UK’s Department for International Trade offers billions to support Africa’s infrastructure

Africa Globe

The UK’s Department for International Trade have stated that they have the ability to facilitate the provision of billions of Pound Sterling in lending and guarantees to African countries, in order to assist with addressing the chronic infrastructure backlog which the World Bank estimates to be about US$93 billion a year in the Sub-Saharan region alone. 

The Department for International Trade has a presence in twenty-one countries across the continent and it has the ability to enable the provision of these facilities through UK Export Finance (UKEF), the United Kingdom’s export credit agency, a part of DIT. Loans can be extended in the local currencies of the nine African countries for projects ranging from transportation, mining and general construction though they must include at least 20% UK content and to meet all of the other lending criteria. For example, UKEF has the ability to support infrastructure projects in South Africa (up to £4 billion), Kenya (up to £1 billion) and Nigeria (up to £750 million).

Africa’s  infrastructure challenges not only inhibit its ability to trade with the rest of the world but are also a significant obstacle to intra-Africa trade, both of which are critical to the continent’s economic growth agenda” says Emma Wade-Smith, the UK’s Trade Commissioner for Africa.

Finance is a critical component of infrastructure development and the combined risk appetite of £21.4 billion we ave across the region to facilitate projects is a clear sign of the UK’s belief in Africa’s long-term economic growth trajectory.

Of course, projects must still meet all the lending requirements before we’re able to disburse any funding. But in terms of capacity, we have the ability to provide significant funding for infrastructure projects across Africa.”

Although Africa is the second-fastest urbanizing region in the world (behind Asia), with estimates showing that in the next thirty years, more than half of its projected 2.2 billion people will live in cities, the continent still struggles from a chronic lack of basic infrastructure. Data compiled by the Washington D.C based Brookings Institution shows that 319 million people across Sub-Saharan Africa have no access to reliable drinking water; 620 million have no access to electricity, whilst only 34% of the continent’s people have adequate road access.

There is enormous scope for Africa to boost its exports to the UK and indeed other parts of the world if it can address its infrastructure backlog” says Emma. “The research shows that the long-term trade is better than aid and without adequate infrastructure, it will be very difficult for Africa to boost its ability to buy and sell with the rest of the world.”

The Department for International Trade has been instrumental in establishing the Africa Infrastructure Board which brings together the UKEF, the Department for International Development and the UK infrastructure and mining companies that are already active in Africa. Its ambition is for the UK government and industry to work together to identify major infrastructure projects across Africa which can benefit from the UK’s extensive expertise in the fields of finance, engineering and governance as well as health and safety.

The Department for International Trade is currently tracking numerous active infrastructure projects across the continent which it believes benefit from UKEF funding. One such project includes Uganda’s Kabaale International Airport which, when completed, will be the East African nation’s second largest airport, thanks to the £215 million loan it received from the UKEF in December last year, the largest-ever facility granted to an African country by the export credit agency.

UKEF’s risk appetite for Africa has more than doubled in the last few years in line with Africa’s improving economic and socio-political fundamentals” said Emma.

The continent is becoming increasingly democratic and economically stable, which is heartening as with infrastructure commitments one needs to be in it for the long haul.