Beyond US Money: Can The AU Make Africa The Owner Of Its Infrastructure Future?
By FRANKLIN FRANCIS FREY
Can Africa Take Control of the AU-US Infrastructure Deal? The Test Begins
THE African Union’s new infrastructure partnership with the United States could become an important channel for investment across the continent. Yet its success will depend on a question that goes beyond how much American capital eventually arrives.
The bigger question is whether Africa can own the process.
The African Union Commission (AUC) and the United States government created the Strategic Infrastructure and Investment Working Group (SIWG) in January. Since then, both sides have started developing the institutional structures needed to turn the agreement into practical projects.
The initiative seeks to attract investment, particularly from the US private sector, while aligning that capital with Africa’s own development priorities.
For the AU, however, the opportunity comes with an unusual institutional challenge. It must coordinate a commercial relationship involving governments, development institutions and private investors even though the AUC does not function like a national government.
That makes the next phase critical.
A partnership built around African priorities
The SIWG is being linked to major continental development frameworks rather than created as a stand-alone collection of foreign-funded projects.
The AU says the partnership will align US capital and financing instruments with Agenda 2063, the Programme for Infrastructure Development in Africa (PIDA) and the African Continental Free Trade Area (AfCFTA).
That approach gives the initiative an important African policy foundation.
PIDA already contains a pipeline of priority infrastructure projects designed around continental connectivity. Its projects seek to link transport, energy, water and information and communications technology infrastructure across national borders.
That corridor approach matters because Africa’s infrastructure problems rarely stop at national boundaries.
A road that ends at a border, a power project without adequate transmission networks or a port without efficient regional connections cannot deliver its full economic value.
The SIWG could therefore provide an opportunity to connect foreign capital with infrastructure plans that African institutions have already identified.
The financing gap remains enormous
Africa’s infrastructure needs have outpaced the ability of governments to finance them.
The continent’s annual infrastructure financing gap is commonly estimated at between $68 billion and $108 billion.
PIDA’s first decade mobilised $82 billion against an initial target of $68 billion. Its second phase, however, carries a much larger investment requirement of about $161 billion.
Private capital has remained reluctant to fill the gap at the required scale.
As a result, African governments and sovereign borrowing have carried much of the burden. That dependence has contributed to debt pressures in several African countries.
The SIWG is therefore built around a significant proposition: US private capital could help finance projects that African governments cannot fund alone.
But attracting foreign capital is only part of the challenge.
Africa must determine how that capital fits into its own development priorities.
Five projects will test the model
The partners have started with a deliberately narrow project list.
It includes the jetty and port expansion at Nacala in Mozambique, another petroleum jetty in Mozambique, Namibia’s Walvis Bay integrated hydrogen hub, the long-delayed Inga hydroelectric project in the Democratic Republic of the Congo and a data centre.
Most of these projects come from the PIDA pipeline.
The inclusion of PIDA projects gives the AU an opportunity to establish that the SIWG is not simply an American investment programme operating in Africa.
Instead, the projects can demonstrate that external investment can support priorities already identified by African institutions.
The data centre, which sits outside PIDA’s pipeline, will provide a different test of how the working group handles projects that emerge from newer areas of economic activity.
The AU faces an institutional problem
The AUC’s role creates one of the partnership’s biggest challenges.
Unlike a national government, the commission does not directly control the specialised agencies responsible for implementing many of its decisions.
Its departments can provide political and strategic direction. Actual delivery often rests with institutions operating with their own mandates.
The SIWG therefore requires the AU to work faster and more commercially than its bureaucracy has traditionally operated.
That will demand coordination across the Infrastructure and Energy, Economic Development, Tourism, Trade, Industry and Mining departments.
The AU Development Agency, which serves as PIDA’s technical implementer, will also have a major role in delivery.
The institutional arrangement is significant because the SIWG represents a relatively new role for the AUC: acting not only as a diplomatic institution but also as a coordinator of a commercial relationship involving private capital.
Member states cannot be spectators
Continental ownership will also depend on African governments.
The projects under consideration cross national boundaries and involve national infrastructure priorities. Member states must therefore remain informed and involved as the SIWG develops.
More importantly, communities affected by infrastructure corridors must have a voice.
Large transport, energy and industrial projects can affect land, livelihoods and local economies. Government and investors cannot assume that continental or national approval automatically settles questions of local consent.
For the SIWG to establish legitimacy, African governments will need mechanisms for engaging citizens’ groups and communities along project corridors.
Ownership cannot exist only at the institutional level.
It must also be visible to the people who live around the projects.
African capital must enter the equation
Another test will be the role of African private and institutional capital.
If the objective is to strengthen African infrastructure, the continent cannot rely entirely on foreign investors to finance and define the projects.
African financial institutions could provide an important bridge.
The African Development Bank, African Export-Import Bank, Africa Finance Corporation and Africa50 possess financial capacity and regional experience that could allow them to co-invest with American institutions and help reduce investment risks.
Their participation could also give African interests greater weight in project design and financing.
A partnership between American and African capital would consequently look very different from a model in which US investors provide most of the funding and African institutions simply receive the projects.
Infrastructure could become a tool of integration
The SIWG could offer the AU something it has often struggled to obtain: a material incentive for governments to implement continental reforms.
Infrastructure investment can create pressure for countries to harmonise regulations, improve cross-border transport systems and remove barriers to trade.
If countries that advance corridor reforms receive priority access to SIWG-linked financing or technical assistance, investment could become an incentive for deeper regional integration.
That would connect infrastructure policy directly to AfCFTA.
The objective would no longer be simply to build ports, power plants or digital facilities.
It would be to build infrastructure that makes African markets work better together.
Washington faces its own obstacles
The United States also has structural problems to overcome.
American private investors remain cautious about Africa. Concerns about the rule of law, contract enforcement and the durability of business agreements can discourage long-term investment.
That challenge becomes particularly important when American companies compete with Chinese and Turkish state-linked firms that may move faster and accept higher levels of risk.
Washington has sought to address the problem through financing tools designed to reduce investment risks.
The new $500 million US-Africa Strategic Investment Program, for example, is expected to provide grants of up to $50 million to help de-risk private-sector deals.
However, financing incentives alone may not overcome investor concerns.
Predictability may matter more than the size of individual financial packages.
Diplomacy will shape investment
The United States also faces a diplomatic challenge.
A smaller diplomatic footprint could make it harder for Washington to maintain the relationships required to identify opportunities, resolve problems and reassure investors.
That means the private sector and intermediary organisations may become increasingly important.
African diaspora networks in the United States, the US Chamber of Commerce and the Corporate Council on Africa could help connect American businesses with African markets.
These organisations can provide knowledge and relationships that government officials cannot always supply from a distance.
The next 12 months will matter
The SIWG now faces the difficult transition from agreement to implementation.
Africa has the infrastructure needs. The United States has capital and financing instruments. African institutions possess project pipelines and development priorities.
The question is whether these assets can be combined without allowing the continent to become merely the destination for an externally driven investment agenda.
For the AU, ownership will require stronger institutional coordination, faster decision-making and greater involvement from African investors.
For African governments, it will require political commitment, regulatory reforms and meaningful engagement with affected communities.
For Washington, success will require greater confidence among American investors and a sustained effort to address the rule-of-law concerns that have historically constrained private investment.
The SIWG could become a model for how Africa engages major external powers on infrastructure.
But that outcome will depend on whether Africa can move from being the recipient of investment to being an active architect of the deals.
The coming year will begin to answer that question.
