Connecting the African continent – Africa-EU Infrastructure Fund

Connecting the African continent – Africa-EU Infrastructure Fund

Infrastructure development fuels economic and social progress on the African continent. Investments in transport, energy, ICT services and water management directly contribute to boosting trade, reducing poverty and strengthening integration at regional level. According to studies, investments in infrastructure accounted for half of the average 6% growth in Africa before the financial crisis in 2009. But the financing needs in this field remain considerable.

The EU Infrastructure Trust Fund for Africa (ITF) was launched by the European Commission and the European Investment Bank (EIB) in 2007 to support Africa’s efforts in this regard and increase EU investment in infrastructure on the African continent.

The EIB-managed fund provides financial support for projects in different forms:

  • long-term loan finance is made available through the provision of interest rate subsidies;
  • technical assistance is provided in the form of funding for preparatory work on eligible projects;
  • direct grants are awarded to projects with social or environmental benefits; and
  • insurance coverage necessary to launch infrastructure projects is financed through ‘insurance premia’.

To be considered for funding, infrastructure projects must involve or benefit several countries and respect the principles of African ownership and long-term sus¬tainability. 47 sub-Saharan African countries are eligible.

At the end of 2009, 21 operations had already been approved or considered eligible, representing a grant amount of over €120 million. The ITF made a major contribution to several infrastructure projects with a positive social and economic impact beyond regional level. These include for instance electricity interconnection schemes between Benin and Togo and between Namibia and Zambia, a fibre optic cable linking Southern and Eastern African countries (the East African Submarine Cable system, EASSy), a hydroelectric scheme for Félou, West Africa, as well as the construction of a number of roads, railways, airports and ports.

The ITF is part of the two continents’ efforts to collaborate closely on infrastructure issues as part of the strategic partnership on trade, regional integration and infrastructure.

In 2009, the European Commission decided to increase its participation by €200 million, bringing its pledge to €308.7 million. This amount is matched by €75 million in pledged contributions by 12 EU member countries.

The grants are designed so as to leverage additional funds from other donors and private investors: up to €5 billion in loans from European or international financial institutions and the private sector are expected.