This paper examines the role of the African Development Fund (ADF) in its efforts to support African low-income countries (LICs) in meeting their infrastructure financing needs. African LICs currently face tremendous infrastructure financing gaps, but are unable to access the concessional loans required to finance these. As a result, many are turning to non-concessional sources of financing, which could have a negative impact on their debt levels. Moreover, improperly managed projects, a lack of private sector involvement and insufficient technical expertise among African government officials also detract from the successful implementation of infrastructure projects on the continent. All of these problems highlight the extremely complex nature of infrastructure financing within LICs. As the concessional branch of the African Bank Group, the ADF is tasked with providing infrastructure financing to African LICs at affordable rates. However, its ability to do so is constrained by a variety of factors, including insufficient funding. In light of the upcoming ADF-14 meeting in November 2016, this paper examines what the ADF can do to improve the services it offers to LICs and mobilise additional finance, while also examining issues that pertain to the fund’s own constrained operations and handicap. It concludes with policy recommendations to assist the ADF in improving its technical and operational functioning, in order to ensure that African LICs receive adequate assistance and levels of finance from the ADF in the years to come.
Authors: Talitha Bertelsmann-Scott, Chelsea Markowitz and Asmita Parshotam