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UNU-WIDER WP/2012/56 Aid and Infrastructure Financing: Emerging challenges with a focus on Africa

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A teenager wears torn rubber boots in a muddy local market in Bac Ha, Viet Nam. As of 2005 figures, half the world population—more than 3 billion people–is estimated to live on less than USD 2.50 a day. Bac Ha, Viet Nam. UN Photo/Kibae Park.

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WP/056 Aid and Infrastructure Financing: Emerging challenges with a focus on Africa

The central argument of this study is that given the magnitude of the investment in infrastructure that is required, especially in Africa, the role of foreign aid in the future should be distinctly different. While aid will be required to continue to fill the ‘savings gap’ in some small countries and land-locked countries, in most other countries aid can play a very different role in facilitating the creation of institutional mechanisms that help mobilize more funding from other sources. These include domestic revenues (which already fund a large proportion of infrastructure), investments by China and the other ‘BRICs’, sovereign wealth funds and infrastructure funds. There are already examples of aid playing such a leveraging role. What is needed is to take this to a new and higher level. The study provides an overview of evidence on infrastructure needs and also possible magnitudes of flows from different sources for investment in infrastructure.
WIDER Working Paper
WP/056 Aid and Infrastructure Financing: Emerging challenges with a focus on Africa
Tony Addison and P. B. Anand
Publication date:
June 2012
ISBN 13 Web:
Copyright holder:
Copyright year:
aid, infrastructure, Africa, finance, funds, private sector
F35, L9, N20, O16
This working paper has been prepared within the UNU-WIDER project ‘Foreign Aid: Research and Communication (ReCom)’, directed by Tony Addison and Finn Tarp. UNU-WIDER gratefully acknowledges specific programme contributions from the governments of Denmark (Ministry of Foreign Affairs, Danida) and Sweden (Swedish International Development Cooperation Agency—Sida) for the Research and Communication (ReCom) programme. UNU-WIDER also acknowledges core financial support to UNU-WIDER’s work programme from the governments of Finland (Ministry for Foreign Affairs), the United Kingdom (Department for International Development), and the governments of Denmark and Sweden.

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