World
China, United States Battle for Influence in African Infrastructure Lending
New research from global law firm Baker McKenzie with data provider, IJGlobal, shows that development finance lending from state-backed institutions is the most important component of infrastructure funding in sub-Saharan Africa.
The battle for influence on the continent between Development Finance Institutions (DFIs) and Export Credit Agencies (ECAs) from China and the United States is set to heat up over the next decade in a fierce competition that could help the continent bridge its vast infrastructure gap more quickly than expected.
The report shows that survey respondents attribute the significance of DFI-lending in sub-Saharan Africa to the growing demand for infrastructure development (39%) and to the lack of availability of commercial funding for projects in the region, due to the perceived high risks associated with these investments (34%). The report further notes that China put US$8.7 billion in sub-Saharan Africa infrastructure projects in 2017 alone, while the US recently set up a new US$60 billion agency to invest in developing countries.
The report, ‘A Changing World: New trends in emerging market infrastructure, surveyed 434 executives from Export Credit Agencies (ECAs), Development Finance Institutions (DFIs), commercial banks and sponsors.
Wildu du Plessis, Head of Africa at Baker McKenzie in Johannesburg, notes that the infrastructure investment landscape in sub-Saharan Africa has changed beyond recognition in the past decade.
“The continent still suffers from massive under investment. According to African Development Bank (AfDB), poor infrastructure has cost the continent a cumulative 25% in growth in the last two decades. The World Bank estimates that the continent needs more than US$90 million per year to begin bridging the infrastructure gap. However, in many African countries governance has improved, which has accelerated growth and will make investment easier. Africa’s GDP is expected to grow to 3.7 per cent in 2019 and countries such as Ethiopia and Ghana, for example, have enjoyed some of the world’s fastest growth recently.”
The report shows how China has targeted sub-Saharan Africa in recent years, both in the context of its need for natural resources and as part of the Belt and Road Initiative (BRI). Chinese policy banks loaned $19 billion to energy and infrastructure projects in the region from 2014-2017, almost half of which was in 2017. China Exim Bank was the largest policy lender in Africa in the period 2008 – 2017 and China Development Bank was the second largest bilateral investor in this period, lending nearly as much as World Bank-linked multilateral agency International Finance Corporation.
“Against a background of a global geopolitical shift in trade relations, China has noted that it is looking to work with African countries in a participative and inclusive way. Chinese president Xi Jinping’s tour of Africa earlier this year is proof of the increasing interdependence of the maturing but still fast growing Chinese economy and developing economies in Africa. The relationship is seen to be mutually beneficial, China needs natural resources and new markets for its exports, and Africa needs funding for infrastructure investment which China is providing,” notes du Plessis.
Despite the prominence of Chinese investment, the US is also seen as a major player in infrastructure investment in Africa. Some 32 % of survey respondents said that they expected US-based DFIs and Export Credit Agencies (ECAs) to be the most active lenders into African power projects – a critical part of infrastructure activity – in the next ten years, while 29% of respondents said that they expected that China based DFIs and ECAs would be the most active in Africa in the next decade.
The US Power Africa programme reported recently that since its inception five years ago it has funded 80 transactions valued at more than US$14.5 billion that are now either online, under construction, or have reached final close. The programme remains fully funded.
Still, IJGlobal data shows that out of all DFI investment flowing into African power projects in the past ten years, Chinese lenders provided more than half of it (53%), followed by multilateral development finance institutions (22%). US-based DFIs only contributed 3% of the funding.
The report notes that the decision by the US in October to turn the Overseas Private Investment Corporation (OPIC) into the International Development Finance Corporation and double its lending ceiling to $60 billion could significantly accelerate the race in Africa.
Du Plessis explains the reason for growing US lending in Africa, “The move is widely seen as a counter to Chinese largesse in Africa and other emerging markets.”
The report shows that the US is reportedly concerned about the security implications of China gaining control of strategic assets as a result of unsustainable borrowing by some developing countries. By increasing the flow of finance to Africa – and bolstering competition among DFIs – the new agency is likely to provide a boost to infrastructure activity in the region.
Yet despite the torrent of development finance lending from China, the US and others, sub-Saharan Africa’s infrastructure gap remains vast.
Jen Stolp, Global Head of Project Finance at Baker McKenzie highlights three priorities which are key to reducing the financing gap: “First, a move away from traditional funding, and recognition that alternative structures and new financial instruments are needed; second, increased focus on project preparation funding and the creation of credible and predictable regulatory environments; and third, increased support for private equity investment.”
The report outlines how both global and regional DFIs are becoming more innovative as they seek to bridge the infrastructure gap. Recently the AfDB bought insurance on a $1 billion loan portfolio from hedge funds, reducing the amount of capital it holds against loans and freeing up lending capacity. Meanwhile, Afreximbank has introduced an African fund for export development to attract more private equity, and a project preparation facility (PPF) to address project development-related constraints.
“The way in which DFIs, ECAs and commercial banks interact is also changing, with a growing emphasis on partnerships, especially on larger projects,” says Stolp.
The survey shows that greater cooperation between DFIs/ECAs and commercial banks leads to more projects being financed and that 60% of survey respondents think there is room for even more collaboration on infrastructure financings. A further 24% note cooperation allows commercial banks to participate in deals too risky to do alone.
“Deals may be fronted by – or may have tranches provided by – DFIs, thereby giving further support to commercial lenders,” agrees Baker McKenzie’s Global Head of Banking and Finance, Michael Foundethakis. “It’s important to remember that DFIs are able to go where commercial banks may fear to tread.”
By Aduragbemi Omiyale
About $32 million has been put into the African Trade and Investment Development Insurance (ATIDI) by Germany through KfW Development Bank.
