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Africa Must Urgently Develop Vaccine Manufacturing Capacity

Share of population receiving COVID-19 vaccine Mountain to climb for vaccine

Africa has received 61.4mn doses, just 6.5% of the estimated c.1bn doses required to inoculate 60% of the region’s adults, the so-called minimum herd immunity threshold necessary to bring an end to the pandemic. Of the nearly 3bn Covid vaccine doses administered globally, less than 2% are in Africa. And with close to 80% of Africa’s current vaccine supply already administered, only c.1% of the population has been fully vaccinated.

On current trends, the IMF’s proposal to end the pandemic by vaccinating at least 40% of the population in all countries by end-2021 and at least 60% by the first half of 2022 is unattainable in Africa. No African country is on track to meet these targets. Morocco - which has by far the highest inoculation rate in Africa – has only vaccinated 22% of the population and exhausted 94% of current stocks.

Current international proposals are insufficient. Having bought up one third of all global production capacity for 2021, G7 governments recently announced plans to divert excess supply of some c.500m doses to poorer countries through the COVAX facility. Crucially, the promised excess supplies are not expected until "sometime in 2022". While the African Union expected a further 30% vaccination coverage through the African Vaccine Acquisition Task Team (AVATT)1, the program also faces delivery delays owing to global manufacturers’ order backlogs.

International cooperation is crucial for near-term scaling up of Africa’s vaccine manufacturing. While WHO and WTO have promoted the establishment of regional vaccine manufacturing hubs in Africa supported by technology transfers from richer countries, production depends on whether pharmaceutical companies with proven mRNA vaccines will commit to supporting the initiative.

Currently global vaccine production supply chains are concentrated in just 13 countries. Between them, this "Vaccine Club" of countries also accounts for the bulk of trade in raw materials that go into the vaccine production process. Opening up these supply chains is critical.

Longer term, developing local manufacturing capacity in medical supplies, including vaccines, is critical to Africa’s future health and economic security. The world’s largest consumer of vaccines, Africa imported 99% of its vaccines pre-Covid, and relied almost entirely on global producers for a product that with hindsight is critical for public health and national security.

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1 The initiative secured a provisional 270m Covid-19 vaccine doses from Pfizer, Johnson&Johnson and AstraZeneca, with Afreximbank providing advance procurement commitment guarantees of up to US$2bn to manufacturers.

Project Focus
Building Infrastructure Ecosystems - The Arise SEZ Success Story

GSEZ Mineral Port Gabon

With the COVID-19 pandemic highlighting the urgent need to expand African manufacturing, we are applying a tried and tested model introduced in Gabon to other countries including Benin and Togo.

The ARISE Special Economic Zone is transforming the Gabonese economy by developing infrastructure, enhancing industrial competitiveness and building a business-friendly ecosystem in Gabon through a joint venture between Africa Finance Corporation, Olam International Ltd. and the Republic of Gabon. AFC invested US$140 million alongside its partners to build a flourishing ecosystem around the forest-wood industry. This includes a new mineral terminal, a general logistics terminal, and other special infrastructure projects. As a result, Gabon’s earnings have increased from €30 to the region of €180 per cbm of wood and in some cases up to €40,000 per cbm of wood.

Through a further US$150 million investment by AFC, the Gabon model is now being replicated by ARISE in Togo, where ARISE Integrated Industrial Platforms (IIP) recently inaugurated the Plateforme Industrielle d’Adétikope (PIA) to focus on creating thriving value chains for the textile industry. By expanding from raw material sourcing to manufacturing and exporting value-added products, the Togo SEZ is expected to generate US$750m in additional GDP, US$1bn in additional exports and impact over 200 farmers.

In Benin, ARISE recently signed an agreement with an electric motor bike and three-wheeler manufacturer to set up a 650 bikes per day manufacturing plant in the country and invest about $150 million over the next two years. The Benin SEZ is expected to generate US$2bn in additional GDP, US$3bn in exports and impact over 600,000 farmers.

Africa is a viable alternative to manufacturing in China and elsewhere, reducing the carbon footprint from global shipping and creating essential jobs for our young population. This can only be achieved though the development of local manufacturing expertise resulting in more efficient and diversified supply chains, resource beneficiation and more jobs in the region.

In Gabon, AFC has expanded operations to invest in the mining industry, with a range of power and transport (ports, railways and an airport) assets connecting Gabon’s untapped mines to the rest of the world. The result is a complete growth ecosystem which has diversified the economy from dependence on crude oil exports, created over 30,000 jobs, increased FX earnings and GDP (US$900 million) and improved livelihoods.

To read the article, click here

Corporate Updates

  • Credit Ratings
    • Moody's Investors Service in Q2 2021 revised AFC’s outlook to 'stable', affirming its A3 long-term issuer and senior unsecured ratings.
    • AFC is one of the highest investment grade rated multilateral financial institutions in Africa, with an A3/P2 rating from Moody’s. The rating is based on a sound capital adequacy position, high asset quality and strong prudential framework that supports a high degree of liquidity, underpinned by an excellent profit margin and profit retention.

  • Membership
    • Burkina Faso, Democratic Republic of Congo and Morocco acceded to membership of AFC, increasing the membership rate across the continent to 57%, or 31 out of 54 African countries, from 26 in 2020.

  • Shareholder structure
    • In Q1 2021, AFC, enhanced its capital structure with equity injections of US$1million and US$20 million from the Central Bank of Guinea and the Government of Togo respectively.

  • Funding
    • In Q2 2021, AFC successfully issued a US$750mn Senior Unsecured Eurobond at 2.991% yield. Geographic distribution for this transaction was spread widely across Europe, Asia, UK, Middle East and Africa, demonstrating AFC’s broad appeal. The transaction was AFC’s first Reg S / 144A format transaction in 2 years and the lowest yield of any of its US$ benchmarks.
    • The Corporation also executed a EUR 100Million 10-year and a USD 100 Million 10-year Loan agreement with KfW IPEX-Bank GmbH and Export-Import Bank of India, London Branch (""India Exim Bank") respectively. These funds will contribute to infrastructure development across the continent.

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