INFRASTRUCTURE AS AN ASSET CLASS IN AFRICA

The document examines the potential for African public pension funds and Sovereign Wealth Funds (SWFs) to address an annual infrastructure investment deficit of $130–$170 billion. While these institutional investors possess long-term horizons and substantial assets—such as South Africa's $318 billion retirement fund industry—actual infrastructure investment remains low due to a preference for traditional assets, a lack of bankable project pipelines, and regulatory constraints. The paper analyzes the landscapes of five countries and identifies key barriers, including a shortage of liquid financial instruments and a lack of internal expertise to appraise complex infrastructure risks. It suggests that capacity building, resource pooling, and early engagement between developers and regulators are essential to stimulate institutional appetite for this asset class.

• Africa faces a significant infrastructure funding gap, with the African Development Bank estimating an annual requirement of $130–$170 billion to close the deficit. In 2016, total funding amounted to $62.5 billion, the lowest level between 2012 and 2016, driven by reductions in Chinese and private sector funding.
• Institutional investors in Africa, particularly public pension funds and SWFs, have the capacity to support infrastructure due to their long-term investment horizons and need for diversification. In 2013, pension funds across 10 African countries held approximately $380 billion in assets under management, while African SWFs held approximately $157 billion in 2016.
• In South Africa, the Government Employees Pension Fund (GEPF) targets infrastructure through the Isibaya Fund, which focuses on energy, commuter transport, ICT, water, and logistics. The South African retirement fund industry is the eighth largest globally, with aggregate assets of $318 billion in 2017.
• Nigeria's pension fund landscape shows strong growth and a robust regulatory framework, though direct infrastructure investment remains low. The Nigeria Sovereign Investment Authority (NSIA) manages the Nigeria Infrastructure Fund (NIF), which is allocated 40% of the total SWF assets.
• Kenya and Botswana demonstrate strong political will to increase infrastructure investment. Kenya is establishing a National Sovereign Wealth Fund with a dedicated Infrastructure and Development Fund. Botswana's Public Officers Pension Fund (BPOPF) has developed a 'Local Infrastructure Investment Policy' to diversify its asset base.
• Ghana's pension industry grew 400% between 2008 and 2014. The Social Security National Insurance Trust (SSNIT) invests in infrastructure via 'economically targeted investments' (ETIs), and the government established the Ghana Infrastructure Investment Fund (GIIF) with $250 million in seed funding.
• Five primary challenges hinder institutional investment in African infrastructure: a limited number of financial instruments, a preference for traditional asset classes (government bonds and equities), a lack of expertise in project analysis, a shortage of bankable project pipelines, and restrictive regulatory thresholds.
• There is a significant mismatch between available projects and regulatory requirements. For example, in Ghana, legislation requires infrastructure bonds to be issued through 'Municipal Financing Authorities' that have not yet been established.
• Case studies indicate that credit enhancements and guarantees are critical for attracting institutional investors. The Viathan Funding SPV in Nigeria succeeded due to a triple A-rated guarantee from InfraCredit, while the Nairobi-Nakuru-Mau Summit Road project in Kenya utilized an International Development Association (IDA) guarantee to mitigate payment default risks.

APA

Oberholzer, G., Markowitz, C., Pautz, M., Barnor, J., & Grobbelaar, N. (2018). INFRASTRUCTURE AS AN ASSET CLASS IN AFRICA. South African Institute of International Affairs. https://saiia.org.za/wp-content/uploads/2018/11/Infrastructure-as-an-asset-class-in-Africa.pdf

Chicago

Oberholzer, Gideon, Chelsea Markowitz, Malcolm Pautz, Joel Barnor, and Neuma Grobbelaar. INFRASTRUCTURE AS AN ASSET CLASS IN AFRICA. South African Institute of International Affairs, 2018. https://saiia.org.za/wp-content/uploads/2018/11/Infrastructure-as-an-asset-class-in-Africa.pdf.

Wikipedia

{{cite report |last1=Oberholzer |first1=Gideon |last2=Markowitz |first2=Chelsea |last3=Pautz |first3=Malcolm |last4=Barnor |first4=Joel |last5=Grobbelaar |first5=Neuma |title=INFRASTRUCTURE AS AN ASSET CLASS IN AFRICA |publisher=South African Institute of International Affairs |date=November 2018 |url=https://saiia.org.za/wp-content/uploads/2018/11/Infrastructure-as-an-asset-class-in-Africa.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{oberholzer2018infrastructure, author = {Oberholzer, Gideon and Markowitz, Chelsea and Pautz, Malcolm and Barnor, Joel and Grobbelaar, Neuma}, title = {{INFRASTRUCTURE AS AN ASSET CLASS IN AFRICA}}, institution = {South African Institute of International Affairs}, year = {2018}, month = nov, url = {https://saiia.org.za/wp-content/uploads/2018/11/Infrastructure-as-an-asset-class-in-Africa.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }