Large infrastructure deficits in sub-Saharan Africa pose major constraints to economic growth, with the largest gap in electricity generation capacity. An estimated $40 billion per year is required to close the infrastructure gap, along with $37 billion for annual maintenance costs. National budgets fund about 73% of infrastructure development, with the remainder from external sources like foreign aid and private investment. Expanding private investment opportunities and improving governance is needed to help address the $35 billion annual financing gap required to develop infrastructure in sub-Saharan Africa.

1. Analysis of Infrastructure Finance in Sub-Saharan Africa
Infrastructure Analysis
In the majority of the Sub-Saharan African countries, large infrastructure deficits pose a major constraint
to macroeconomic growth, employment expansion and poverty reduction. As shown in figure 1, the largest
infrastructure gap can be found in electricity generation capacity within the power sector, which stands at
a fraction of electric generation capacity by other developing countries outside the Sub-Sahara. Another
notable deficit lies in Africa’s paved road density, where one-third of Africans living in rural areas are
within two kilometers of an all-season road, compared with two-thirds of the population in other developing
regions. On the telecommunications front, Africa fare better with GSM signal rising dramatically between
1999 and 2006 by 57%, but still lags behind with internet and mainline penetration. Physically Sub-Saharan
Africa is water abundant, however economically the region is water scarce due to the absence of water
storage facilities, conveyance systems, transportation networks, and irrigation systems.
An estimated budget of approximately $40 Billion per year in infrastructure investment is required as initial
capital to close that infrastructure gap. Moreover operation and maintenance costs account for a further $37
Billion. The combined infrastructure capital and maintenance estimates reflect a $35 Billion gap in
infrastructure financing, which can only be filled with African nations investing 12% of their GDP
infrastructure development.
Fig. 1. Infrastructure Deficit in Sub-Saharan Africa

2. Infrastructure Financing Analysis
The major public source of infrastructure financing are the national budgets of Sub-Saharan African
countries which fund approximately 73% (2012) of total infrastructure development. However it is worthy
to note that aggregate estimates hide the unequal distribution of government spending on infrastructure
spending. For example, in terms of absolute national budget allocations, South Africa is the largest spender
on infrastructure at $30 billion (out of a total of $60 Billion for Sub-Saharan Africa). These national
investments have been recently been supplemented by three external financing sources: (1) Official
Development Finance (ODF), (2) Private Participation in Infrastructure (PPI), and (3) official Chinese
investment. All three sources of financing have grown appreciably. The current breakdown of external
financing is as following: 30% ODF, 50% PPI, and 20 % Chinese official investments.
Financing Recommendations
Given that infrastructure is highly correlated with improved growth performance and necessary to tap into
potential economic capital and wealth, it is essential that the lag by Sub-Saharan Africa in infrastructure
networks be addressed with feasible and comprehensive financing options.
Enhanced collaboration and coordination between traditional (e.g. national budgets) and non-traditional
sources if finance is paramount. The African Development Bank must continue to play a central role in the
collaboration between different African countries and tradition donors. Moreover opportunities and
conditions for private investments are to be expanded if the gap in infrastructure development finance is to
be minimized or eliminated. Private investment in Sub-Saharan Africa well established in the Telecom
Sector. As such, conclusions can be derived to expand such investment into the energy and power
generation sector primarily. Finally, African Countries are urged to direct their attention to governance
reform opportunities in order to ensure maximization of potential efficiency benefits. This requires sectoral
focus on national and sub-national levels.