The Africa Finance Corporation (AFC) priorities those sectors which simultaneously offer a significant development impact and a high profit potential, so as to achieve the best return on investment for shareholders. The Corporation principally funds and develops projects in the power, transportation and logistics, heavy industries, natural resources and telecommunications sectors.
POWER
power.jpgELUMA OBIBIAKU
Vice President, Power


“Improving access to energy is crucial for driving socio-economic development across Africa. Countries that have limited access to electricity are deprived of the chance to maximize the potentials of their population since children cannot study at night, hospitals are ill-equipped to attend to mothers who give birth at night and small or large scale industries may not spring up for want of electricity. We strive to lift the standard of living for millions of people through the modest work of AFC.

In many respects, the raison d’etre of AFC to is help fill the growing gap between the demand and supply of financial capital to address Africa’s infrastructure needs. We invest in the knowledge that Africa has the natural resources, in both thermal and renewable energy sources, to quench her thirst for energy. For want of financing from government and donors, Africa has waited a long time. The needs are urgent and we cannot wait.”

The Challenge
Power Generation and distribution infrastructure across Africa is often inadequate, unreliable and costly, and this has constrained wider economic growth and development across the continent.
On current trends, fewer than four out of every ten African countries will achieve universal access to electricity by 2050.
 
Owing to outdated facilities and plants and a lack of maintenance, power supply in Sub-Saharan Africa is notoriously unreliable and power outages are frequent. This is of particular concern given emergency power is expensive and represents a considerable proportion of GDP in some countries.

A Solution
Solving Africa’s energy crisis is critical to unlocking the full potential of the continent’s natural, economic and human resources. As the effects of global warming and its attendant impact on climate change are increasingly felt across the world, there has been greater global emphasis on the need for financing solutions for greener and climate-friendly energy generation sources as evidenced by the signing of the Paris Climate Agreement in 2016.

The Role of AFC
AFC has sought to address the wider infrastructure divide by originating, structuring and executing projects in the African power sector. AFC has entered into a number of strategic partnerships towards positioning itself as a leading climate finance institution. In 2015, AFC became the first African Development Finance Institution to be accredited by the Green Climate Fund (“GCF”). The GCF supports the efforts of developing countries to respond to the challenge of climate change. It was set up by 194 countries which are parties to the United Nations Framework Convention on Climate Change (UNFCCC) in 2010, as part of the convention’s financial mechanism. Following the signing in October 2017 of an Accreditation Master Agreement, AFC has access to direct funding from GCF to support climate financing activities in Africa. In September 2017, AFC also secured a € 100 million climate financing line of credit with the Agence Francaise de Developpement (AFD) to improve AFC’s competitive ability to fund climate-friendly projects.

AFC’s power projects include:
 
  • - Cen Power Kpone IPP in Ghana
  • - Cabeolica Wind farm in Cape Verde
  • - 450MW IPP In Republic of Benin
  • - 350MW IPP in Ghana
  • - 300MW IPP in Mozambique
  • - Technical Adviser to the Central Bank of Nigeria on its US$2 billion Power and Aviation Intervention Fund (PAIF)
  • - AFC/Harith Merger
  • - Kenya Power & Lighting Company
  • - 420MW Nachtigal Hydroelectric Project, Cameroon
  • - 44MW Singrobo Hydroelectric Project,
  • - Gabon Hydroelectric Projects
  • - Djibouti 60MW Wind Project

Read more about our activity in this sector during the year in our annual report.
 
TRANSPORT AND LOGISTICS
REUEL-IIa.jpgREUEL ANDREWS
Director, Transport & Logistics


“Africa holds great potential for growth in intracontinental and global trade. These expectations require transportation and logistics infrastructure to realize, which is currently grossly inadequate. Efficient transportation infrastructure is critical to trade as it connects physical and human resources to locations where they create the most economic value”

The Challenge
Over the last decade, there have been notable efforts to improve transportation systems and trade connectivity by governments, development finance institutions (DFIs) led mainly by the Africa Development Bank and the private sector. However, given that African governments are constrained by limited resources, the recent approach has been more towards enhancing the economic environment to attract private sector capital into infrastructure development. In essence, DFIs are bridging the divide between government’s development impact objectives and the private sector’s return-on-investment objectives, while also taking the lead in environmental and social responsibility.

