By Ghislain KAPSSU, Managing Partner – Kompt Capital West Africa S.A.
For several decades, the debate on financing infrastructure in Africa has focused on large structuring projects: hydroelectric dams, highways, ports, airports, or national energy networks. These assets naturally play an essential role in the continent’s economic transformation and attract the attention of international donors, multilateral development banks, and capital markets. However, this focus on mega-projects tends to overshadow another issue, equally crucial for economic and social development: that of local infrastructure.
A deficit that is not only measured in billions of dollars
When discussing the African infrastructure deficit, the figures mentioned are generally in the tens or hundreds of billions of dollars. But behind these amounts lie much more concrete realities. Local infrastructure refers to essential facilities that directly improve the daily lives of populations and strengthen local economic activity: mini water supply networks, solar public lighting, municipal markets, agricultural cold storage rooms, community health centers, agricultural collection and storage facilities, secondary rural roads, or decentralized mini energy networks.
These infrastructures share a common characteristic: their impact is immediate, visible, and directly measurable through economic, social, and environmental performance indicators, particularly in terms of access to essential services and reducing carbon footprint. A cold storage room reduces post-harvest losses and improves agricultural income. A covered market structures the commercial exchanges of a municipality. A water supply network simultaneously improves health conditions, education, and economic productivity. A public lighting system contributes to security and extends commercial activity after nightfall.
However, despite their importance, these projects remain largely underfunded. Their investment needs, generally ranging from a few hundred million to a few billion CFA francs, are often too modest to attract major international donors. At the same time, their technical, legal, and operational structuring appears too complex or insufficiently standardized for traditional commercial banks. They thus find themselves in a true financing intermediate zone, despite their direct and immediate impact on people’s lives.
An asset class still underdeveloped
This situation raises a fundamental question: why do infrastructure projects that meet essential needs still struggle to attract suitable financing? The answer partly lies in the absence of a clearly identified asset class that connects the needs of territories to the expectations of institutional investors. Local infrastructure projects have several characteristics that could interest long-term investors. Firstly, they often rely on essential services whose demand remains relatively stable regardless of economic conditions.
Secondly, their revenues can be linked to operating fees, concession contracts, public payments, or hybrid mechanisms combining several revenue sources. Finally, their low correlation with traditional financial markets can be an interesting diversification source for institutional portfolios. For insurance companies, pension funds, or certain wealth investors, these assets have characteristics similar to those sought in long-term investments: visibility of cash flows, anchoring in the real economy, and investment horizon compatible with their commitments.
Why private infrastructure debt deserves special attention?
While several financial tools can contribute to financing these infrastructures, private debt appears particularly relevant for a wide range of revenue-generating projects. Unlike solely equity financing, private debt allows adjusting the financing level to the project’s actual capacity to generate cash flows. It also provides investors with increased visibility on repayment mechanisms and investment duration. In the case of local infrastructure, financing can take various forms: private loans, unlisted bond issuances, project financing, or Public-Private Partnership (PPP) structures.
The presence of local authorities or public entities should not only be seen as a complexity factor but rather as a lever. When properly structured, these projects can integrate additional security mechanisms such as public guarantees, segregated accounts funded by dedicated revenues, or specific budget commitments. The challenge is not only to finance more projects but to build structures robust enough to simultaneously meet the requirements of communities and investors.
Obstacles still hindering the market
Despite its potential, this segment still faces several structural challenges. The first concerns project preparation. The needs are numerous, but few of them reach a sufficient level of maturity to become financeable. Technical, environmental, legal, and financial studies are often underfunded, mechanically limiting the number of investable opportunities. The second challenge is the exchange rate risk. A significant portion of the capital available to finance these projects is denominated in international currencies while revenues are generally generated in local currency.
The development of investment vehicles and appropriate hedging tools remains an essential condition for the market’s growth. The third challenge concerns mobilizing African institutional savings. Insurance companies, pension funds, and other long-term investors have considerable potential, but regulatory frameworks and available vehicles do not yet allow a significant allocation to this asset class.
Finally, the market still lacks specialized actors capable of identifying, structuring, aggregating, and managing these investments according to the standards expected by institutional investors. It is precisely in this segment that Kompt Capital West Africa aims to make its contribution.
Mobilizing African savings to finance African territories
For a long time, African development financing has mainly relied on external capital. This approach has led to many achievements, but it alone cannot meet all the continent’s needs. Africa now has a considerable stock of savings held by insurance companies, pension funds, banks, institutional investors, and private wealth. The real challenge now is to create mechanisms that effectively connect this savings to the real needs of territories.
It is precisely with this perspective that we have created Kompt Capital West Africa. Our ambition is to build from Africa a platform specialized in private infrastructure debt, capable of structuring investment vehicles adapted to institutional investors’ requirements while meeting the financing needs of communities and territories. Our approach is based on a simple belief: local infrastructure can constitute an emerging asset class provided they are identified, structured, aggregated, and managed according to international standards of governance, risk management, and transparency. In this regard, we are developing a complementary strategy based on private debt funds for qualified investors in private markets and the progressive creation of regulated vehicles within the WAEMU area.
For this purpose, an accreditation procedure is currently underway with the West African Monetary Union Financial Markets Authority (AMF-WAEMU) to manage regulated vehicles such as Risk Capital Investment Funds (FCPR) in the long run. The real challenge in the coming years may not only be to attract more international capital to Africa but also to enable an increasing share of African savings to finance African infrastructure. Local infrastructure represents a particularly promising investment opportunity: close enough to the needs of populations to generate an immediate impact, tangible enough to be understood by investors, and numerous enough to create a true asset class serving the continent’s development.
About Ghislain KAPSSU
Ghislain KAPSSU is the Managing Partner of Kompt Capital West Africa (KCWA), an alternative asset management company based in Abidjan and specializing in financing local infrastructure through private debt in sub-Saharan Africa. Holding an MSc in Mathematics and Statistics from the University of Paris-Dauphine and an MSc in Electronic Engineering from the University of Staffordshire (United Kingdom), he has worked for over fifteen years in financial markets, particularly in structuring and selling tailor-made complex derivative instruments to alternative investment funds and international institutional investors.
