Pandemic Disrupted Infrastructure Development in Africa

Rabat – The COVID-induced economic crisis has negatively impacted infrastructure financing globally, and Africa has been no exception.

Peaking at $100 billion in 2018, infrastructure financing has been on a rapid decline in the aftermath of the global pandemic, preventing projects from achieving financial closure, according to the Casablanca Finance City’s (CFC) annual report.

The report, titled “Developing African Infrastructure in Challenging Times,” is part of CFC’s “Africa Insights” series. It details how governments grappled to control the spread of COVID-19 as government spendings on infrastructure projects fell drastically in 2019 and 2020.

The report notably suggests that the COVID-created gap in infrastructure financing can be bridged by creating an investment channel with the private sector.

Despite the economic fallout of the pandemic, the private sector in Africa displayed great resilience. As the volume of projects financed by the private sector fell by an astounding 53% across emerging and developing economies, investments in Africa resisted global trends and rose by 7.3%, explains the report.

The report cites Africa’s demographic growth as the driving force behind the forecasted demand for infrastructure.

Coupled with the intensive business activities within the African Free Trade Area (AfCFTA), Africa’s rising demography will require a significant increase in infrastructure investment, says the report.

It cites a number of options AfCFTA can potentially unlock to provide the necessary funding to meet the robust demand for infrastructure projects.

The report also highlights the importance of Islamic Funding as a potential source to finance infrastructure projects. In 2014, Morocco, Ivory Coast, South Africa, and Nigeria started issuing sovereign Sukuk, state-issued bonds, to fund infrastructure projects.

Morocco has seen a rapid acceleration in infrastructure development in recent years.

However, the North African country’s sub-optimal infrastructure is still lagging behind in the 2020 Infrastructure Development Index. With a score below 80, the Moroccan infrastructure ranks in the seventh position in Africa, according to the African Development