The Opportunity
Over 70% of the world’s biggest consumer goods companies are already operating in Africa, and a number of large multinationals are investing in the region, providing a key opportunity for the transport and logistics sector. In concert with governments, DFIs and private sector investments greater progress can be made, building on more recent momentum in the space.

The Role of AFC
Private participants, principally financial institutions and strategic investors have demonstrated increased appetite for transport infrastructure investments, both as debt and equity, influenced by the growing prevalence of the project finance structure. Private equity infrastructure funds have also been growing in participation and relevance in this space.
The DFI community, including the AFC, continues to play the important facilitation role by becoming more and more involved in projects at the early stage of development. This ensures that by the time a project comes to the market, it has a bankable set of project documents, appropriate environmental and social considerations have been accounted for and the regulatory framework is in place to undertake such transactions.

AFC’s transport and logistics projects include:
 
  • - Henri Konan Bedie Bridge in Cote d’Ivoire
  • - Ethiopian Airline Expansion
  • - Bakwena Toll Road in South Africa
  • - Ghana Airport Company
  • - Port d’Abidjan
  • - Adviser to Nigeria Sovereign Investment Authority (NSIA) on the Second Niger Bridge
  • - Olam Gabon Special Economic Zone (GSEZ)

Read more about our activity in this sector during the year in our annual report.
 
TELECOMMUNICATIONS

TARIYE-GBADEGESINa.jpgTARIYE GBADEGESIN
Senior Vice President, Telecommunications and Heavy Industry

“The Sub-Saharan Africa telecoms market is growing faster than any other region. According to GSMA data (2018), Sub Sharan Africa will have the largest increase in mobile subscribers from 2017 to 2025 (8%) largely due to growing mobile network coverage in rural areas.

In order to capture this opportunity in rural and semi-urban areas, operators are investing heavily in energy efficient towers, while submarine and terrestrial cable providers have been increasing the available backbone infrastructure. Until recently, access to broadband connectivity in many regions was limited to the use of fiber cables, however these investments could only be economically justified for connecting areas with high traffic and a high concentration of users. The emergence of lower orbit geostationary satellites could lead to improved broadband connectivity in markets with low broadband penetration including those in remote, isolated and underserved areas.
Expanding connectivity, energy efficient equipment and consolidation in the mobile operator space, are predicted to be the main drivers of investment and deal activity in Sub-Saharan Africa over the coming years.”
 
The Challenge
The telecommunications sector is crucial for economic growth and development and is often viewed as a supporting factor in developing the transport and logistics sectors.
 
The Opportunity
Improved economic conditions and rapid combined GDP growth over the last five years have seen Africa experiencing fast growth in this sector, which has transformed fundamental aspects of social and business life. Mobile phone usage is growing faster in Africa than in any other region and at a phenomenal rate; whereas only 6% of African citizens owned a mobile phone users on the continent, a rise in part due to the escalating popularity of social media sites and mobile banking.

The mobile phone industry plays an important role in Africa’s telecommunications sector. A lack of landline-based infrastructure has led to mobile devices becoming the most popular way to communicate or access the internet.
Investment in the sector is increasing and Sub-Saharan Africa’s telecommunication market is set to grow to US$53.3 billion between 2018 and 2023, amidst affordability, regulatory and macroeconomic challenges

The Role of AFC
AFC has supported several companies in the telecom sector such as AFC’s cornerstone investment in Main One which remains a major contribution to the revolution in undersea cables in Africa, as well as the development of terrestrial fiber, data centers and value-added services leveraging on the Main One platform. AFC has also financed I.H.S Towers, Africa’s leading tower company in Africa and MTN Nigeria on their network upgrade needs.

AFC’s telecommunications projects include:
 
  • - MainOne cable system
  • - SAIF acquisition, South Africa
  • - I.H.S Towers
  • - MTN Nigeria

Read more about our activity in this sector during the year in our annual report.
 
HEAVY INDUSTRIES

TARIYE GBADEGESIN
Senior Vice President, Telecommunications and Heavy Industry

“High Quality industrial development is essential for Africa to drive sustainable economic growth and job creation. Rarely has a country or region progressed to achieving prosperity without the development of a robust industrial sector.
Data from the Overseas development Institute shows that African manufacturing production and Foreign Direct Investment (FDI) have developed positively over the last decade from US$73 billion to US$157 billion, growing 3.5% annually in real terms. However, according to the United Nations Industrial Development Organization (UNIDO), despite being richly endowed in natural resources and minerals, Africa still accounts for a small share of global manufacturing.
Since 2005, Africa has accounted for no more than 2.0% of global Manufacturing Value Added (whereas industrial regions like Asia, Europe and North America each accounted for a substantial portion of global MVA during the same time period.”
 
