MAPPING CURRENT TRENDS IN INFRASTRUCTURE FINANCING IN LOW-INCOME COUNTRIES IN AFRICA WITHIN THE CONTEXT OF THE AFRICAN DEVELOPMENT FUND

The document analyzes the challenges African low-income countries (LICs) face in financing infrastructure, specifically focusing on the African Development Fund (ADF). It highlights a critical gap in concessional funding, which pushes LICs toward high-interest non-concessional loans and unsustainable debt. The paper evaluates the ADF's ability to mobilize private sector finance through blending, guarantees, and public-private partnerships (PPPs), while using Lesotho and Senegal as case studies to illustrate issues such as inadequate project preparation, limited institutional capacity, and the risks of poorly managed PPPs. It concludes with recommendations for the ADF to enhance its project preparation facilities, improve debt advisory services, and ensure more inclusive stakeholder consultations.

• African low-income countries (LICs) face significant infrastructure financing gaps and are increasingly turning to non-concessional sources, which threatens their debt sustainability. Sub-Saharan Africa alone is estimated to require up to $93 billion annually until 2020 to bridge this gap.
• The African Development Fund (ADF) is constrained by insufficient funding and a reliance on capital injections from developed economies every three years. Its disbursements are heavily concentrated in transport and power generation, while the communications sector received negligible investment between 2003 and 2015.
• There is a growing risk of a debt crisis for African LICs due to a decline in the grace period and maturity of new external debt commitments and an increase in domestic market borrowing, which rose to 19% of GDP in 2013 from an average of 11% in 1995.
• The ADF's private sector mobilisation initiatives, such as the Partial Risk Guarantee (PRG) and Partial Credit Guarantee (PCG), have seen very low uptake, primarily limited to the energy sector in Ghana, Nigeria, and Kenya.
• Project preparation is a major bottleneck for infrastructure development. The ADF's Project Preparation Facility (PPF) is underfunded with a total capital base of only $12.87 million, which is insufficient to cover the estimated $3.36 billion shortfall in project-financing for the continent from 2006–2015.
• Public-Private Partnerships (PPPs) in LICs often fail due to a lack of institutional capacity to monitor spending and manage contracts. In Lesotho, the Queen ‘Mamohato Memorial Hospital PPP resulted in costs three times higher than the previous hospital by 2014, accounting for 51% of the total health budget.
• Case study evidence from Lesotho indicates that the AfDB's consultation process for Country Strategy Papers (CSPs) is too narrow, often excluding the private sector and civil society, which leads to politicised project selection.
• Senegal has increasingly relied on Eurobonds to fill financing gaps due to limited concessional loans from the ADF, issuing bonds with interest rates of 8.75% and 6.25% between 2009 and 2014.

APA

Bertelsmann-Scott, T., Markowitz, C., & Parshotam, A. (2016). MAPPING CURRENT TRENDS IN INFRASTRUCTURE FINANCING IN LOW-INCOME COUNTRIES IN AFRICA WITHIN THE CONTEXT OF THE AFRICAN DEVELOPMENT FUND. South African Institute of International Affairs. https://saiia.org.za/wp-content/uploads/2016/11/GA_Th1_DP4_bertelsmann-scott-et-al_20161130.pdf

Chicago

Bertelsmann-Scott, Talitha, Chelsea Markowitz, and Asmita Parshotam. MAPPING CURRENT TRENDS IN INFRASTRUCTURE FINANCING IN LOW-INCOME COUNTRIES IN AFRICA WITHIN THE CONTEXT OF THE AFRICAN DEVELOPMENT FUND. South African Institute of International Affairs, 2016. https://saiia.org.za/wp-content/uploads/2016/11/GA_Th1_DP4_bertelsmann-scott-et-al_20161130.pdf.

Wikipedia

{{cite report |last1=Bertelsmann-Scott |first1=Talitha |last2=Markowitz |first2=Chelsea |last3=Parshotam |first3=Asmita |title=MAPPING CURRENT TRENDS IN INFRASTRUCTURE FINANCING IN LOW-INCOME COUNTRIES IN AFRICA WITHIN THE CONTEXT OF THE AFRICAN DEVELOPMENT FUND |publisher=South African Institute of International Affairs |date=November 2016 |url=https://saiia.org.za/wp-content/uploads/2016/11/GA_Th1_DP4_bertelsmann-scott-et-al_20161130.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{bertelsmannscott2016mapping, author = {Bertelsmann-Scott, Talitha and Markowitz, Chelsea and Parshotam, Asmita}, title = {{MAPPING CURRENT TRENDS IN INFRASTRUCTURE FINANCING IN LOW-INCOME COUNTRIES IN AFRICA WITHIN THE CONTEXT OF THE AFRICAN DEVELOPMENT FUND}}, institution = {South African Institute of International Affairs}, year = {2016}, month = nov, url = {https://saiia.org.za/wp-content/uploads/2016/11/GA_Th1_DP4_bertelsmann-scott-et-al_20161130.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }