Africa’s next major breakthrough in infrastructure investment won’t come from discovering new opportunities — it will come from reducing risk and building investor confidence.
That was the consensus among financial and policy leaders at a Moonshot Panel on October 15, where experts explored how de-risking tools, government guarantees, and blended finance can unlock billions in Africa infrastructure investment across the continent.
“Financing local infrastructure in local currency is a very challenging endeavor primarily because of inflation,” said Fola Fagbule, Deputy Director and Head of Financial Advisory at the Africa Finance Corporation (AFC).
“The government and other large financial institutions make these guarantees to make these investments more profitable for foreign investors. A guarantee is very powerful if used properly.”
The message is clear: Africa doesn’t lack opportunity — it lacks trust.
By reducing risk, countries can attract long-term infrastructure finance and spark an inclusive growth boom.
Understanding the Confidence Gap in Africa’s Infrastructure Investment
From energy corridors to digital infrastructure, Africa’s infrastructure investment pipeline is strong, yet global institutional capital remains cautious.
Concerns over currency volatility, political risk, and credit ratings continue to stall projects, even when the fundamentals are sound.
As highlighted in Africa’s Infrastructure Gap 2025, the real obstacle isn’t the lack of viable projects — it’s the perception of instability that discourages global financiers.
That’s why de-risking frameworks are now becoming the foundation of modern African investment strategies.
How De-Risking Unlocks Africa’s Infrastructure Boom
De-risking Africa infrastructure investment means using financial structures that distribute risk more evenly between public and private players.
Through blended finance, governments and DFIs absorb early-stage risk, allowing commercial investors to enter once viability is proven.
Examples include:
- Partial Risk Guarantees (PRGs) against political interference.
- Credit enhancement tools to boost project ratings.
- First-loss facilities to safeguard institutional investors.
The AFC, AfDB, and Africa50 have deployed these tools successfully in large-scale projects — including green energy corridors in Kenya and transport hubs in West Africa.
For comparison, Turkey–Africa Investment 2025 illustrates how similar co-financing structures are unlocking billions in infrastructure finance across emerging markets.
Financing in Local Currency: Managing the Inflation Trap
A major challenge in Africa’s infrastructure investment landscape is currency mismatch.
Projects earn in local currency but borrow in dollars, exposing them to exchange-rate and inflation risk.
Countries like Nigeria and Kenya are now issuing local-currency infrastructure bonds and diaspora-backed instruments to fix this imbalance.
As covered in Diaspora Bonds & Diaspora Capital: Financing Africa’s Future, diaspora-led financing can stabilize infrastructure returns while supporting national development.
ESG and Impact Investment: Aligning Profit with Purpose
Global investors managing over US$40 trillion in ESG capital are looking to Africa, but remain cautious.
De-risking strategies and clear guarantees can convert hesitant ESG interest into real investment commitments.
This balance between profit and purpose echoes insights from The Power of Purpose: Building Meaningful Growth in Africa’s Economy, which argues that Africa’s growth will depend on aligning values with viability.
Case Studies: De-Risking in Practice
- Lake Turkana Wind Power (Kenya): AfDB guarantees attracted US$650 million in private finance.
- Amandi Power (Ghana): Local and international banks co-financed through blended guarantees.
- South Africa’s REIPPPP: Mobilized US$20 billion in renewables via state-backed assurances.
Each project shows that confidence, not capital, is the true key to infrastructure success.
Policy Roadmap: Building Confidence Through Collaboration
To close Africa’s US$100 billion annual infrastructure gap, governments and regional institutions must expand:
- Sovereign guarantee pools across the AU and AfDB.
- Regional credit enhancement platforms.
- Transparent investment regulations that attract institutional partners.
For policymakers and investors alike, the message is simple: reducing risk builds confidence — and confidence builds Africa.
