“The fourth quarter of 2020 capped an unprecedented year in recent history…”


The fourth quarter of 2020 capped an unprecedented year in recent history and may have set the tone for yet another uncertain year ahead in 2021. In previous quarters governments across the world responded to the COVID-19 pandemic through a range of interventions that included lockdowns, curfews, and other more moderate restrictions. State intervention also included measures and spending aimed at minimising the unintended debilitating economic impact of restrictions. According to the IMF Annual Report 2020 government and central bank support stood at USD19.5 trillion by November and was expected to rise.

Government interventions aimed at reducing the spread of the corona virus appeared to show positive results, but the outcomes proved unsustainable outside of those measures once they were eased or lifted. The fourth quarter therefore saw several countries battle secondary waves of the surge in infections. Hard hit major European economies responded swiftly with new measures ranging from a nighttime curfew in France to a partial lockdown in Germany and a full lockdown in England.

African countries also witnessed an upsurge in cases marking the emergence of the second wave. South Africa entered a stricter lockdown level 3 at the end of December while Nigeria also locked down or introduced stricter restrictions in select states and cities during the quarter. Kenya extended its curfew and other countries implemented a blend of near similar interventions. As a result, sub-Saharan economic activity is projected to have declined by 3.3% in 2020, confirming the region’s first recession in 25 years according to the World Bank. This substantial downturn in economic activity is estimated to have cost the region at least US$115 billion in output losses last year.

The unintended consequence of all these events was that the prospects for a swift economic rebound were diminished in the short term. While the impact was arguably not as severe as in the earlier quarters, investor appetite remained relatively dampened and some infrastructure projects remained adversely affected. In early December AMETrade hosted the 12TH ANNUAL AFRICA PPP INFRASTRUCTURE INVESTMENT PARTNERSHIPS VIRTUAL CONFERENCE and the COVID-19 pandemic was a key theme as both a threat and an opportunity. In this article we will look at how infrastructure finance fared in the fourth quarter in the context of secondary COVID-19 waves and take a brief look at the outlook for 2021.


Broad Impact

The full impact of the COVID-19 pandemic on PPPs and private infrastructure investment continued to unfold in the fourth quarter. According to PWC key infrastructure impact has worsened somewhat in key areas notably in terms of revenue loss in ‘user pays’ models and the material valuation of certain assets. This has in turn impacted liquidity leading to weaker credit ratings and higher cost of capital.

Supply chain issues remain in focus with some delivery delays and concerns around the solvency of key supply chain players. Cyber security risks, digitisation challenges and workforce shortages have also continued.

During the 12th Africa PPP Conference contractual issues also came into focus as many PPP projects were strained during the crisis. Presenters noted that in PPPs, reverting to force majeure is not automatic because of the multi-faceted nature of these projects as there is a need to prove that the delays are solely due to the pandemic. Practitioners were encouraged to preserve long-term relationships in PPPs by balancing legal and commercial considerations even when entitled to force majeure provisions. Collaborating and finding a middle ground was seen as a better approach.

The pandemic has also been damaging to Africa’s nascent capital markets which could have been a key source of funding for infrastructure projects. According to the South African Institute of International Affairs COVID-19 has plunged many African economies into a recession. It also noted that spreads rose in the credit and bond markets along with credit rating agencies revising African countries’ economic outlooks and instituting downgrades in some cases. Borrowing costs increased as expectations of widespread defaults rose and the financial alarm led to a swift decline in commodity prices and large foreign financial outflows.

Continuing interventions

In the course of the year, key projects were saved from collapse through the use of relief mechanisms under PPP contracts and agreements between governments, sponsors, and lenders that served as practical temporary solutions to avoid disputes. However, in the fourth quarter, it had become clear that the pandemic will be with us for much longer than might have been expected. It has thus become imperative to establish measures and approaches beyond the short term to account for the long-term implications of COVID-19 on PPP programs.

Speakers at the recent Africa PPP Conference acknowledged that accessing finance is now more crucial than ever considering the COVID crisis especially as governments seek to use infrastructure investment as a catalyst for post-Covid economic recovery. There is a need for governments, the private sector and DFIs to agree on the regulatory best practices to address the current cumbersome PPP regulatory frameworks that take too long and increase costs. The conference also noted the need for regulatory acceleration which could be achieved through the establishment of dedicated institutions to streamline the process and address hurdles quicker.

Building Back Better

The 12th Africa PPP conference last December opened with an acknowledgment of the impact of the COVID pandemic on society and the economy in general but also specifically on infrastructure development and PPPs in particular. Speakers across the board called for the scaling up of public-private partnerships as a direct response to the crisis and its aftermath.

