: The Role of African IFIs |publisher=South African Institute of International Affairs |date=June 2025 |url=https://saiia.org.za/wp-content/uploads/2025/06/SAIIA_PI-163_RoleOfAfricanIFIs.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{mopipi2025bolstering, author = {MOPIPI, KESAOBAKA NANCY}, title = {{Bolstering AfCFTA Infrastructure: The Role of African IFIs}}, institution = {South African Institute of International Affairs}, year = {2025}, month = jun, url = {https://saiia.org.za/wp-content/uploads/2025/06/SAIIA_PI-163_RoleOfAfricanIFIs.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }