A report by the OECD and the African Union shows the potential for Africa's development by building roads or technology networks to reduce high poverty rates.
In this intense week at Casa África, one of the activities we have organised has been the presentation, in Tenerife and Madrid, of one of the macroeconomic reports on Africa of international reference. This is the so-called African Development Dynamics, a work that is produced each year jointly by the OECD Development Centre and the African Union Commission. Each year, the report usually deals with a specific topic related to the necessary economic development of the continent, and this year's report deals with a very interesting topic of great interest and potential for collaboration for our country: the impact of infrastructure development.
And the report comes to a fundamental conclusion: building infrastructure is not only a necessity for the African continent, but the key strategic lever to reach the levels of development that the African Union itself has set as a goal in its master plan, called Agenda 2063.
The context is pressing: despite Africa's GDP growth (which between 1990 and 2024 has managed to multiply 4.2 times, reaching $2.8 trillion), progress has stalled and is not progressing as it should. The COVID crisis and the increasing fragility of many states have led to huge pockets of poverty. Nearly 700 million people in the world today live in extreme poverty, i.e. on less than $2.15 a day to survive.
The African continent (1.3 billion people) is currently home to 16% of the world's population. The dramatic fact is that 67% of the world's population living in extreme poverty is in Africa. In other words, two out of every three people living in extreme poverty in the world are Africans. And that, unfortunately, the figures in recent years show that we have gone from bad to worse: poverty rates in low-income countries are higher than before the pandemic.
What Federico Bonaglia, Deputy Director of the OECD Development Centre, told us at the launch of this report is that, without faster and more inclusive growth, the eradication of extreme poverty could take several decades, and it will take more than a century before the world's population manages to break the $6.85 a day threshold.
The AfDD 2025 report leaves no room for doubt: if Africa wants to catch up with the countries that have achieved an exemplary productive transformation, it must mobilise an average annual investment of 155 billion dollars by 2040. This figure, far from being a mere technical figure, represents 5.6% of Africa's GDP in 2024 and is, in my opinion, the true thermometer of the continent's ambition and commitment to its own future.
Why is this threshold so relevant? Because reaching this volume of investment would not only close the infrastructure gap, but would also have a multiplier effect on economic growth. The report's calculations are convincing: with this injection of capital, African GDP could grow, on average, 4.5 percentage points more each year. We are therefore talking about the real possibility of doubling the size of the African economy in just three decades and, more importantly, of surpassing the ambitious target of 7% of annual growth set by the African Union's Agenda 2063.
Despite the unquestionable need for infrastructure investment in Africa, the reality is that resource mobilisation remains insufficient. Between 2016 and 2020, the continent barely managed to raise $83 billion per year, little more than half of what is actually required to close the gap. The challenges, far from being conjunctural, are deeply structural and manifest themselves on three main fronts.
First, sovereign debt and scarce fiscal space: African governments have seen their room for manoeuvre shrink drastically. Today, they spend on average seven times more on debt interest payments than on infrastructure investment. In 15 countries, interest spending even exceeds spending on new infrastructure.
Second, the high cost of private capital: private sector participation is minimal, accounting for only 11% of total investment. The average cost of capital for infrastructure projects in Africa stands at 13%, well above the 8% observed in OECD countries. This highlights the urgency of reducing perceived risk and improving transparency to attract investors.
Finally, uncertainty in development financing: although bilateral and multilateral partners provide almost half of the investment, the future is uncertain. Global Official Development Assistance is projected to fall by as much as 17% by 2025, a decline that will particularly affect the most vulnerable African countries, which already receive 40% less funding relative to their population.
That said, it is clear to no one that this whole approach, however ambitious it may be, comes up against a question that is as simple as it is devastating: where will the money come from? Because, as I have pointed out on other occasions, the great challenge continues to be access to financing, either because of the heavy burden of foreign debt or because of the high interest rates that make any attempt at progress so expensive. The financial issue, in short, is the real Gordian knot that Africa must untie if it wants to transform its potential into a tangible and lasting reality. And that requires a solidarity effort on the part of the rest of the world.
The focus of the proposed initiatives is on infrastructure that will accelerate productive transformation, and the report even goes so far as to propose a breakdown of investment needs, such as road networks (32%), railways (24%), fibre optic cables (23%) and the deployment of solar panels (17%). Interestingly, it even discusses which transport axes need to be developed, citing as many as 69 cross-border projects designed to boost regional trade and expand access to essential services.
For example, Mr Bonaglia explained that West Africa, our closest neighbour, needs to invest mainly in transport (more than half of the investments) and in the digital sector, prioritising all-season roads and better access to energy to support agricultural transformation.
The presentation, in the Salón Noble of the Cabildo of Tenerife, was attended by the Director General of Relations with Africa of the Government of the Canary Islands, Luis Padilla, and the Director of External Action of the Cabildo, Pedro González, as well as a large group of businessmen from the province, led by Pedro Afonso, from CEOE-Tenerife.
In Madrid, on the other hand, several ambassadors attended, such as those of Mali and Cape Verde, as well as officials from the Ministry of Foreign Affairs, including the director of cooperation with Africa of the AECID, Cecilia García. In both places, the presentation served to highlight the magnitude of the need for infrastructure in Africa and the efforts being made to mobilise funding.
It has also been, or should be, a wake-up call for the Spanish and Canary Islands business community. Our country has some of the most recognised and experienced companies in the world in the execution of bold and transformative infrastructure projects. However, faced with a continent that demands innovative solutions and unprecedented investment, it is worth asking why Spain, with all its potential and leadership in the sector, is not more present in this process of African transformation? The opportunity is there, the need is evident and international efforts to facilitate financing are advancing. It is time for Spanish companies to step forward and assume a leading role in the development of infrastructures that will mark the future of Africa.