This funding package allows the European nation to become a D2-class shareholder of ATIDI, a status dedicated to Export Credit Agencies and Non-African Public Entities.
Of this amount, $18.4 million is funded from BMZ budget resources, with the remaining $13.6 million coming from KfW’s own resources. As such, it will assume the obligations and benefits related to its new shareholding status, including representation in ATIDI Governance and decision-making structures, and equally participating towards improving German trade and investments in Africa in alignment with the G20 Compact with Africa (CwA 2.0).
KfW’s subscription in ATIDI is the culmination of a dynamic partnership between the two organisations.
On behalf of the German Federal Ministry of Economic Cooperation and Development (BMZ), KfW has supported several countries’ membership in ATIDI with over $100 million in financing, thus strengthening the organisation’s capital base and expanding its ability to mitigate risk and mobilise private investment across African markets.
The new equity participation adds a direct shareholding to this long‑standing cooperation.
KfW is the 13th Institutional shareholder in Africa’s premier development insurer, further strengthening the organisation’s capital base and its capacity to support trade and investment across the continent.
At the official signing of the subscription agreement in Nairobi, Kenya, a member of the executive board of KfW, Ms Christiane Laibach, said, “Our membership is executed on behalf of the Federal Republic of Germany. It is only the latest culmination of a successful cooperation that has enabled the ATIDI membership of several African states and has created innovative insurance solutions to attract foreign investment on the continent.”
The chief executive of ATIDI, Mr Manuel Moses, said, “This milestone is iconic in many ways. First, it elevates our already dynamic bond with KfW and creates more opportunities for German investors looking to engage in Africa. It is also a recognition of ATIDI’s earned status as Africa’s top development insurer and the acknowledgement of the soundness of our business. Last, it underscores the power of partnerships in a global context increasingly marked by volatility and uncertainty. ATIDI will spare no effort to make this partnership a successful one.”
Established in 1948, KfW is Germany’s state-owned promotional and development bank and a key implementing partner of BMZ in international financial cooperation. Its shareholding in ATIDI is expected to stimulate up to $500 million in trade and investment between German companies and African markets.
Over the past 25 years, ATIDI has grown to become Africa’s premier provider of development insurance and one of its highest-rated financial organisations. It leverages its partnerships with leading multilaterals and regional bodies, including the African Union, the World Bank Group, COMESA, the European Investment Bank (EIB), and the Norwegian Agency for Development Cooperation (NORAD), to offer innovative credit and investment insurance products that foster sustainable and transformational growth across the continent.
By Modupe Gbadeyanka
The Netherlands’ largest energy provider, Essent, has cut the technology costs of its contact centre infrastructure by half.
The organisation, which serves 2.5 million customers, recorded zero critical incidents post-migration and improved agent workplace satisfaction by 36 per cent.
The migration was delivered in partnership with AI-first customer experience transformation specialists, Sabio Group, and was completed in under 12 weeks for an operation spanning over 1,000 agents across two locations.
Agents were forced to juggle multiple disconnected screens simultaneously — a workflow that was as inefficient as it was stressful.
“Our agents were constantly working with different screens — multiple chat instances open at once, multiple agent desktop instances. It was messy, and in some cases, quite stressful,” SAFe Product Manager for Customer Interaction, Omnichannel and Digital Transformation at Essent, Michiel Kouijzer, stated.
“A lot of colleagues were saying I was mad for even suggesting this approach. It kind of feels like a victory on a personal level that it did work out. You just have to be a little ambitious — and have the right expert partner who can make it work,” Kouijzer added.
With stable cloud infrastructure now firmly in place, Essent is turning its attention to the capabilities that were impossible in its legacy environment: AI-powered call summarisation, agentic customer self-service, and next-generation workforce optimisation.
Rather than a reckless ‘big bang’ cutover that could have affected service to millions of households, Sabio engineered a phased migration strategy — beginning with Essent’s SME segment to validate technical readiness before scaling to the full enterprise operation.
“This project showcases Sabio’s unique position in the contact centre technology landscape. We’re not just moving Essent to the cloud — we’re establishing a foundation for continuous improvement in their customer experience delivery,” the Country Manager for Sabio Group Benelux, Wouter Bakker, commented.
By Kestér Kenn Klomegâh
On April 11, the presentation of the book “Africa: a new market for Russian business” took place, which aroused lively diverse interests among business representatives, entrepreneurs and employees of federal structures of Russia. The event was dedicated to discussing the prospects of Russian companies entering the African market and became a platform for the exchange of views and experiences.
Participating guests, packed in the small hall, included:
– representatives of business circles,
– entrepreneurs interested in new directions of development,
– employees of federal agencies curating foreign economic activity.
The presentation was held in a constructive and friendly atmosphere. The author of the book, Serge Fokas Odunlami, detailed the key ideas and conclusions presented in the publication. Particular attention was paid to the practical aspects of operating in the African market, as well as the analysis of opportunities and risks for Russian companies.
During the lively discussion, participants asked questions, shared their experiences and made suggestions for developing cooperation with African countries. This format allowed not only to get acquainted with the content of the book, but also to discuss topical issues of expanding business relations.
Meaning of the book: The publication, “Africa: a new market for Russian business” offers readers not only analytical, but also practical recommendations on investment and market trends, and how to enter the African market. The book will be a useful tool for those considering Africa as a promising destination for investment and business development.
The presentation of the book became a significant event for the Russian business community interested in expanding cooperation with Africa. Serge Fokas Odunlami introduced the participants to the new edition, which is a comprehensive business guide that gives an impetus for dialogue and implementation of joint entrepreneurial projects and corporate initiatives across Africa.
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