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Infrastructure can often be used as a pawn in the political chess game, not only at a federal level between political parties, but at a foreign policy level too. It’s crucial that a cross-border infrastructure project has political support and cooperation from all parties involved, and that it’s being supported not for political gain, but to further regional development. A lack of strong political leadership can be detrimental to a cross-border project, and weak capacity can be a deterrent to investors.

Risks can be hard to define, manage and mitigate. In infrastructure projects that cross regional or national borders and involve multiple parties from both the public and private sector, these risks may be amplified.

When we as consumers decide to invest our money—whether through shares, bonds, or other instruments—we look at whether our investment will deliver a solid financial return. It makes sense then that the same risk-return principle is applied to investments in infrastructure.

As outlined earlier in this blog series, private investors are looking for reliable returns to justify the risks that they are taking. Financing and procurement of cross-border projects will often be more complex than national projects due to the scale of the project and compounded risks, and the financial returns may be more uncertain than for national projects.

Over the last decade, much has been written about globalisation and how we’re more connected than ever before. In the infrastructure world, we think of connectivity as the “linkages of communities, economies and nations through transport, communications, energy, and water networks across a number of countries” .

Investors need certainty of the division of responsibilities between the various parties involved in the project, as well as a clear commitment of payment from the parties, before becoming involved in the project themselves. This requires countries to have reached a clear and durable commitment to their respective responsibilities.

Institutional investors are facing growing calls for a stronger engagement in development, in particular for infrastructure, climate and social investments. The investment requirements for global sustainable development are huge. State budgets are already stretched in most emerging markets and developing countries (EMDE), with tax bases weakened and public debt piling up.

Infrastructure is crucial to Africa’s growth prospects. It’s also hard to get right, a reality acknowledged by delegates from around the continent and further afield who recently gathered in Cape Town, South Africa, for Africa’s First Roundtable on Infrastructure Governance.

A summary of the first G20 Infrastructure Working Group meeting under the Indian G20 Presidency in January 2023

Training program to upskill African infrastructure public servants commences

FOR CONSULTATION The draft Guidance Note on National Infrastructure Banks and Similar Financing Facilities is open for public consultation to capture your insights and feedback for the final version.