Better infrastructure can be a catalyst for Africa’s productive transformation. Quality transport, energy, digital and water networks improve citizens’ well-being and shape more productive economies. African policymakers have made big strides to accelerate infrastructure development, notably through the African Union’s Programme for Infrastructure Development in Africa (PIDA). However, more than 2 out of 5 African people remain without access to basic infrastructure, especially electricity. If left unaddressed, we estimate the number of Africans without access to electricity will increase from 641 million today to one billion by 2050, or 11% of the world’s population.
Our report finds that African economies require investments of USD 2.48 trillion between now and 2040 to develop their infrastructure to the level comparable to peer countries in other regions. Achieving such investment levels could boost growth by 4.5 percentage points per year. This in turn would allow Africa to surpass the African Union’s Agenda 2063 target of 7% annual gross domestic product (GDP) and double the continent’s GDP by 2040.
With the right policies, Africa can meet its needs for investment. The annual infrastructure investment need of USD 155 billion is equivalent to 5.6% of the continent’s GDP in 2024. African governments spent an average of 1.3% of GDP (USD 34 billion) on infrastructure per year over the 2016-20 period. This is comparable to the global average, but below the levels of countries that have pursued infrastructure-led development such as China (6.7% of GDP) or Viet Nam (5.1% of GDP).
Public funding remains central: African governments and international public funders accounted for 89% of the average annual infrastructure spending in Africa between 2016 and 2020. African governments also spent seven times more on debt service than on infrastructure from 2019 to 2023.
Private finance can play an important role in addressing the current infrastructure investment gap. Private investment in African infrastructure fell from USD 1.8 billion in 2023 to USD 1.2 billion in 2024. Reversing this trend will require managing risks and risk perceptions that deter investors. Africa has the lowest default rates on infrastructure debt – less than 2%, compared to almost 5% in Asia and 10% in Latin America – yet we estimate the cost of capital to be 13% in Africa, well above the OECD average of 8% and the developing Asia average of 10%. Enhanced transparency of data and information on investment risks could lower risk perception and reduce the cost of capital. The joint African Union-OECD African Virtual Investment Platform, launched at this year’s African Union Summit, is a step in this direction.
Africa’s Development Dynamics 2025 proposes three main levers to boost infrastructure development:
Improve debt financing conditions and investment rules to mobilise all resources, including from institutional investors.
Enhance the strategic prioritisation of PIDA projects, especially in least developed countries and for regional integration.
Strengthen the governance and project capacity of infrastructure developers and relevant government agencies.
This year marks a new turning point for financing Africa’s infrastructure, with important milestones like the 4th International Conference on Financing for Development. The African Union Commission and the OECD Development Centre are proud to continue the partnership on this flagship report now in its seventh edition. Africa’s Development Dynamics is the foundation of our joint work. As we deepen our collaboration, we are generating relevant new sources of data and intensifying the dialogue between policymakers, investors, and international partners. We trust that this report, like previous editions, will become an essential resource for our stakeholders in their quest to attain the goals of the African Union’s Agenda 2063 and to improve the living standards for all Africans.
Mahmoud Ali Youssouf,
Chairperson,
African Union Commission
Mathias Cormann,
Secretary-General,
Organisation for Economic Co-operation and Development