Mobilising Capital for Infrastructure Development in West Africa

Toyin Owolabi

Infrastructure has long been recognised as the foundation upon which economic growth, regional integration and industrial development are built. Roads connect markets. Ports facilitate trade. Power plants energise industries. Housing supports urbanisation and enhances productivity. 

Digital infrastructure expands access to opportunity. Yet across West Africa, the gap between infrastructure needs and available financing remains one of the region’s most significant development challenges.

The conversation around infrastructure is often framed in terms of physical assets. However, the more pressing issue is financial architecture. The challenge is not simply what needs to be built, but how to mobilise the capital required to build it.

As West Africa seeks to accelerate economic transformation, strengthen regional trade and unlock the full potential of a rapidly growing population, infrastructure financing must move from being viewed as a government responsibility alone to becoming a shared undertaking involving the public sector, private investors, development finance institutions and domestic capital markets.

The Scale of the Infrastructure Challenge

West Africa’s infrastructure deficit remains substantial, despite decades of investment efforts. According to the OECD’s Africa’s Development Dynamics 2025 report, West African countries will need to invest approximately $20 billion annually through 2040 to achieve infrastructure levels comparable to peer developing regions, with transport infrastructure accounting for more than half of the investment requirement. The report further notes that improved infrastructure could significantly boost regional economic growth, integration, and drive productive transformation.

At the continental level, the financing challenge is even more pronounced. The African Development Bank estimates that Africa faces an annual infrastructure financing gap of between $130 billion and $170 billion across sectors including energy, transport, water and digital infrastructure. For West Africa, closing this gap is not merely a development objective. It is an economic necessity.

Why Infrastructure Financing Matters

Infrastructure has a multiplier effect that extends far beyond individual projects. Reliable power supply lowers production costs for manufacturers. Efficient transport networks reduce logistics expenses and facilitate regional trade. Affordable housing stimulates construction activity, creates employment and improves living standards. Digital infrastructure enables financial inclusion, innovation and entrepreneurship.

The economic benefits are well established. The African Development Bank notes that bridging Africa’s infrastructure gap could increase economic growth significantly while improving competitiveness and productivity across sectors.

However, infrastructure projects are capital intensive and often require long repayment horizons. This creates a mismatch between project needs and the short-term funding structures that dominate many financial markets across the region.

Addressing this mismatch requires a deliberate strategy focused on mobilising long-term capital from multiple sources.

The Critical Role of Public-Private Partnerships

Governments across West Africa face competing demands on limited fiscal resources. healthcare, education, security, and social programmes all require funding. Relying exclusively on public budgets to finance infrastructure is increasingly unsustainable.

Blended Finance structures, leveraging Public-Private Partnerships (PPPs) provide a framework through which governments can access private sector expertise, efficiency, and capital while maintaining oversight of strategic assets.

Globally, Blended Finance helps to de-risks infrastructure investments and unlock domestic institutional capital to transform infrastructure projects across transportation, energy, water and social infrastructure sectors into an investable asset class enabling local savings to finance national development.

Across Africa, development financial institutions, private equity, banks, pension funds increasingly view blended finance as an important tool for addressing infrastructure financing constraints by providing catalytic capital and crowding-in private capital in the process. The African Development Bank’s PPP Strategic Framework identifies transport, electricity and water infrastructure as critical sectors where partnerships can accelerate development outcomes.

Unlocking Investment in Energy Infrastructure

The region continues to face significant electricity deficits that constrain industrialisation, increase business costs and reduce competitiveness. Reliable power remains essential for manufacturing, digital services, healthcare and broader economic development.

The OECD reports that energy infrastructure remains one of the largest areas attracting both private participation and development finance across West Africa. Between 2019 and 2023, energy accounted for more than half of private participation investments in infrastructure.

This reflects growing recognition that energy investment generates economy-wide benefits. Opportunities exist across traditional power generation, transmission infrastructure, renewable energy projects and distributed energy solutions. Solar power, in particular, presents significant potential given the region’s abundant sunlight and growing demand for cleaner energy alternatives.

Transport Infrastructure as a Growth Enabler

Efficient transport corridors facilitate regional trade, improve market access and support the objectives of the African Continental Free Trade Area. Yet many parts of West Africa continue to experience inadequate road networks, port congestion and limited rail connectivity.

The OECD identifies transport as the largest infrastructure investment requirement in West Africa through 2040 and notes that the region has attracted substantial private participation in transport infrastructure projects in recent years.

Investments in highways, ports, rail systems and logistics hubs have the potential to transform economic activity across the region by reducing trade costs and improving supply chain efficiency.

Addressing the Housing Financing Gap

Rapid urbanisation is increasing demand for affordable housing across major cities. Yet financing constraints continue to limit housing development and homeownership.

Addressing this challenge requires deeper mortgage markets, innovative housing finance solutions and stronger collaboration between financial institutions, developers and policymakers. Institutional investors can play an important role by providing long-term capital for housing projects, while governments can support the sector through enabling policies and regulatory reforms.

Beyond addressing social needs, housing investment generates substantial economic benefits through job creation, construction activity and increased household wealth.

Mobilising Domestic Capital

West Africa possesses growing pools of domestic capital through pension funds, insurance companies, sovereign wealth funds and investment managers. Yet much of this capital remains underutilised for infrastructure development.

Mobilising these resources requires creating bankable projects, strengthening investment frameworks and developing financial instruments that align infrastructure assets with institutional investor requirements.

Utilising the blended-finance structures, partnerships between DFIs, private -equity, banks, pension funds, insurance firms and asset managers can help bridge the financing gap while supporting long-term economic development.

Building the Infrastructure Future West Africa Needs

The challenge facing West Africa is not a lack of investment opportunities. It is a need for more appropriate and effective capital mobilisation.

Most importantly, it will require a shift in mindset. Infrastructure should no longer be viewed solely as a public expenditure requirement. It should be recognised as an investable asset class capable of generating economic returns while delivering broad social impact.

The region’s next phase of growth will depend not only on what infrastructure is built, but on how successfully capital is mobilised to build it. That is the defining infrastructure challenge and opportunity facing West Africa today.

* Mr Owolabi is the MD/CEO, FSDH Asset Management