How Africa’s $2tn institutional capital can create investment-ready infrastructure projects

Africa’s infrastructure financing conversation has long been dominated by concerns over limited capital. Governments across the continent routinely cite funding shortages as the primary reason roads, railways, power plants, ports, and other critical projects fail to materialise. Yet, according to Bowale Odumade, founder and chief executive officer of SeedTree Capital, the continent’s biggest obstacle is not the absence of money but the absence of well-prepared, bankable projects capable of attracting long-term investors.

Odumade argues that Africa already possesses significant pools of domestic institutional capital. Pension funds, insurance companies and sovereign wealth funds collectively control more than $2 trillion in long-term assets, but only a small fraction is invested in infrastructure. Closing the continent’s infrastructure gap, he says, will depend less on finding new sources of finance and more on creating commercially viable projects with credible sponsors, sound governance, and appropriate risk structures.

Drawing on more than two decades of experience advising governments, investors and infrastructure developers across Africa and other emerging markets, Odumade believes the investment landscape is undergoing a structural shift. Local capital is becoming increasingly important, and environmental, social, and governance (ESG) considerations are now influencing financing decisions, while regional integration under the African Continental Free Trade Area (AfCFTA) is creating new opportunities for cross-border infrastructure investment.

In this exclusive interview with BusinessDay’s Chinwe Michael, Odumade discusses why project preparation remains Africa’s weakest link, how governments can attract more patient capital, the sectors with the greatest investment opportunities over the next decade, and the single policy reform that could fundamentally reshape infrastructure financing across the continent.

You have spent more than two decades working across infrastructure finance and investment projects in Africa and other emerging markets. Looking back, what are the biggest changes you have seen in how infrastructure is financed?

Two developments stand out.

The first is the emergence of domestic institutional capital as a genuine source of infrastructure financing across Africa. Pension funds, insurance companies and sovereign wealth funds now collectively manage more than $2 trillion in long-term assets. For many years, most of that money remained invested in government securities, with less than three percent finding its way into infrastructure.

That is gradually changing. Regulatory frameworks are evolving to accommodate alternative investments, credit enhancement mechanisms are helping de-risk infrastructure assets, and institutional investors are becoming more sophisticated in assessing long-term infrastructure opportunities.

The second shift is the growing recognition that regional integration can significantly improve project viability. The African Continental Free Trade Area has created an institutional framework for larger regional markets. While implementation is still evolving, infrastructure will ultimately determine whether the promise of regional integration becomes an economic reality.

Infrastructure projects require significant capital and often take decades to generate returns. In today’s market, what makes a project bankable?

Bankability begins long before financial close.

A project becomes bankable when it is structured in a way that allows investors and lenders to understand the risks, price them appropriately and commit capital with confidence.

Today’s investment environment is far less tolerant of uncertainty than it was in the past. Capital has become more expensive, and investors are far more selective. The projects attracting financing today are those built on realistic assumptions, sound commercial structures, and credible sponsors.

In many respects, bankability is designed rather than discovered. It is established during project preparation, not after financing negotiations begin.

ESG has become increasingly important in global finance. Beyond compliance and reporting, how is it changing infrastructure investment decisions?

ESG is increasingly influencing how infrastructure projects are financed and priced.

Rather than treating ESG as a reporting obligation after projects are approved, investors now expect environmental, social, and governance considerations to be embedded throughout project development.

Projects that proactively identify environmental risks, establish strong governance structures,, and engage affected communities early are generally viewed as lower-risk investments. That often translates into improved financing conditions and greater investor confidence.

In practical terms, ESG has become part of investment risk management rather than simply a compliance exercise.

Africa continues to face a significant infrastructure deficit. In your view, what remains the biggest obstacle?

Many people immediately point to capital, policy or execution capacity.

Those are certainly important challenges, but they are closely interconnected.

Poor policy environments make project development more difficult. Weak stakeholder alignment creates additional uncertainty, while execution challenges discourage investors.

However, the single biggest constraint remains project preparation.

The quality of early-stage work, including feasibility studies, commercial structuring, technical design, and stakeholder engagement, largely determines whether projects ever become attractive to investors. Without strong preparation, discussions about financing become largely academic because projects never reach investment readiness.

Infrastructure investments in emerging markets often involve significant risks. How do you balance developmental impact with commercial returns?

We evaluate three things simultaneously: the quality of the project, the credibility of its sponsors, and the environment in which it will operate.

Weakness in any one of those areas can undermine an otherwise attractive investment.

The strongest infrastructure projects are those where developmental impact and commercial returns reinforce each other.

Where commercial viability alone is insufficient, blended finance solutions—including grants, concessional funding and viability gap financing—can help bridge the difference while preserving investment discipline.

Public-private partnerships are frequently promoted as the solution to Africa’s infrastructure deficit. Why do some succeed while others fail?

Successful PPPs function as genuine partnerships rather than contractual arrangements.

Governments bring policy support and public mandates, while the private sector contributes commercial discipline, technical expertise and operational efficiency.

Where PPPs work well, three elements are consistently present: sustained political commitment, appropriate allocation of risk and genuine alignment around long-term project outcomes. When any of those ingredients is missing, projects often struggle.

Investors often cite policy uncertainty as a major concern. How important are governance and regulatory consistency in attracting infrastructure capital?

Investors are comfortable pricing measurable risks. What they find extremely difficult is pricing uncertainty.

Infrastructure investments often extend over 20 to 30 years. That requires regulatory frameworks that remain broadly consistent throughout the life of the project, regardless of political transitions.

Countries that demonstrate long-term policy stability send a powerful signal to investors, and that confidence typically translates into stronger capital inflows.

Looking ahead, which sectors offer the greatest infrastructure investment opportunities over the next decade?

Energy remains the continent’s most urgent priority. Nearly half of Africa’s population still lacks reliable electricity, making power shortages one of the biggest constraints on economic growth. The continent has abundant energy resources; the real challenge is financing projects and connecting supply to demand.

Transport and logistics follow closely behind. Roads, ports, and rail infrastructure require substantial investment to reduce logistics costs and improve regional trade.

These investments are interconnected.

Reliable energy supports industrial production. Efficient transport connects producers to markets. Together, they create the foundation for manufacturing and value addition, enabling Africa to process more of its own raw materials instead of exporting them for others to transform. That is where long-term economic transformation lies.

If policymakers could implement just one structural reform to improve infrastructure financing, what should it be?

I would recommend making project preparation a mandatory component of every national infrastructure budget.

Governments should legislate a requirement that a defined percentage of infrastructure spending be ring-fenced specifically for early-stage development activities such as feasibility studies, project structuring and stakeholder engagement.

Some countries are already moving in that direction, but it should become institutional rather than discretionary.

When governments consistently develop a pipeline of investment-ready projects, long-term capital naturally follows. That, more than anything else, would transform infrastructure financing outcomes across Africa.