Inside Africa50’s push to unlock African capital for infrastructure

With aid from traditional donors in decline, African governments are being pushed to look inward to finance everything from emergency assistance to public health and long-term infrastructure. That shift is reshaping the financing landscape, prompting new approaches to mobilize domestic capital and putting the spotlight on institutions such as Africa50, which in many ways was created to do just that. Launched in 2015 by African states and the African Development Bank, Africa50 was set up as a Pan-African investment platform to help close the continent’s infrastructure funding gap, which stands between $68 billion and $108 billion. By combining project development and financing under one roof, it backs medium- to large-scale projects that can deliver both development impact and commercial returns. Headquartered in Casablanca, Morocco, Africa50 now counts more than 30 African countries, two central banks, and AfDB as shareholders. Since its creation, it has invested in 32 projects in 30 countries and has a portfolio valued at more than $8 billion. Against this backdrop, Devex spoke with Moshood Bode Abolade, Africa50’s investment director, about the institution’s evolving strategy, lessons in mobilizing African institutional investors, and how it is approaching climate-resilient infrastructure. This conversation has been edited for length and clarity. How has Africa50’s strategy evolved over the past seven years, and what led to the emphasis on mobilizing African capital? I think it all goes back to our mandate: African governments recognized the need for a Pan-African vehicle to expand the pipeline of bankable infrastructure projects. At the time, there was capital available, but few well-prepared projects, so Africa50 was set up to fill that gap as a homegrown solution. As we began operating, it became clear that capital from governments would be limited, especially after COVID and the commodity crisis strained public finances. At the same time, Africa’s financial system held significant resources through insurance companies, pension funds, sovereign wealth funds, and others. We realized we needed to tap into that. Our initial focus was on project development and direct investment. But the need to mobilize more capital — one of our core pillars — pushed us to evolve into an asset manager, offering strategies aligned with the mandates and regulatory requirements of institutional investors. The money is there; the challenge is to design vehicles that both attract their capital and fulfill our original mandate, given the constraints on government resources. Africa50 describes the $222.5 million close of its Infrastructure Acceleration Fund as a “groundbreaking achievement,” in 2023 since it was the first time a Pan-African infrastructure fund reached first close with capital committed primarily by African institutional investors — pension funds, insurers, and sovereign wealth funds — alongside one global investor. What did that process look like, and what have you learned from it? The first realization was that there’s a lot of money in Africa — the question is how to unlock it. We had to walk the journey of showing institutional investors, especially pension funds, that African infrastructure is a bankable proposition. We weren’t just saying this; our portfolio demonstrated that infrastructure here can deliver commercial returns that meet expectations. Another important lesson was that while Africa is fragmented into 54 countries, many investors — even those based in a single market — have mandates to invest beyond their borders. From the outside, you might assume a pension fund can only invest domestically, but that’s not the case. We also found strong appetite for capacity building. For some, infrastructure was a new asset class, and they wanted to learn how to approach it. Many asked to co-invest with us on projects, not only to put capital into our funds but to gain firsthand experience they can later use to invest directly. For us, this is part of the bigger story of using Africa’s own capital to deliver Africa’s infrastructure. What reforms or incentives are needed to continue unlocking African institutional money? Regulation is very key. In a lot of markets, pension funds’ allocation to infrastructure is very limited. There needs to be a concerted effort across jurisdictions to improve regulation to allow more allocation to infrastructure. Infrastructure can deliver long-term returns, which is what African pension funds are seeking — being able to match assets with liabilities decades into the future. Infrastructure assets essentially match that profile. On the project side, both public and private actors have roles to play. We need more homegrown developers who can complement Africa50’s work and that of other infrastructure investors. Governments also need to keep creating enabling environments. It’s not a one-shot game — it requires continuous improvement to make projects commercially viable and to encourage local capital markets as a funding avenue. Would you say we’re at a turning point in how African infrastructure is being funded? Yes, it is a turning point. In some markets, a lot of infrastructure is already being funded using only local capital. In South Africa and Morocco, sometimes, outside capital cannot compete with local capital. That eliminates foreign exchange risk, because the funding and revenue sides are both local. We see a future where the experiences of Morocco and South Africa are extrapolated to other markets. As local financial institutions gain more comfort with infrastructure as an asset class, they will dedicate more capital to it. So investors are increasingly recognizing infrastructure as a bankable asset class? Yes, but we’re still in the early stages. There are projects that have demonstrated the asset class is bankable, but they’re limited. It’s a chicken-and-egg situation — we need local investors to keep funding these assets, and we need the assets to keep performing to bring in more capital. We’re at that turning point. It will take time, but the direction of travel is right. We just need to increase the pace. What role do non-African players play, especially as traditional partners such as the U.S. and Europe shift away from the continent and others such as the Gulf and China expand? The sort of funding that comes from outside Africa will continue, and Africa continues to need it. Other continents also rely on international capital for infrastructure financing — in South America, Asia, even Europe. Intercontinental fund flows will always remain. The key message is that Africa’s infrastructure is not about aid. It is commercial and can deliver long-term risk-adjusted returns. The best way to show that is by using local capital to create a demonstration effect, sending a message to the international community. There’s no difference in investing in infrastructure in Eastern Europe, South America, or Africa. In fact, data shows Africa has fewer project failures in the operations phase than some other markets. That tells us African infrastructure is actually a safer investment proposition. We need to close the gap between perceived and actual risk. Finally, how does Africa50 approach climate resilience in infrastructure? We approach this in several ways. First, through the Alliance for Green Infrastructure in Africa, a fund dedicated to the project development stage — when projects are designed technically, environmentally, and socially. The aim is to ensure projects are green and climate resilient from the start, so that once they move into financing, construction, and operations, the assets are ready to confront climate challenges. Second, in our own development projects we conduct climate vulnerability assessments as part of environmental impact studies. We embed mitigants at the development, construction, and operations phases to make sure assets are fit for purpose and can withstand climate shocks over their lifespan. Another avenue I’d like to mention is our innovative product called asset recycling. Its primary purpose isn’t climate resilience, but innovation in how governments can unlock and redeploy capital. Essentially, we take an existing government-owned asset — where capital is tied up and immobilized — and bring it under private sector operation and maintenance. That frees governments to use the released capital to build new assets, meaning the same initial investment can be recycled multiple times. When we do this, we assess the asset’s current state, correct gaps, and integrate climate resilience and adaptation. Even brownfield projects [redeveloping or upgrading existing, underused infrastructure or land] can be upgraded to confront today’s and future climate challenges. But the real power of asset recycling is that it creates a cycle of liquidity for governments, helping them deliver more infrastructure while strengthening the resilience of what already exists.