The United Kingdom’s Department for International Trade (DIT) says it has the ability to facilitate the provision of billions of Pounds Sterling in lending and guarantees to African countries to help them address a chronic infrastructure backlog that the World Bank estimates to be about $93 billion a year in the Sub-Saharan region alone.
DIT in Africa has a presence in 21 countries across the continent, can enable the provision of these facilities through UK Export Finance (UKEF), the United Kingdom’s export credit agency, a part of DIT. Loans can be extended in the local currencies of 9 African countries for projects ranging from transportation, mining and general construction, though they must include at least 20% UK content and meet all other lending criteria. For example, UKEF has the ability to support infrastructure projects in South Africa (up to £4 billion), Kenya (up to £1 billion) and Nigeria (up to £750 million).
“Africa’s infrastructure challenges not only inhibit its ability to trade with the rest of the world but are also a significant obstacle to intra-African trade, both of which are critical to the continent’s economic growth agenda,” said Emma Wade-Smith, UK Trade Commissioner for Africa.
“Finance is a critical component of infrastructure development and the combined risk appetite of £21.4bn we have across the region to facilitate projects is a clear sign of the UK’s belief in Africa’s long-term economic growth trajectory.”
“Of course, projects must still meet all the lending requirements before we’re able to disburse any funding. But in terms of capacity, we have the ability to provide significant funding for infrastructure projects across Africa,” Wade-Smith added.
Although Africa is the second-fastest urbanizing region in the world behind Asia, with estimates showing that in the next 30 years more than half of its projected 2.2bn people will live in cities, the continent still struggles from a chronic lack of basic infrastructure. Data compiled by the Washington D.C.-based Brookings Institution show that 319 million people across Sub-Saharan Africa have no access to reliable drinking water; 620 million have no access to electricity; while only 34% of the continent’s people have adequate road access.
“There is enormous scope for Africa to boost its exports to the UK and indeed other parts of the world if it can address its infrastructure backlog,” says Wade-Smith. “The research shows that in the long-term trade is better than aid and without adequate infrastructure it will be very difficult for Africa to boost its ability to buy and sell with the rest of the world.”
DIT in Africa has been instrumental in establishing the Africa Infrastructure Board, which brings together UKEF, the Department for International Development (DfID) as well as UK infrastructure and mining companies that are already active in Africa. Its ambition is for UK government and industry to work together to identify major infrastructure projects across Africa that can benefit from the UK’s extensive expertise in the fields of finance, engineering and governance, as well as health and safety.
DIT in Africa is currently tracking numerous active infrastructure projects across the continent which it believes could benefit from UKEF funding. One such project that has already benefitted is Uganda’s Kabaale International Airport which, when completed, will be the East African nation’s second-largest airport, thanks to the £215m loan it received from UKEF in December 2017, the largest-ever facility granted to an African country by the export credit agency.
“UKEF’s risk appetite for Africa has more than doubled in the last few years in line with Africa’s improving economic and socio-political fundamentals,” said Wade-Smith. “The continent is becoming increasingly democratic and economically stable, which is heartening as with infrastructure commitments one needs to be in it for the long haul.”