Project Finance for Africa's Construction Sector: Can Stabilization Funds Work?

The construction sector remains one of the most important economic sub sectors of any country's economy. A well-developed construction sector is a prerequisite to enhanced infrastructure development which is cardinal to a country's economic development. One of the factors that enhance construction sector growth is finance. Unfortunately Africa is still unable to attract large investments into its construction sector as compared to other continents because investors view the continent mostly as a source of cheap mineral resources. In this paper, it is observed that the size of Africa's construction sector despite its rapid growth remains relatively small as compared to other continents. The paper also shows that the challenges facing the African construction sector include poorly developed capital markets, high interest rates and the resource curse among others. It is also noted that Africa needs to establish stabilization funds to channel resources from sell of commodities to fund infrastructure development.