Investing USD 155 billion each year in infrastructure development could boost Africa’s annual gross domestic product (GDP) growth by 4.5 percentage points, doubling the continent’s GDP by 2040. These gains would enable Africa to surpass the objective of 7% annual GDP growth set out in the African Union’s Agenda 2063.
Such a push is within the reach of African countries. USD 155 billion per year is equivalent to 5.6% of the continent’s GDP in 2024. According to the latest comparable data, its annual infrastructure investment – from private, government and development finance combined – averaged 3% of GDP (USD 83 billion) between 2016 and 2020, with African governments contributing on average 1.3% of their countries’ GDP. In 2019-20, four African countries already allocated more than 5% of their GDP to infrastructure from government spending, approaching the levels of the People’s Republic of China (6.7%) and Viet Nam (5.1%). A rise in total spending from 3% to 5.6% of GDP seems feasible for more African countries.
Increasing Africa’s infrastructure investment to that level requires more financing from all sources, especially private capital. At 11% of the total, the share of private investment in Africa’s infrastructure finance is lower than in other regions, and its absolute level is lower than would be expected given potential returns.
Most African countries have not tapped into the tripling of global private infrastructure investment that occurred between 2013 and 2022: over that period, Africa attracted only 6-8% of the total. More recently, in 2024, rising costs and deteriorating macroeconomic conditions even led private capital deals in African infrastructure to fall from USD 1.8 billion in 2023 to USD 1.2 billion.
This report estimates the weighted average cost of capital for infrastructure projects for 2023 to be highest in Africa, at 13%, compared to 10% in developing Asia and 8% in OECD countries. Africa’s cost of commercial debt is at least 2.5 times higher than in OECD countries; its cost of equity is at least 1.6 times higher.
Limited private investment in infrastructure can lead to higher costs for the African people. For example, the average cost of broadband Internet for African users per month was USD 56 in 2024, higher than in Latin America and the Caribbean (USD 46) and developing Asia (USD 17).
Yet, the returns on investment of infrastructure projects in Africa – up to 20% – are among the world’s most attractive.
Contributing 41% of the continent’s total investment, African governments are playing a central role as infrastructure funders; however, shrinking fiscal space and rising sovereign debt burdens constrain government spending.
In addition to direct budget allocations, Africa’s public spending on infrastructure is channelled through state-owned entities (30%) and public-private partnerships (10%). In both cases, transparency, accountability, monitoring and evaluation are essential to reducing off-budget interventions such as fiscal injections or contract renegotiations.
Between 2009-13 and 2019-23, the number of years it would take to repay the public debt using tax revenues in African countries increased from 2.8 years to nearly 5 years, rising faster than in developing Asia (1.3 years) and Latin America and the Caribbean (1.2 years). African countries that face the tightest conditions are also those that rank lowest on the United Nations Development Programme’s Human Development Index: they would need more than 5 years to repay their debts. Over 2019-23, African governments spent seven times more on debt service than on infrastructure on average, and 15 of them allocated more public finance to interest payments than to infrastructure.
At 48% of Africa’s total infrastructure investment, bilateral and multilateral development partners are currently the main funders, but the outlook for this source of finance is uncertain.
According to OECD data, development finance flows disbursed for infrastructure in Africa increased from around USD 10 billion in 2010 to almost USD 15 billion in 2023. Development banks doubled infrastructure-related disbursements over the same period. In 2023, infrastructure represented 19% of total development finance transactions to Africa.
However, the OECD projects a 9% to 17% drop in official development assistance (ODA) in 2025. This comes on top of a 9% drop in 2024. The outlook beyond 2025 remains highly uncertain. Declines in bilateral and multilateral funding could disproportionally affect African countries with lower development levels, which already receive less ODA than middle-income countries.
Given constrained resources, infrastructure that connects economic hubs should be prioritised as the most cost-effective path to productive transformation. This report finds that Africa’s investment needs for achieving productive transformation are the largest for roads (32% of the total), followed by railways (24%), fibre-optic cables (23%) and solar power (17%). Depending on their infrastructure endowments, countries may identify different priorities for supporting regional and continental objectives. Better transport, digital and energy infrastructure can lower trade costs, stimulating Africa’s participation in global value chains, deepening regional value chains and advancing industrialisation. Strengthening infrastructure within and between cities is also key, as by 2050, two out of three Africans will live in urban agglomerations, and the urban land area will more than double.
Integrating environmental and social risk management into infrastructure planning can help mitigate costs and improve sustainability. Policy design and implementation should better reflect and manage the vulnerabilities caused by climate change and social risks, including pollution, biodiversity loss, population growth, and the exclusion of rural populations and women. African countries would need to set aside at least USD 10 billion each year to recover asset loss and damage to infrastructure due to extreme weather events linked to climate change.
Infrastructure development requires credible, evidence-based policies and a careful prioritisation of projects that advance Africa’s productive transformation. Africa’s Development Dynamics 2025 highlights two main areas to accelerate and scale up infrastructure development on the continent:
Aligning infrastructure development priorities with productive transformation goals can optimise the targeting and allocation of available financing. To enhance productive transformation, policymakers can focus on development corridors and urban infrastructure that boost highly productive sectors and regional value chains, especially through the Programme for Infrastructure Development in Africa (PIDA) Priority Action Plan. To monitor progress, policymakers require more and better data on productive transformation outcomes, job creation targets, available skills, infrastructure development and its financing. Greater co-ordination across different government levels (e.g. through master plans) can strengthen institutional and financial backing. Increasing capacity and skills – technical and managerial – is a prerequisite for implementing infrastructure projects.
More effective infrastructure governance can accelerate project implementation, reduce costs and improve operational sustainability. For instance, well-equipped public-private partnership units and project preparation facilities could better support large projects throughout their life cycle, lower costs, and strengthen the division of labour between public and private actors. Greater cost recovery and enhanced planning for maintenance are also essential for project sustainability: overall, 42% of the estimated investment need is for maintaining existing infrastructure. Credible African-led infrastructure certification, such as the PIDA Quality Label, can help improve project quality and bankability, in alignment with local contexts.