Even as we acknowledge the adverse human and economic toll of the COVID crisis participants at the conference noted that it still presents an opportunity to rationalise and restructure health services for example. The health sector had been significantly tested and strained during the COVID crisis. Digitalisation and technology helped to support the response and it was seen that these tools can make it possible to deliver universal access to health through PPP models.

According to the IFC frequent and proper hand washing is the most basic frontline defence against the spread of COVID-19 and yet a quarter of the world’s population lacks access to a reliable water supply. As the world looks to build back better during and in the aftermath of the pandemic the water sector will be among the priorities.

The African Development Bank further highlights that attracting the private sector to water projects is a difficult task, yet the water sector is critical to development with about 340 million people in Africa having no access to safe drinking water and some 1 million lives lost each year to water borne diseases. The current estimated investment flows to the sector in Africa are about USD13 billion leaving a gap of at least USD43 billion per year.

Dr. Ashenafi Fanta, senior lecturer in Development Finance at the University of Stellenbosch Business School, quoted in a post on the university website, says public finance is the primary source of funding infrastructural development in Africa but that is now constrained due to higher health expenditure, welfare payments to vulnerable households and loss of tax revenue as governments had to provide help to struggling businesses. Dr Fanta suggests alternative funding mechanisms to provide funding for infrastructural development including Infrastructural bonds, development impact bonds, commodity-backed loans and tapping into pension funds.

Speaking at an African Development Bank workshop last September, Bank Vice President Solomon Quaynor said, “Before the COVID-19 pandemic, African infrastructure was already struggling to structure projects tailored for the private sector and at the same time achieving value for money for the public sector including affordability for users. It is therefore imperative that hybrid solutions such as PPPs must be seen and promoted as a way of building back better, stronger, greener, by clawing back private capital to infrastructure while creating much needed fiscal room for governments to address multiple other demands including building health systems’ resiliency.”


