EU’s €300bn Global Gateway aims to boost Africa investment
The €300 billion Global Gateway initiative faced a critical question at the European Investment Bank Global Forum in Luxembourg: how can private capital be mobilized at scale for industrial development? This challenge is central to Europe’s ambition to strengthen economic ties with Africa, shaping the future of development finance and the credibility of its partnerships. The discussion highlighted a deeper structural issue, emphasizing that the world lacks not capital but investable development opportunities.
Dr. Hubert Danso, chairman of Africa Investor, argues that the issue isn’t capital availability but the structure of investment opportunities. Global institutional investors manage over $300 trillion, yet this capital is allocated based on mandates, benchmarks, and scalable asset classes, not persuasion. Until development is structured as an investable asset class, these vast pools of capital remain inaccessible. For decades, development finance has focused on making investment developmental, but mobilizing private capital requires the opposite: making development investable.
The Gap Between Ambition and Reality
Currently, development finance in Africa mobilizes only $0.20–$0.38 of private capital for every dollar invested, far below the $10 benchmark. In contrast, European instruments have shown potential to mobilize up to €15 for every euro of public capital. This disparity shows a structural issue rather than a capital shortage. European Council President António Costa noted this during the Forum, highlighting the need to bridge this gap for both development and strategic economic gains. As Europe seeks to strengthen industrial supply chains, expand energy partnerships, and deepen economic ties with Africa, mobilizing institutional capital into large-scale infrastructure becomes critical to the Global Gateway strategy’s credibility.
The gap between $0.20 and €15 reveals that global institutional investors lack not capital but investment structures meeting their scale, liquidity, and governance requirements. Institutions that mobilize trillions do so by creating asset classes, not presenting projects.
Lessons from History
Historically, capital mobilization has succeeded when investment architectures are well-designed. Venture capital ecosystems, global infrastructure allocations, and responsible investment leadership were pioneered by institutions like the Yale University Endowment, Canadian pension funds such as CPP Investments, and Norway’s Government Pension Fund Global. These examples demonstrate that investors are architects of asset classes, not just capital providers. Their success lies in creating mandate-eligible, benchmark-compatible opportunities capable of absorbing capital at scale.
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This approach contrasts with traditional development finance, which has focused on making investment developmental rather than structuring development as an investable asset class. A shift in mindset is essential to align opportunities with institutional investors’ mandates and scale capital absorption. Two priorities emerge: democratizing access to Global Emerging Markets (GEMs) investment risk data and deepening partnerships between Global Gateway, the European Investment Bank, the European Commission, the EBRD, and institutional investors to jointly design scalable asset classes.
The Cost of Inaction
The consequences of not addressing this investment architecture are significant. Developing countries pay over $15.6 billion annually in excess financing costs, while global institutional investors have missed out on more than $6 trillion in potential returns over the past two decades due to poorly structured opportunities. This dual loss shows the urgency of restructuring development as an investable asset class.
Platforms such as Institutional Investor–Public Partnerships (IIPPs) could help align public institutions and institutional investors around bankable infrastructure systems capable of absorbing capital at scale. As Dr. Danso emphasized, the task is to make development investable, not just investment developmental. This requires working with institutional investors as partners in designing asset classes capable of absorbing capital at scale.
Ultimately, private capital mobilization is an investment architecture challenge, not a development finance problem. When development becomes investable, capital reallocates automatically through mandates, benchmarks, and scalable asset classes, eliminating the need for persuasion.
