Infrastructure investment vital to Africa’s economic growth but financing gaps remain
More infrastructure investment is key to Africa’s growth and transformation, according to a report from the OECD and the African Union Commission. The continent could double its GDP before 2040 by increasing annual infrastructure spending to $155bn — equivalent to 5.6% of GDP, the report, Africa’s Development Dynamics 2025, estimated.
Current investment levels fall far short of that target. Governments, development finance institutions and private investors are collectively spending around $83bn a year, leaving a substantial financing gap that is constraining growth and industrial development.
The report frames infrastructure as a central driver of economic transformation, enabling countries to move into higher-value sectors, improve regional connectivity and strengthen participation in global value chains. For investors, this translates into significant opportunities across transport, energy and digital infrastructure.
Returns can be attractive: the OECD notes that infrastructure projects in Africa can generate returns of up to 20%, reflecting strong demand and structural deficits across key sectors. However, mobilising private capital at scale remains a challenge.
Public finances are under increasing strain. In many countries, debt servicing costs now exceed spending on infrastructure, limiting governments’ ability to fund large-scale projects and increasing reliance on external investment.
At the same time, traditional financing sources are shifting. Official development assistance is expected to decline, while lending from major bilateral partners, including China, has slowed compared with previous decades.
Against this backdrop, attracting foreign direct investment is becoming more critical. The report highlights the need for improved regulatory frameworks, stronger project preparation and clearer pipelines of bankable projects to reduce risk and increase investor confidence.
Targeted investment will also be essential. Transport corridors, renewable energy systems and digital infrastructure are identified as priority areas with the potential to lower trade costs, support industrialisation and expand access to services.
Closing the infrastructure gap will be decisive in determining whether Africa can sustain higher growth rates and compete more effectively in the global economy.