  • Africa: The African Development Bank (AfDB) and European Investment Bank (EIB) signed a joint partnership action plan highlighting their strengthened cooperation and mutual development priorities and a strong shared emphasis on boosting public and private sector investment in Africa. The Joint Action Plan enables both institutions to grow a shared pipeline of bankable projects around key complementary themes to which each institution would bring their comparative advantage.
  • Africa: African Infrastructure Investment Managers (AIIM), one of Africa’s largest infrastructure-focused private equity fund managers, successfully completed a capital increase of USD80m for its flagship pan-African infrastructure fund, AIIF3. The capital increase takes the total commitments for AIIF3 to USD400m and represents one of the largest capital raises closed for an African fund since the advent of the COVID-19 pandemic.
  • Africa: The AfDB approved a USD20 million concessional investment from the Sustainable Energy Fund for Africa (SEFA) to establish the COVID-19 Off-Grid Recovery Platform (CRP).
  • South Africa: The National Energy Regulator of South Africa (NERSA) approved the plan of the South African Department of Mineral Resources and Energy for a new Power Plant Construction Programme under which power plants will be developed by independent power producers (IPP’s). The Programme will increase the national power production capacity by 11 813 MW.
  • Nigeria: The Federal government of Nigeria has launched a ‘Solar Power Naija’ project, a programme focussing on 5 million solar connections for off-grid communities as part of the Economic Sustainability Plan (ESP) in response to the COVID-19 pandemic.
  • Nigeria’s biggest pension fund manager Stanbic IBTC Pension Managers wants the flexibility to invest directly in large local projects as bond yields are coming off record lows and a hard-to-trade equity market. The firm is looking to invest in real estate and infrastructure that has economic benefits like transportation, health care, telecommunications and has more than 3.5 trillion naira (USD9 billion) in assets under management.
  • Morocco is set to spend over USD1 billion to enlarge controlled-access highways across the country in 2021. The Ministry of Equipment, in collaboration with Autoroutes du Maroc (ADM), the company managing Moroccan highways, will work on adding lanes to some of the country’s busiest highways, making them six-lane roads—three lanes in each direction.
  • Notable Power deals in the quarter… ARCH EM Partners to Invest USD40m in Secondary Deal for CrossBoundary Energy; Inspired Evolution Leads USD35m Investment to establish Sub-Saharan Africa-Focused Energy Services Company ESCOTEL; Madagascar secures USD43m AfDB loan for 2nd phase of power transmission project; The Central Termica de Temane (CTT) a 450MW gas-fired power plant to be developed in Mozambique secures substantial portion of the debt funding requirements; The AfDB approved USD120 million in funding to construct the 50MW Malagarasi Hydropower project in western Tanzania; West Africa Energy (WAE) and its technical partner, Thialis concluded an agreement for the construction of a 300 Mw Thermal Power Plant in Senegal. The cost of the project is USD390 million and the project is being funded entirely from domestic funds; Funding was secured for the 34 MW Kinguele Aval Hydro in Gabon with a Public-Private-Partnership (PPP) agreement signed between the government and Asonha Energie (Meridiam); ADC Projects of South Africa and ECI-Distribution of Austria were awarded the operations and maintenance contracts for the 40.35 MW Kuvaninga Gas-Fired Power Plant in Chokwe, Gaza Province, Mozambique.
  • Notable Renewable Energy deals in the quarter… AIIM invested in Phakwe Group to Acquire Witkop Solar Park; Climate Fund Managers provided USD40m in Financing to Develop Senegal’s Niakhar Project; Solar power provider Starsight and Chapel Hill Denham NIDF secured a USD9.2m senior debt facility; The International Renewable Energy Agency (IRENA) and the African Development Bank (AfDB) agreed to jointly support investment in low carbon energy projects; A Gridworks led consortium was appointed as the preferred bidder for the Essor A2E Initiative (Essor) in the DRC; The EU added USD11.9 million in funding for the Climate Investor One (CI1) financing facility in emerging markets, with a specific designation towards financing projects within Nigeria; EleQtra (UK) began construction of the 120 MW Namaacha Wind Power Plant in Maputo Province, southern Mozambique at a cost of USD280 million; Lesotho announced construction of the 70 MW Mafeteng Solar Power Plant to begin within the next six months. The total cost of the project is USD147 million.
  • Notable Oil and Gas Infrastructure deals in the quarter… Ninety One’s EAIF provided USD31 million in financing to Helios-Backed Access LNG; The joint venture between Sahara and SAPET Cote d’Ivoire will be building a new Butane Gas Storage Facility with a capacity of 12 000 tons at an estimated cost of USD43,3 million; The sovereign wealth fund of Senegal, Fonds Souverain d’Investissements Stratégiques (FONSIS) issued a Request for Proposals (RFP) to US firms for the proposed National Gas Pipeline; Uganda and Tanzania signed the host government agreement (HGA) for the implementation of the East Africa Crude Oil Pipeline (EACOP) project that runs from Uganda’s oilfields around Lake Albert to the port of Tanga in Tanzania’s northeast region.
  • Notable Water deals in the quarter… Nordic Development Fund approved a USD8.8m grant for the African Water Facility; Ghana secured USD125 million from the World Bank, approved through the International Development Association for the Greater Accra Metropolitan Area Sanitation and Water Project (GAMA SWP); Kisumu, the third-largest city in Kenya to get an USD82 million upgrade to its water and sanitation systems; Construction began on the Mamelles Desalination Plant situated in Dakar. The project is being funded by the Japanese International Cooperation Agency (JICA) and the cost is about USD240 million; The Suez Group of France was awarded a USD98 million contract by the water utility, Empresa Publica de Aguas (EPAL) of Angola for the development of the Luanda Bita Water Supply Project; The Africa Water Facility (AWF) supported by AfDB is promoting the Surface Water Resource Development And Strengthening Project in the Cape Verde with an estimated cost of about USD97,5 million.
  • Notable Transport deals in the quarter… The Gabonese national roads utility signed an agreement with AFCONS Infrastructure of India for the commencement of work on the 748 kilometre Libreville-Franceville Trans-Gabon Highway based on the Public-Private-Partnership (PPP) model; The Ghana Railway Development Authority (GRDA) is undertaking several developments along the Western Railway and AFCONS Infrastructure Limited of India was appointed for work on the 51 kilometre Eduadin-Obuasi stretch. The project value is USD419 million; The South African Minister of Transport announced that a total of about USD1,73 billion was allocated for the N2 and N3 Road Upgrades; In Cameroon, the Kribi Port Authority announced plans to raise funds for its Kribi Port Expansion Project from the Central African Stock Exchange (BVMAC). The cost of the project is estimated at about USD716 million; The Guinea government signed two agreements for the construction of a Deepwater Port and Rail Line for the export of iron ore from the Simandou iron ore deposit; The Nigerian Federal Ministry of Aviation announced a major National Airports Construction Programme. The objective is to increase the number of airports in the country to 62 by 2023; The Tanzania National Roads Agency signed agreements worth USD95,7 million with the China Civil Engineering Construction Company (CCECC) and AVIC International Project Engineering Company for the construction of the Dodoma Outer Ring Road;
  • Notable Logistics deals in the quarter… Harith General Partners and Pembani Remgro Invest in USD296 million Zimbabwe Border Post Project; Ninety One’s EAIF Invests USD15 million in Local Currency Bond for Senegal’s Port Autonome de Dakar; A.P. Moller Acquires 49% Stake in Moroccan Grain Terminal Operator MCM.
  • Notable Telecommunications deals in the quarter… EAIF, PIDG, and Proparco Invest USD100 million Debt in WIOCC; AIIM and STOA Lead USD97 million Investment in South African Fibre Network Operator MetroFibre Networx.
  • Notable Urban Development deals in the quarter… The World Bank approved a USD100 million grant from the International Development Association (IDA) in support of Maputo Urban Transformation Project; The Mooikloof Mega City Project in South Africa was launched. The nodal lower- and middle-income housing Public Private Partnership (PPP) development will be developed in the eastern part of Pretoria at a cost that has been quoted as high as USD5 billion; The National Housing Enterprise (NHE) of Namibia announced a National Housing Programme that entails the construction of 335 housing units throughout the country based on a Public Private Partnership (PPP) construction model.



