Picture: 123RF/SONDEM
Picture: 123RF/SONDEM

Here is what you need to know: 

Baker McKenzie’s latest report — “New Dynamics: Shifting Patterns in Africa’s Infrastructure Funding” — shows the state of the African infrastructure market, and how the major global players’ approach to infrastructure lending on the continent is changing.

Evan Pickworth. Picture: REBECCA HEARFIELD
Evan Pickworth. Picture: REBECCA HEARFIELD

The report’s data shows that multilateral and bilateral lending into Africa has declined, with investment levels falling successively in 2019 and 2020 compared to peak levels seen after the financial crisis.

In 2019, bilateral and multilateral lending into Africa amounted to $55bn, which dropped to $31bn in 2020. Over the past six years, the decline is significant — deal values dropped from $100bn in 2014 to $31bn in 2020.

This slowdown in infrastructure investment is attributable to a number of factors, including the pandemic. Economic contraction has affected Nigeria and SA, meaning the region’s largest economies have not been feeding in growth as in previous years. However, market fundamentals signal a region with underlying resilience and, as the global economy recovers, finance will be unlocked.

There are already positive indicators of forthcoming investment. Commodity prices are rising and landmark deals are returning. For example, mining multinational Sibanye-Stillwater recently committed R6.3bn to SA infrastructure projects.

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