AfDB boosts ATIDI to unlock African private capital

The African Development Bank (AfDB) committed $125 million to the African Trade and Investment Development Insurance (ATIDI). This makes AfDB the largest shareholder in the Nairobi-based risk insurer, aiming to mobilize more private capital for Africa’s infrastructure needs.

This significant investment will increase AfDB's stake in ATIDI from 3 percent to 14 percent. AfDB President Sidi Ould Tah announced the investment after the bank’s annual meetings in Brazzaville. The move is a key part of AfDB’s new financial strategy for Africa’s development.

The investment comes as traditional development finance sources face increasing strain. Official development assistance from wealthier countries fell sharply last year. This has intensified pressure on African institutions to find sustainable ways to fund infrastructure. Africa faces an annual infrastructure and development funding gap estimated at $400 billion. The continent holds nearly $4 trillion in institutional capital, including pension funds and sovereign wealth funds. However, this capital often remains fragmented and underutilized for large-scale development projects.

By strengthening ATIDI’s capital, AfDB plans to expand the use of guarantees and risk-sharing tools. These tools are designed to attract private investors to projects often seen as too risky. AfDB hopes to increase ATIDI’s annual guarantee capacity to $10 billion, more than three times its current support. This aligns with a broader shift from reliance on external aid to leveraging domestic financial resources.

Founded 25 years ago, ATIDI helps reduce investment risks across Africa. It does this through insurance and guarantee products for both public and private sector projects. Its shareholders include 24 African countries, development finance institutions, and international partners. The AfDB’s increased stake signals that de-risking African investments is now a strategic priority.

This strategy reflects a re-evaluation of development finance across the continent. Concessional funding is becoming scarcer, and global economic uncertainty continues. African leaders are increasingly looking to domestic savings and institutional capital. They aim to drive long-term growth and reduce dependency on external borrowing.

The challenge for Africa has often been the lack of structures to convert available capital into investment-ready projects. Institutions like ATIDI are crucial in this regard. Guarantees and political risk insurance can reduce the perceived risk of infrastructure and energy projects. This makes them more attractive to pension funds, insurers, banks, and global investors. AfDB is also encouraging other governments and private investors to join or increase their participation in ATIDI.

For private investors, this AfDB commitment indicates a stronger focus on making African investments safer. For governments, it suggests a move away from heavy reliance on public borrowing and donor funds. Instead, public balance sheets will be used more strategically to attract private money. This emphasizes that Africa's future development depends on its ability to use its own financial resources effectively. It requires stronger institutions, better project planning, credible guarantees, and cooperation among stakeholders.