The Challenge
Despite Africa’s wealth of natural and mineral resources, the continent has yet to see sustainable growth in the heavy industries sector. Raw materials are normally exported with little or no value added and manufacturing contributes relatively little to Sub-Saharan Africa’s GDP-according to the World Bank, only 13% in 2012.
Limiting the development of the industry include:
  • Poor quality supporting infrastructure- inadequate power supply and weak transport networks
  • Low availability of industrial project sponsors and limited project management capacity for large-scale projects
  • Financing requirements-large capital investment is normally needed to fund heavy industry projects.
The Opportunity
Africa’s large population provides companies looking to invest in the sector with an ever-expanding consumer base and a large labour force. The region’s human capital combined with the abundance of natural resources is making Sub-Saharan African an attractive investment option for both local and international heavy industry and manufacturing firms.
 
The Role of AFC
In recognition of the need to continually develop a sustainable industrial sector, AFC provides private sector dynamism to fund investments on the continent through debt and principal investments. AFC’s investments in the sector are diverse and consists of four sub-vertical sectors specifically Chemicals (refineries, petrochemicals, fertilizer and natural gas conversion), Building Materials (cement, float glass), Enterprise Industrial Inputs (bottling, pulp and paper) and Metals (steel, mineral beneficiation).

AFC’s Heavy Industries projects include:
 
  • - Société ivoirienne de raffinage (SIR), Côte d'Ivoire
  • - Société nationale de raffinage (SONARA), Cameroon
  • - Carbon Holdings, Egypt
  • - PPC Barnet, Democratic Republic of Congo
  • - Meridian Consolidated Investments

Read more about our activity in this sector during the year in our annual report.
NATURAL RESOURCES
OSAM-IYAHEN2.jpgOSAM IYAHEN
Director, Natural Resources

“The global natural resources sector stabilized in 2018 and recorded a stronger year than in recent years, largely due to increased commodity demand and constrained supply for most resources. Despite the improvements recorded in 2018, the sector must now contend with a number of emerging trends, most notably the impact of digital technologies. This reality is most evident in the mining sector, given increased consumer demand for electric vehicles.

Tracking and monitoring of trends, such as fluctuating consumer demands, global demographic and economic shifts through the adoption of new technologies, are now more important for the long-term sustainability of companies operating in the sector. Additionally, obtaining the requisite licence to operate from communities through the robust implementation of environmental and social impact plans is now prominently at the core of the operating philosophy for companies and stakeholders in the sector”

The Challenge
As is the case all over the world, a rich supply of natural resources unfortunately signals a degree of economic inequality within that region or country. There is also a high risk of corruption amongst large-scale commercial players and of exploitation of the local population, who often benefit little from the resources themselves.
In addition, few African countries process their own raw materials. The real value is therefore added elsewhere, causing much of the profits from natural resources to leave the continent entirely in the hands of foreign-owned companies which pay low rates of tax.
 
The Opportunity
As the sector recovers from the lows of the last few years, many companies still face a huge debt overhang together with legacy issues that are impeding exploration and development programs. This recovery therefore presents an opportunity for financial institutions and strategists to offer unique financing solutions to meet the growth requirements of the sector.
 
The Role of AFC
AFC acts as an adviser and financier to a number of leading sponsors seeking to undertake important transactions in the mining and oil and gas industries and associated infrastructure.

There is, for example, high demand for a wide variety of specialized rigs and vessels for both swamp and offshore areas of operations in the midstream sector of the oil and gas industry. In addition, a lack of essential pipeline infrastructure is slowing transportation from field to market. With its wealth of experience in sector development, AFC is strategically positioned to actively participate and lead indigenous companies in this critical space.
 
AFC’s Natural Resources projects include:
 
  • - Megadrill Services Limited
  • - Société Nationale des Pétroles du Congo, Republic of Congo
  • - Bonny Gas Transport
  • - Glencore/ Société des Hydrocarbures du Tchad
  • - Vivo Energy
  • - Shalina Resources Limited
  • - New Age (African Global Energy)
  • - Alufer Mining
  • - Jubilee Oil Field
  • - Bonikro Gold Mine
  • - Svenska
  • - Thor Explorations Limited
  • - Danakali Limited  

Read more about our activity in this sector during the year in our annual report.




 

 

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