NEW ANALYSIS: Forecasting The Infrastructure Financing Needs of Ghana, Nigeria, Senegal and Cote d’Ivoire to 2030
Numerous international organizations often stress the importance of infrastructure for development, including in Africa’s development. Yet, there is a severe lack of analysis on the actual infrastructure financing needs of the continent, making it increasingly difficult to identify the actual costs required to meet these needs.
A handful of organizations have sought to address this, for example, the African Development Bank (AfDB) in its 2018 forecasting predicted Africa needed USD 130 – 170 billion for 10 years with external financing standing at USD 68 – 108 billion up to 2030, however, these estimates are updated every eight years at best. Similarly, the Global Infrastructure Hub, an organisation by the G20, has analysed the infrastructure needs of 56 countries across the world, however, only 15 of these countries are African.
There is an urgent need to break down infrastructure financing needs by region, subregion and country, and to ensure they are updated promptly – a space which DR has sought to address.
We have designed an econometric model to predict the infrastructure investment spending needs of four West African countries – Ghana, Nigeria, Senegal and Cote d’Ivoire – from 2021 to 2030 under two scenarios – Business as Usual (BaU) and Meeting the SDGs. Our analysis highlights the extensive capital requirements required over the next eight years to Meet the SDGs, reflecting the importance of access to concessional, long-term and sustainable financing.
Our analysis equally emphasizes the constraints African countries face in the development financing system, largely owing to the Debt Sustainability Assessment (DSA) by the World Bank and the IMF. There are two central issues with the DSA:
- The DSA provides a negative signal to investors as the DSA is only applied to poorer countries, implying a need for “surveillance”; and
- The DSA ignores the positive aspect of debt, including the production of high-quality assets created by debt that drive growth
The ability to address infrastructure goals and meet targets such as the UN SDGs and Agenda 2063 is contingent on the ability to secure affordable financing. It is therefore directly impacted by the DSA, which is in urgent need of reform.