The African Development Bank (AfDB) plans to invest $125 million in the African Trade and Investment Development Insurance (ATIDI) to boost private investment in key infrastructure and development projects across the continent.

This investment will elevate AfDB from a minor shareholder to the largest investor in ATIDI, significantly increasing its ownership stake.

AfDB President Sidi Ould Tah revealed the investment in an interview with Reuters following the Bank’s Annual Meetings held in Brazzaville, where financing Africa’s development agenda was a key focus. The capital injection aligns with AfDB’s broader strategy to reduce reliance on traditional aid and accelerate the mobilisation of private sector investment across Africa.

This initiative is a key part of the Bank’s New African Financial Architecture for Development (NAFAD), to tap into domestic and institutional capital to address Africa’s significant financing requirements.

Addressing Africa’s development financing gap

The AfDB estimates that Africa has an annual development financing gap of about $400 billion, mainly in infrastructure, energy, industrialisation, and climate projects.

Meanwhile, African pension funds, sovereign wealth funds, insurance companies, and other institutional investors collectively manage an estimated $4 trillion in assets, much of which remains underutilised for development financing.

AfDB is strengthening ATIDI’s capital to enhance the use of guarantees and risk-mitigation tools, attracting private investors to projects that may otherwise face funding challenges.

Expanding guarantee-backed financing

President Tah highlighted the goal of increasing ATIDI’s guarantee volume to enhance financing for major infrastructure projects across Africa.

The partnership is expected to enhance project financing capacity, especially in sectors where perceived investment risks have historically limited private sector participation.

ATIDI has played a pivotal role in supporting investments across Africa by providing political risk insurance, credit guarantees, and trade-related risk mitigation products. 

These instruments have facilitated billions of dollars in investments annually by reducing risks for lenders and investors operating in African markets.

Increased ownership and institutional shift

Under the proposed transaction, AfDB’s stake in ATIDI will increase from about 3% to 14%, making it the largest shareholder.

This move would be a shift among African development finance institutions toward leveraging guarantees, blended finance structures, and private capital mobilisation as governments face tighter fiscal constraints and declining external aid.

With global development financing tightening, policymakers are seeking ways to attract long-term institutional investment to support Africa’s growth ambitions.

The AfDB sees guarantee-backed financing as a crucial way to address infrastructure funding gaps and boost economic transformation in Africa. By improving risk mitigation and building investor confidence, investment in ATIDI will be able to attract significant private capital, promoting sustainable development and inclusive growth across the continent.