Africa's Infrastructure Gap: Why Surety Bonds Are Part of the Answer

14 November 2024

The Scale of the Need

Africa's infrastructure deficit is substantial and well-documented. Roads, ports, energy systems, water infrastructure, and urban development across Sub-Saharan Africa and North Africa all require sustained investment — investment that is increasingly coming from a combination of public budgets, development finance institutions, and private capital.

The construction activity that flows from this investment generates direct and consistent demand for performance bonds, advance payment bonds, and contractual guarantees. Employers and funders — including development banks, government procurement bodies, and international project developers — routinely require contractors to provide bond security as a condition of contract award.

The Access Problem

For contractors operating across African markets, obtaining a bond that is acceptable to the employer is not always simple. Local banking infrastructure varies significantly between markets. In some countries, the availability of bank guarantees is constrained by limited credit facilities or collateral requirements that are difficult for smaller or mid-sized contractors to meet. In others, employers or their funders prefer bonds from internationally recognised institutions.

The result is a gap between the demand for contractual guarantee instruments and the practical ability of contractors to access them — particularly in markets where the surety product is still developing.

Where Demand Is Strongest

Markets with the most active infrastructure pipelines — Kenya, Nigeria, Ghana, South Africa, Tanzania, Egypt, and Morocco — are also those where the requirement for performance bonds and advance payment bonds is most consistently embedded in contract frameworks. In these markets, both government-funded and privately financed construction contracts typically include bonding requirements aligned with internationally recognised standards.

The Middle East and Africa surety market was valued at $563 million in 2024 and is projected to reach $819 million by 2031 — a growth rate that reflects both the pipeline of infrastructure projects and the gradual maturing of surety infrastructure across the region.

How Solidum Global Supports African Contractors

Solidum Global works with a network of local and international partners who are positioned to provide performance bonds and contractual guarantees for construction projects across African markets. Our role is to assess your requirement and connect you with a partner who can provide a solution that meets the specification in your contract.

If you are working on a project in Africa and need a bond, submit an enquiry. We will review the details and advise on whether our network can assist.

Reference: The Insight Partners — Middle East & Africa Surety Market Forecast: theinsightpartners.com/reports/middle-east-and-africa-surety-market

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