Focus Africa

Opportunity For Infrastructure Investment In Africa

Investors are having trouble looking for profitable deals, who says! Solution is found. Infrastructure investment   is claimed  as  benefited solution offering  diversification ,low double digit returns (majority from cash yield) and rest from capital appreciation.

It is widely documented and accepted that developing countries like Africa is currently facing a considerably large infrastructure shortfall. Residence lacks access to good quality infrastructure and reliable basic services.  Recent surveys (2015) reports indicates that in developing countries who falls under low and middle-income bracket, requires around USD 1 trillion to USD 1.5 trillion of annual infrastructure  by 2020 and African continent is one of them. Africa total infrastructure financing needs amounts  USD 93 billion per year until 2020 (Africa Infrastructure Country Diagnostic, 2009), there is already a lapse and gap is widened. According to Sylvian Boko, the principal regional advisor and head of development planning at the Economic Commission for Africa (ECA) a solid infrastructure base is critical for Africa’s economic transformation and it is imperative for the continent to create an enabling environment for investment in trans boundary infrastructure projects.

Initially, infrastructure investment in Africa was controlled  by structural obstacles and lack of financing options. Fortunately, now investors  can benefit from additional sources of financing which means Islamic financing for infrastructure development is the new opportunity for investors. Islamic Banks and financing institutions are stepping up their efforts by providing finances and different financial solutions to minimize the risk of the investment in developing region like Africa. Islamic Financing  is growing in Africa, it is the new and innovative way to meet the needs of this continent to fund infrastructure development.

Islamic finance contributes to only 1% of the global financial market, the percentage looks very small, how can tapping these funds will bridge the gap for developing countries to work on their infrastructure and how can it attract the investors to jump in with their two feet and invest?  The Answer is the deployment of Islamic financial products which gives new horizon to infrastructure development and financing in a region like Africa where the risk is high and political and economic condition is yet not stable.

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