G7’s $600bn global infrastructure initiative targets Africa

At the G7 meeting of wealthy nations in Bavaria, US President Joe Biden and his counterparts launched the Partnership for Global Infrastructure Initiative to mobilise $600bn by 2027 for developing countries and combat Chinese influence.

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Leaders of the wealthiest democracies meeting in Germany’s Bavarian Alps for the G7 Summit have announced a $600bn lending initiative to fund infrastructure projects in the developing world, which they say will have a particular focus on Africa.

The leaders of the G7 – which comprises Canada, France, Germany, Italy, Japan, the US and the UK – say that the Partnership for Global Infrastructure Initiative (PGGI) will help to close the infrastructure gap in developing countries and will provide an alternative to China’s Belt and Road Initiative (BRI), an infrastructure and investment programme spanning multiple continents.

Initiated by the US one year ago at the last G7 Summit in Cornwall, UK, the PGII was officially launched at this year’s meeting by President Joe Biden and German Chancellor Olaf Scholtz, with the announcement of flagship projects for Africa and other regions.

US takes the lead 

Biden has announced that the US will mobilise $200bn for PGII over the next five years through grants, federal financing, and leveraging private sector investments.

Several deals have already been announced under the new initiative. Biden said that the Angolan government has signed a $2bn contract with two American companies, AfricaGlobal Schaffer and Sun Africa, to implement various solar-powered utilities including solar mini-grids, solar phone booths, and home-power kits in four southern Angola provinces by 2025.

After a business mission to West Africa by the US Chamber of Commerce earlier this month, the Philadelphia-based company ABD group was awarded $320m for the building of 100 hospitals and clinics across Côte d’Ivoire.

Last week, the US International Development Finance Corporation (DFC) announced a $15m equity investment in Norrsken22 Africa Fund, and $25m in Uhuru Growth Fund, to drive capital growth in African tech companies and consumer-facing SMEs respectively.

African countries will also benefit from the Digital Invest Program, a blended finance programme launched by USAID, which aims to gather $335m in private capital to supply secure network equipment in Africa, Asia, and Latin America.

“These deals are just some of what’s in store.  And we’re ready.  We’re ready to get to work, together, all of us,” said President Biden at the launch.

G7 counter-offensive to China’s Belt and Road

On Monday, South Africa President Cyril Ramaphosa and Senegal’s President Macky Sall, current chairperson of the African Union, joined the meeting in talks expected to touch on the initiative and other areas of mutual concern, including the global economic fallout of Russia’s war on Ukraine.

 

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