The World Bank and the IMF project that Africa will rebound in 2021, however growth will vary across countries. South Africa is projected to endure a weak recovery while overall growth in Eastern and Southern Africa region is expected to average 2.7%. While Nigeria’s economic recovery is also likely to be weak, the Western and Central Africa region is expected to experience an average growth of 1.4%.

On the Foreign Direct Investment front, UNCTAD says uncertainty about the COVID-19 pandemic’s evolution and the global investment policy environment will continue to affect FDI flows in 2021. For developing countries, the prospects are of particular concern. Despite projections for a global economic recovery in 2021, UNCTAD expects FDI flows to remain weak due to uncertainty over the evolution of the COVID-19 pandemic projecting a 5-10% FDI slide in 2021 in its World Investment Report.

According to Fitch, expenditures from infrastructure operators over 2021 will be significantly lower than planned, taking into account the adverse revenue performance seen in 2020 in light of the Covid-19 pandemic and subsequent restrictions on the movement of goods and people.

Given the above outlook the continent looks set for a long and arduous recovery, however there are still reasons for optimism going forward. Firstly the prospect of an elaborate vaccine roll-out across the continent could provide a sound basis for bringing the pandemic under control and eliminate the use of the harshest of the control measures especially hard lockdowns that have been so devastating for economies. The process has been slow to pick up pace with the UN led COVAX initiative’s first batch of 90 million doses set to support countries inoculate just 3 per cent of the African population most in need of protection in the first half of 2021.

As another cause for optimism Renaissance Capital’s Global Chief Economist Charlie Robertson (as quoted on the Atlantic Council website) says African markets have an advantage in 2021 and beyond because the continent has been the least affected by COVID-19 relative to other regions. Low interest rates in the West could see institutional investors increasing portfolio exposure in Africa to benefit from higher yields in the region. He also added that China’s firm recovery could help drive commodity price increases and lift the whole continent if African countries invest in the right infrastructure. Green infrastructure may also see a strong year in terms of supportive policy formation and funding inflows, with renewable energy a key avenue for governments to stimulate economies.

According to a leading PPP expert Maude Valle in a post on the World Bank blog, one crucial unknown remains the present ability of PPPs to attract foreign direct investment. She asserts that the decline in foreign investment during the pandemic has highlighted the need to rely on a mix of domestic private sector players, along with government and other foreign parties, to meet financing objectives. According to her, most private funding had come from foreign investors and partners. For example, across Sub-Saharan Africa, 83 percent of total funding in 2019 was from development finance institutions and the remaining 17 percent was from other international sources. Deepening domestic private sector involvement will mean a focus on developing domestic financial markets and fostering integration across the continent to provide cross-listings and to provide investment options for African institutional investors seeking yield and long-term cash flows to meet matching financial obligations.

While 2021 looks set to be yet another highly uncertain year fraught with challenges, opportunities will also abound that will require policies and investments that focus on connecting people to job opportunities and help end extreme poverty. Investing in the digital economy and infrastructure will also be crucial to mitigate the impact of the COVID-19 pandemic and foster a sustained recovery. Innovative infrastructure finance approaches continue to be more important than ever as the world slowly re-emerges from the lowest depths of the Covid-19 crisis.

AMETrade continues to provide platforms for engagement among all stakeholders to deepen the necessary dialogue and cooperation through its hybrid events, digital events and information.