Africa’s $68 billion to $108 billion annual infrastructure financing gap is emerging as one of the continent’s most pressing challenges and promising opportunities, offering South African businesses and global investors a unique chance to drive sustainable development while unlocking significant economic returns.
Tania Swanepoel, Head of ESG at African Infrastructure Investment Managers (AIIM), a division of Old Mutual Alternative Investment (OMAI), explains that the continent’s unmet energy, transport, and digital infrastructure needs to create fertile ground for impactful investments.
“There is a major imbalance between the demand for high-quality, sustainable infrastructure and the supply of those services,” says Swanepoel, calling it “a major opportunity” for collaboration between the public and private sectors.
Despite ongoing global economic uncertainty, Africa’s infrastructure sector has remained resilient, buoyed by the continent’s long-term growth potential and increasing urbanisation. Sub-Saharan Africa is projected to add 900 million urban dwellers by 2050, with cities demanding extensive investments in energy grids, mobility solutions, and digital networks to keep pace.
Swanepoel highlights South Africa’s unique position as a gateway for infrastructure investment across the continent. With its advanced financial sector, robust project structuring expertise, and a strong network of institutional investors, South Africa plays a pivotal role in channelling funds into high-impact projects elsewhere in Africa.
“Allocations to African and emerging markets were not necessarily part of investors’ strategies in the past,” says Swanepoel. “But there is now a willingness to explore new growth areas and consider how investors can access those opportunities.”
Johannesburg’s Sandton financial district and Cape Town’s burgeoning tech ecosystem illustrate how South Africa is a strategic base for developing regional infrastructure solutions. The country’s infrastructure expertise and well-established ESG practices further enhance its role as a hub for sustainable investment.
Investment interest is converging around three key sectors: energy transition, mobility and logistics, and digital infrastructure. According to Swanepoel, their African Infrastructure Investment Fund 4 (AIIF4) has strategically focused on these verticals, aligning projects with solid sustainability and impact objectives.
Digital infrastructure, including transmission networks and data centres, is a standout priority as Africa undergoes rapid digitisation. Energy projects aimed at electrification and cleaner energy adoption are equally critical, given that two-thirds of the world’s population lacking electricity live in Africa. Mobility and logistics investments are essential to support urban growth and improve market access.
“The numbers are astounding,” Swanepoel notes, pointing out that between $130 billion and $170 billion is needed annually for infrastructure development. “This leaves a financing gap that underscores the scale of opportunities for investors.”
AIIF4 is also distinguished by its focus on gender-lens investing and climate goals, which are integrated into the fund’s mandate to deliver measurable, sustainable impact across projects.
Investors are increasingly drawn to African infrastructure because of its alignment with Environmental, Social, and Governance (ESG) standards, which not only mitigate risks but also amplify the impact of investments.
“Incorporating ESG into the investment process means looking at every asset as a whole entity,” explains Swanepoel. This includes evaluating environmental risks, governance practices, and social impacts like workforce diversity and community health. Such rigorous due diligence ensures that projects are both sustainable and resilient, making them attractive to institutional investors navigating complex global markets.
The momentum behind Africa’s infrastructure sector is undeniable. With its rapidly growing population, urbanisation, and untapped energy and digital connectivity potential, the continent is poised to attract even greater attention from global investors.
Partnering with experienced investment managers with deep regional expertise is essential for navigating Africa’s complex infrastructure markets.
Swanepoel concludes, “This is about more than just building roads or power plants – it’s about building the foundation for long-term prosperity.”
