Investing in Africa’s Infrastructure: The Role of Project Finance and Risk Tools

Africa remains a continent of vast promise and infrastructure need. With over 50 nations spanning diverse political, economic, and geographic landscapes, investment strategies must navigate a complex terrain. Annual infrastructure investment needs are estimated between $130–170 billion, yet actual spending remains closer to $80 billion—leaving a financing gap of $50–90 billion. This shortfall limits growth potential, with World Bank estimates pointing to a GDP loss of up to 2% annually.

Project Finance as a Catalyst for Development

To bridge this gap, project finance has become a central mechanism—particularly when coupled with blended finance models that combine public, private, and development capital. However, in Africa, private sector investment rarely occurs in isolation. In 2023, just 24% of infrastructure projects were financed solely by the private sector, and that share drops to 13% when excluding South Africa. Across emerging markets, over half of private infrastructure investments still require co-financing from non-private actors such as governments, DFI[1]s, or multilateral banks.

Public and development capital are not alternatives to private capital—they are critical enablers of it.

Regional Investment Trends

According to the World Bank's Private Participation in Infrastructure (PPI) Database, investment activity across the continent reflects varying levels of maturity, risk appetite, and capital availability.

• In Sub-Saharan Africa (SSA), $3.5 billion was invested across 66 projects. South Africa alone attracted $1 billion across 11 deals, accounting for nearly half of Eastern and Southern Africa’s project volume. Western and Central Africa secured $1.2 billion through 21 projects.
• Average project sizes in SSA remain relatively small, around $52.5 million, compared with $206 million in MENA, reflecting differences in deal complexity, scale, and risk allocation.
• In contrast, MENA projects attracted $2.3 billion across six projects in Egypt alone—representing 80% of regional infrastructure investment in 2023. Notably, over 90% of infrastructure projects in MENA involved private participation, but with no local debt participation.
• SSA, on the other hand, saw 40% of project debt provided by local financial institutions—a meaningful sign of local market involvement.

Foreign sponsor participation also increased. In 2023, 52% of PPI projects in developing markets were led by foreign investors, up from 44% in 2022. In SSA, 83% of projects involved foreign sponsors, and in MENA, that share was 100%.

What’s Driving Growth?

Several structural factors continue to support project finance investment across Africa:

• Demographics and Urbanization: By 2030, one in five people globally will live in Africa, fueling long-term demand for transport, energy, housing, water, and digital infrastructure.
• Infrastructure Gaps: Two-thirds of the world’s population without electricity access lives in Sub-Saharan Africa.
• Energy Transition: Africa’s renewable potential is vast. Countries like South Africa (REIPPPP), Kenya (geothermal), and Morocco (solar) have pioneered blended finance and PPP frameworks—a specific type of PPI—increasingly aligned with ESG goals and green capital flows.
• Policy Coherence: Investment pipelines are supported by multi-tiered planning frameworks—from Agenda 2063 and PIDA at the continental level to regional (SADC, ECOWAS) and national plans (e.g., Kenya’s Vision 2030, South Africa’s Infrastructure Plan 2050). These strategies enhance transparency and predictability for investors.
• Global Engagement: Africa sits at the intersection of multiple investment initiatives—from China’s Belt and Road and the EU’s Global Gateway to U.S. programs such as Power Africa and capital flows from the Gulf.

Sectoral Trends and Financial Innovation

Energy continues to dominate, accounting for nearly three-quarters of private infrastructure investment. Financial innovation is also rising:

• DFI participation in PPI projects increased from 18% in 2022 to 40% in 2023.
• New tools such as green bonds, ESG-linked loans, and viability gap funding are helping improve project bankability and de-risking.

Why Risk Tools Matter

Project finance is complex by nature. These transactions are highly bespoke, span decades, and feature shifting risk profiles from construction to operation. Lenders, DFIs, and investors need robust, forward-looking frameworks to assess and price risk consistently across jurisdictions and asset classes.

According to McKinsey, only 10% of infrastructure projects in Africa reach financial close — — highlighting the urgent need for consistent risk assessment tools to improve project bankability and execution.

Without standardized tools, internal assessments may vary, reducing comparability and potentially misaligning with capital or regulatory expectations.

The S&P Project Finance Scorecard

S&P Global Market Intelligence offers the Project Finance Scorecard—a benchmarking tool built on S&P Global Ratings’ established methodology, with over 300 publicly rated project finance transactions globally.

The Scorecard replicates S&P’s official approach and provides a shadow credit rating—a forward-looking estimate of how a project might be rated if formally assessed.

It enables:

• Cross-asset comparability and integration with other S&P tools
• Mapping to 44 years of default data for expected loss modeling
• Application across the full asset lifecycle—from pre-financial close to post-completion

Who Uses It and Why

For a broad range of investors—including commercial banks, African and international development institutions, and infrastructure investment committees—the Scorecard helps by supporting:

• Credit approval and origination structuring
• Risk benchmarking and pricing
• Ongoing monitoring, stress testing, and scenario analysis
• Internal consistency across portfolios
• Co-financing and syndication discussions with global partners

Sector and ESG Coverage

The Scorecard covers over 100 sectors and sub-sectors, including:

• Renewable energy (solar, wind, hydro, geothermal)
• Transportation (airports, rail, ports, toll roads)
• Social infrastructure (schools, hospitals)
• Natural resources and utilities

It also includes an ESG-enhanced version to help institutions assess how environmental, social, and governance factors may influence project credit quality.

The model incorporates both sector-specific and country-specific risks, providing a comprehensive picture of creditworthiness.

In addition, S&P offers supporting tools such as:

• Infrastructure-specific LGD models
• Credit cycle overlays for IFRS 9 provisioning
• Regulatory-aligned frameworks for internal model validation

Below you can find the sector-specific insights from our experts and could help provide a broader view of the analytical possibilities our solution offers.

• PF: Discover How to Assess Unrated Projects – webinar covering structuring and risk assessment 
• PF: Social Infrastructure Projects – sector specific webinar 
• PF: Data Centres – sector specific webinar 
• PF: ESG factors in PF – webinar on how ESG factors are considered in PF and how they link to credit risk 

[1] Development finance institutions (DFIs) refer to multilateral and bilateral development institutions, including development banks and export credit agencies.¹ Definition adapted from WB PPI investment report, where DFIs encompass institutions with development mandates as well as ECAs supporting foreign investment.