Africa has least default rate on infrastructure projects, say leaders

Wednesday November 02 2022
African Development Bank president Akinwumi Adesina

African Development Bank president Akinwumi Adesina speaks during the opening ceremony of the Africa Investment Forum 2022. He noted that Africa has the lowest default rate on infrastructure projects in the world, at 5.5 per cent. PHOTO | COURTESY | AFDB GROUP


African leaders have said the continent’s investment risk has been exaggerated, making investors hesitant to put their money in its development projects.

Quoting a Moody’s Analytics report on defaults on infrastructure investments, African Development Bank (AfDB) president, Dr Akinwumi Adesina, noted that Africa has the lowest default rate on infrastructure projects in the world, at 5.5 per cent.

“Africa is not as risky as you think. Perception is not the same as reality,” Dr Adesina said at the opening of the Africa Investment Forum in Abidjan, Cote d’Ivoire, on November 2.

The biggest defaulter, according the Moody’s report, is Latin America at 12.9 per cent, followed by Asia at 8.8 per cent, Eastern Europe (8.6 per cent), North America (7.6 per cent), and Western Europe (5.9 per cent).

Recovery from Covid pandemic

“Africa has shown resilient recovery from the Covid-19 pandemic. Foreign direct investment (FDI) declined from $47 billion in 2019 to $40 billion in 2020 because of Covid. Africa recovered in 2021, as FDI rose to $83 billion, doubling the flows in 2020,” he said.


Heads of state attending the forum amplified Dr Adesina’s sentiments. They included Ghana’s Nana Akufo-Addo, Zimbabwe’s Emmerson Mnangagwa, Ethiopia’s Sahle-Work Zewde and Ivorian Vice-President Tiemoko Koné.

The leaders said that having one of the world’s largest young populations, natural resources and renewable energy potential, the continent is the investment frontier in the world.

President Akufo-Addo said the African premium risk has become a huge obstacle to development as it hampers investment. Noting that the global investment environment is difficult, he said Africa has excellent returns on investment and urged businesses to take advantage of the continent’s demographic dividend to foster growth.

Africa Investment Forum 2022 in Abidjan, Cote d’Ivoire

Participants pose for a photo at the opening ceremony of the Africa Investment Forum 2022 in Abidjan, Cote d’Ivoire, on November 2. PHOTO | COURTESY | AFDB GROUP

Electric cars

Dr Adesina said the future of electric cars in the world depends on Africa because it has the largest sources of cobalt in the world, with massive sources of lithium in Zimbabwe, Namibia, Ghana, Mali, and Democratic Republic of Congo.

“The African Continental Free Trade Area is the largest free-trade zone in the world, connecting economies worth $3.3 trillion,” he said.

The Africa Investment Forum — Africa’s premier investment marketplace now in its fourth year — helps to connect investors to Africa. The African Development Bank, the Africa Import-Export Bank, the Trade and Development Bank, the Africa Finance Corporation, the Development Bank of South Africa, the European Investment Bank, the Islamic Development Bank and Africa50 support it.

It is aimed at mobilising investments for Africa, and showcase the continent’s bankability to the world.

Investment interests

In four years, it has helped to mobilise $110 billion in investment interests to Africa, said Dr Adesina.

“The $600 million securitised finance to support the cocoa board of Ghana has helped Ghana to grow its cocoa production by one million tonnes, with infrastructure for warehousing and cocoa processing. The landmark $24 billion liquefied natural gas project of Mozambique, which was structured and closed at the Africa Investment Forum, is the largest-ever foreign direct investment in Africa. It will turn Mozambique into the third-largest exporter of natural gas in the world and add $66 billion to its economy,” he said.

The leaders have curated investment projects in renewable energy, hydropower, gas, railways, roads, and water transport, agriculture, health, mining, fertiliser manufacturing, port infrastructure and urban green transport to woo investors.