Sustainability and Infrastructure Investment: National Development Banks in Africa

The need for infrastructure finance in Africa is tremendous. A 2009 report by the World Bank suggests that the continent faces needs of US$93 billion per year. More recent studies, pointing to economic and population growth trends and using more sophisticated methods of assessing needs, indicate that infrastructure needs are actually much higher. Existing financing sources have not been able to keep pace. In this context, the role of national development banks (NDBs) in the continent merits attention. As will be shown below, many African countries have NDBs, although the vast majority are quite small, with limited access to finance and short on capacity. A few, however, are more significant players, particularly in infrastructure (notably in Algeria and South Africa), and others are undergoing reforms under governments that see their potential as an additional source of finance and expertise to promote their country’s development (such as Ethiopia, Rwanda and Uganda). The aim of this paper is to provide an overview of the activities of NDBs in Africa, and present two case studies of South African NDBs — Development Bank of Southern Africa (DBSA) and the Industrial Development Corporation (IDC) — that may provide lessons for other NDBs in Africa and beyond. Where data permit, the paper considers general characteristics of the NDBs as well as specific information regarding investment in sustainable infrastructure