Facilitating Africa’s private sector access to capital markets

AFC is building its capabilities to establish investments and financing leaderships across Africa.

Reflecting high commodity prices and improved fundamentals, net private capital flows to sub-Saharan Africa in 2006 exceeded net official flows for the first time. Access to private capital flows, however, remains limited and is dominated by trade financing, the resource sector and a limited number of countries.

At the same time, capital flight from Africa has been very significant. It is estimated that Africans hold up to 40% of their wealth outside Africa and the continent’s official foreign reserves increased five-fold between 1996 and 2006. Overall, Africa’s reserves are growing faster than its foreign trade as many countries try to reduce the impact of external shocks. Domestic financial markets are also thin and relatively underdeveloped.

To attract capital back to the continent and enhance domestic and foreign equity flows, African countries need to combat the perception of high risks and high transaction costs due to structural weaknesses of capital markets and inefficiencies of the infrastructure and trading systems.

AFC is leading by expanding the investment space without competing with local banks. It is creating new opportunities for domestic banking by pioneering investment in under-invested sectors and products. AFC is focused on building and developing the domestic capital markets in target markets in Africa. The AFC is capitalizing on the successful cases of financial sector reforms across Africa to help deepen capital markets development on the continent.

The AFC is launching an international asset management business to provide African capacity to manage the reserves of the central banks of African countries in the first instance

AFC is opening offices in North, West, East, and Southern Africa to ensure that it is close to its projects, in order to optimize the local knowledge which gives AFC the compelling competitive advantage in Africa.