Joy Agwunobi
The African Insurance Organisation (AIO) has issued a compelling call for Africa’s insurance and reinsurance sectors to play a frontline role in bridging the continent’s massive infrastructure gap, positioning the industry as a vital contributor to economic growth, regional integration, and climate resilience.
This call to action was unveiled during the launch of the AIO’s latest flagship publication, “Africa Insurance Pulse 2025 – Supporting Infrastructure Development in Africa,” presented at the organisation’s 51st Conference and Annual General Assembly held from May 24 to 28 in Addis Ababa, Ethiopia.
In the report, the AIO identifies infrastructure—across key sectors such as energy, transport, water supply, healthcare, communications, and financial systems—as the cornerstone for delivering inclusive development and lifting living standards. Yet, it notes that Africa continues to fall behind, with widespread deficits hampering growth. For instance, only 43 percent of the population has access to all-weather roads, while more than half of the population in Sub-Saharan Africa still lives without electricity. The divide between urban and rural areas remains sharp.
Drawing on figures from the African Development Bank (AfDB), the report notes that achieving the Sustainable Development Goals (SDGs) by 2030 would require annual investments of about $495.6 billion, with a further $86.7 billion annually needed to meet the African Union’s Agenda 2063. These figures underscore the continent’s heavy reliance on infrastructure to meet its broader development ambitions. However, with current efforts falling short, the estimated financing gap sits at a staggering 81 percent of the total need.
The challenge, the report says, is further complicated by limited government revenues and high debt servicing obligations, which leave little room for public infrastructure financing. Even though fiscal reforms are crucial, the AIO acknowledges that many African nations face serious constraints in implementing them.
Given this backdrop, the report stresses the urgent need for Africa to attract more private capital and development financing. Unlocking these funding sources, it argues, will depend heavily on reducing investment risks.
The report outlines a range of challenges that continue to deter investors—among them political and economic uncertainty, weak regulatory frameworks, lack of coordination between countries, insufficient project preparation, and data-related gaps. These issues drive up the cost of doing business and discourage long-term infrastructure investments.
According to the AIO, it is in this space that the insurance and reinsurance sectors can make a significant difference. By offering cover for risks such as project delays, political instability, property damage, and credit defaults, insurers can provide the kind of security that attracts investors and protects infrastructure projects throughout their lifespan.
Beyond risk coverage, the report points out that insurance companies, especially those managing long-term funds are increasingly positioned to invest directly in infrastructure projects. With stable, predictable returns, infrastructure represents a natural fit for insurers looking for long-horizon investments.
To accelerate progress, the AIO calls for more collaboration between insurers, governments, and development partners. Among its recommendations: involve insurers early in infrastructure planning, promote public-private partnerships, adopt flexible funding models, and implement reforms to create a more stable and predictable investment environment.
Another key priority highlighted in the report is the development of local capital markets. Encouraging more domestic investment especially from pension funds and insurance firms can reduce overreliance on foreign borrowing and shield countries from exchange rate risks. This would require, however, policy support such as classifying infrastructure as a distinct investment category and offering capital incentives.
The AIO also commended the work of regional institutions such as Africa Re, the African Trade Insurance Agency (ATI),and various regional risk pools are already making meaningful progress in supporting Africa’s infrastructure development. However,it noted that broader participation across the insurance sector is urgently needed to expand these efforts and build a continent-wide risk resilience framework.
Commenting on the report, Jean Baptiste Ntukamazina secretary general of the AIO said: “With a rapidly growing population and accelerating urbanisation, Africa faces an urgent need for expanded and resilient infrastructure.”
He added, “(Re)/insurers have a crucial role to play in bridging this gap – as providers of advisory and risk mitigation solutions to mobilise investment flows and protect infrastructure over its full lifecycle, and as long-term institutional investors. Stakeholder collaborations, risk sharing, diversification and enhanced data and analytics capabilities are all focus areas for increasing the sector’s involvement to foster growth, resilience and inclusion across Africa’s evolving development landscape.”
The report further advises insurers to develop Africa-wide shared risk databases and investing in data, advanced technology and analytics, climate risk and catastrophe models, and underwriting and risk management tools to improve risk assessment and pricing accuracy, reduce high-risk perceptions, and better manage exposures.
Further recommendations include seeking domestic and international risk-sharing solutions to strengthen underwriting capacity, promoting skills sharing across Africa, considering portfolio diversification across infrastructure categories and geographies, and – given that infrastructure risk has often been profitable for African (re)insurers – sharing success stories.
The report concludes by reaffirming that, although infrastructure investment is often seen as complex and fraught with risk, it remains an area where insurers have consistently added meaningful value—both in safeguarding assets and in supporting economic development.
Historically viewed as secondary players, insurers are now being urged to step into a leadership role to de-risk large-scale projects, mobilise long-term capital, and drive innovation in support of the continent’s infrastructure ambitions. It noted that the future of Africa’s infrastructure and, by extension, its economic transformation may well rest on the insurance industry’s willingness and capacity to meet this challenge head-on.
