Insurance Is Enabler Of Africa’s Infrastructure
With a rapidly growing population and accelerating urbanisation, Africa faces an urgent need for expanded and resilient infrastructure.
Besides, unlocking investor capital for infrastructure development hinges on effective risk mitigation.
This was made known report by insurers and reinsurers under the umbrella body of the African Insurance Organisation (AIO) at the opening ceremony of the 51st Annual Conference holding in Addis Ababa, Ethiopia.
The report stated that the continent has a huge infrastructure shortfall and infrastructure financing deficit.
For example, only 43 per cent of Africa’s population has access to all-season roads, 50.7 per cent of sub-Saharan Africans lack electricity access, and infrastructure inequality between urban and rural areas remains significant.
“These shortfalls hinder intra-African trade, raise production and logistics costs, and leave communities vulnerable to economic and climate-related shocks. According to the African Development Bank, Africa needs $495.6 billion annually to meet the Sustainable Development Goals (SDGs) by 2030, and $86.7 billion annually to advance African Union’s Agenda 2063 – both of which are dominated by infrastructure needs – and it estimates that the financing gap for these targets stands at a staggering 81 per cent of the total need.
“Domestic public funding is constrained by limited revenues and high debt servicing costs. While fiscal reforms are essential, they face considerable hurdles. To accelerate infrastructure development, Africa must urgently further mobilise alternative financing sources, alongside boosting donor inflows and concessional financing to help reduce debt vulnerabilities,” the report said.
AIO said unlocking investor capital for infrastructure development hinges on effective risk mitigation.
“Africa’s infrastructure investment environment is shaped by complex risk factors, including political and economic instability, regulatory uncertainty, insufficient data, lack of transparency, weak cross-border coordination, and in some cases inadequate project preparation. These risks drive up capital costs and deter long-term investment. This is where the re/insurance sector plays a pivotal role. As risk experts with strong credit ratings and specialised solutions – such as performance guarantees and coverage against property, liability, credit and political risks – re/insurers help to de-risk infrastructure investments and protect assets across their lifecycle.
“Moreover, insurers with long-term liabilities are increasingly aligning with the low-carbon transition and represent a significant, largely untapped pool of institutional capital. With the right frameworks, they can become powerful enablers of resilient, sustainable infrastructure across Africa. Call to action for all stakeholders.
“The report finds that bridging Africa’s infrastructure gap requires cross-sector collaboration and coordinated actions by all stakeholders. For example, for governments and regulators, key recommendations include implementing reforms to foster a stable macroeconomic environment, promoting intra-Africa coordination, involving re/insurers early-on in projects to benefit from the sector’s extensive risk expertise, promoting public-private partnerships and blended financing structures, and enabling innovative risk mitigation solutions and risk-sharing initiatives.
“The report also emphasises the need to foster efficient, liquid domestic capital markets to mobilise domestic capital and reduce currency risk and external debt, including by recognising infrastructure as a unique asset class and reducing capital charges for infrastructure assets. Institutions such as Africa Re, the African Trade Insurance Agency (ATI) and various regional risk pools are already making meaningful progress in supporting Africa’s infrastructure development. However, broader participation across the insurance sector is urgently needed to expand these efforts and build a continent-wide risk resilience framework,” the report added.