Can Africa take ownership of the AU-US infrastructure deal?

Since the African Union Commission (AUC) and the United States (US) government signed off on the Strategic Infrastructure and Investment Working Group (SIWG) in January, the platform has begun to take shape. Projects are being identified and institutional mechanisms built, as both sides test each other’s ability to deliver on their promises.

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The SIWG is a promising new initiative aimed at securing investment inflows and developing trade in Africa, notably from the US private sector.

Signs of progress include an agreement between AUC Chairperson Mahmood Youssouf and US Deputy Secretary of State Christopher Landau that the SIWG will align US capital and financing tools with AU-backed infrastructure. This will be informed by the AU’s Agenda 2063, Programme for Infrastructure Development in Africa (PIDA) and African Continental Free Trade Area (AfCFTA).

On the US side, the Bureau of African Affairs has been coordinating with the US International Development Finance Corporation and the Export-Import Bank of the US to set up a cross-departmental task force of agencies and US companies interested in investing in Africa. On the AU side, the Chairperson’s cabinet is organising the AUC’s components of the working group.

The partners have also agreed on a first, deliberately narrow slate of projects. These are the jetty and port expansion in Nacala, Mozambique; another petroleum jetty in Mozambique; Namibia’s Walvis Bay integrated hydrogen hub; the long-stalled Inga hydroelectric scheme in the Democratic Republic of the Congo; and a data centre. The data centre is the only project outside PIDA’s pipeline.

The anchoring of SIWG initiatives in PIDA’s 69 priority projects is not incidental. PIDA’s first decade mobilised $82 billion against an initial target of $68 billion. The second phase is pegged at $161 billion, a level that private capital has been reluctant to supply. That leaves African governments and sovereign borrowing – the latter being partly responsible for Africa’s debt distress – to absorb most of the burden.

Africa’s infrastructure financing gap is commonly estimated at $68 billion to $108 billion a year. The SIWG bets on US capital closing parts of the gap that African governments cannot close alone. Selecting PIDA’s projects also reinforces Africa’s SIWG ownership, as these projects follow an integrated corridor logic, in which transport, energy, information and communications technology and water infrastructure are designed simultaneously.

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The AU’s internal organisation to meet the SIWG’s demands is original. The departments of Infrastructure and Energy, as well as Economic Development, Tourism, Trade, Industry and Mining, drive the partnership under the Chairperson’s leadership. The AU Development Agency – PIDA’s technical implementer – handles delivery.

This is the first time the AUC will drive a commercial relationship with a major partner that directly involves private capital. But that novelty is potentially the AU’s biggest challenge.

The AUC is not a government. Its departments set the political and strategic direction, while implementation mostly rests with specialised agencies that it does not control, unlike a government minister overseeing a line department. Making SIWG work will require efficient, faster and more innovative working methods than the AU bureaucracy is used to.

While AU structures support the SIWG, member states will need to be kept updated on progress, as projects span multiple countries. Creative ways are needed to secure the backing of local communities and citizens’ groups whose land and livelihoods intersect PIDA corridors.

As private sector mobilisation is key, the AUC will need a strategy to bring selected African businesses into the public-private coordination SIWG requires. The backing of African financial institutions – the African Development Bank, African Export-Import Bank, Africa Finance Corporation and Africa50 – could be critical as they have both the balance sheet and credibility to co-invest and de-risk with American counterparts.

The SIWG could be a unique opportunity for the AU to offer something it has never really had: a set of material incentives that align with continental priorities such as PIDA and AfCFTA. A government that fast-tracks corridor reforms or harmonises regulations could be rewarded with priority access to SIWG-linked financing and technical support, thereby providing the AUC with substantial leverage to advance integration.

Challenges are different on the US side, but no less structural. American private capital remains conspicuously cautious about Africa. US investors have doubts about the rule of law and the durability of contracts, a pattern evident even in strategic sectors such as rare earth minerals.

Hopefully, the new $500 million US-Africa Strategic Investment Program, which offers grants of up to $50 million to de-risk private deals, will prioritise partners committed to strengthening the rule of law and predictable business conditions. Predictability – more than amounts – is what will enable American firms to compete for African infrastructure against Chinese and Turkish state-linked builders, who move faster and tolerate more risk.

Washington’s efforts to sell opportunities in Africa to the private sector should involve multiple actors outside government. This matters more as the US diplomatic footprint on the continent shrinks. With fewer US ambassadors being confirmed for African embassies and plans to close several visa-processing missions, there will be fewer diplomats on the ground to broker deals and reassure investors.

American businesses will increasingly rely on intermediaries who understand both US expectations and African realities. African diaspora communities in the US and organisations such as the US Chamber of Commerce and Corporate Council on Africa, which convene the annual US-Africa Business Forum, could play that role.

The SIWG is an innovative platform that positions the AU as both a diplomatic and a commercial partner to a major power. For it to deliver, the AU should move fast to secure African private and institutional capital and ensure the pilot projects are rooted in the consent of the countries and communities they cross.

The US, for its part, should treat the rule of law and its own shrinking diplomatic capacity as the working group’s main obstacles. Both sides have said they want to flip the script. The next 12 months will show whether they meant it.

Paul-Simon Handy is Regional Director East Africa and Representative to the African Union for the Institute for Security Studies (ISS) in Addis Ababa. Joseph Sany is a Senior Research Fellow at the ISS.

(This article was first published by ISS Today, a Premium Times syndication partner. We have their permission to republish).