AfDB and Global Finance Leaders Tackle Infrastructure Investment Gaps at Finance in Common Summit

“We recognized that to effectively engage private sector sponsors in infrastructure projects, a more structured and systematic approach was essential,” Quaynor stated.

The African Development Bank joined global development finance institutions in Cape Town for the Finance in Common Summit, focusing on strategies to bridge infrastructure financing gaps in emerging economies.

During a key session titled Private Sector Mobilization for Sustainable Infrastructure in Emerging Economies, African Development Bank Group Vice President for Private Sector, Infrastructure, and Industrialization, Solomon Quaynor, outlined the Bank’s value chain approach to infrastructure development. Quaynor emphasized a strategic shift from ad hoc project planning to a systematic framework designed to attract private sector investment.

“We recognized that to effectively engage private sector sponsors in infrastructure projects, a more structured and systematic approach was essential,” Quaynor stated.

Infrastructure Investment Challenges and Solutions

Jordan Schwartz, Executive Vice President of the Inter-American Development Bank, underscored the major challenge of sovereign risk, noting that it remains the primary determinant of private sector investment in infrastructure, exceeding concerns over contract types, project pipelines, or financing structures.

Sir Danny Alexander, CEO of HSBC Infrastructure Finance, identified three critical drivers of private sector investment:

1. Strong policy frameworks that ensure security and sustainable cash flows.
2. Comprehensive project preparation, which he noted is more expensive and time-consuming in emerging markets.
3. Effective financial instruments to facilitate infrastructure financing.

The African Development Bank’s New Approach

Quaynor detailed the Bank’s recent progress, highlighting two flagship initiatives:

• Africa50 – A leading infrastructure project developer dedicated to advancing bankable infrastructure projects.
• Alliance for Green Infrastructure in Africa (AGIA) – A fund aiming to mobilize $400 million for project development and $100 million for project preparation to accelerate green infrastructure investments.

“Public development banks working with local developers can access AGIA’s market facility, fostering a more competitive and efficient environment for project development,” Quaynor noted.

Risk Mitigation and Financing Strategies

To address investor concerns, Quaynor emphasized the Bank Group’s risk mitigation mechanisms, including:

• Partial risk guarantees to support government obligations.
• Triple-A guarantees to ensure financial stability.
• First-loss protections, though structured to prevent excessive realized losses.

Pradeep Kurukulasuriya, Executive Secretary of the UN Capital Development Fund (UNCDF), reinforced the role of organizations like UNCDF in financing infrastructure, emphasizing their ability to absorb higher risks than traditional multilateral development banks (MDBs) and development finance institutions (DFIs).

A Call for Greater Collaboration

Other panelists included Kishor Khumbare (Chief Risk Officer, India Infrastructure Finance Company Limited), Marta Postula (First Vice President, BGK Poland), Woochong Um (CEO, Global Energy Alliance for People and Planet), and Leslie Maasdorp (CEO, British International Investment). They collectively called for enhanced integration among development finance institutions to maximize the impact of existing financial instruments.

“The challenge isn’t the lack of financial tools—we must enhance integration and coordination across institutions to function as a cohesive system,” Kurukulasuriya emphasized.

Finance in Common Summit 2025

This year’s Finance in Common Summit, themed Fostering Infrastructure and Finance for Fair and Sustainable Growth, is taking place in Cape Town, South Africa, from February 26 to 28, 2025. The event gathers global financial leaders, multilateral banks, and private investors to devise strategies for closing infrastructure investment gaps and fostering sustainable development worldwide.