The Challenge of Bankable Projects
A shortage of bankable projects remains a key bottleneck in Africa. Large infrastructure projects have extensive development periods and often entail multifaceted feasibility studies and expert transaction advice. What is lacking, is the resources (financial and expertise) that are required to make the project bankable. From our experience, project development costs for infrastructure projects can be as high as 5% to 10% of the total project cost. This sort of finance is not readily available on the continent.
AFC provides capital and technical expertise on commercial terms, to early stage projects in order for sponsors to achieve the desired objective of mitigating the risks associated with the projects and making it more attractive to investors.
AFC’s Project Development Offering
AFC offers early stage project development investment products to clients and partners in three major forms: advisory, development financing, and co-development.
AFC – FMO Project Development Facility
The AFC-FMO Project Development PD Facility was jointly established by the AFC and the Netherlands Development Finance Company (FMO), to make early stage investments in infrastructure projects under development in Sub-Saharan Africa.
The vision of the facility is to bridge the infrastructure gap by enhancing and increasing the pipeline of bankable projects on the continent.
- Initial commitment of US$15 million to the facility which is expected to run for 7 years
- The facility, which is managed by AFC, mobilizes risk capital and technical expertise
generation, transmission and distribution
roads, bridges, ports, airports and rail
Oil & Gas Midstream & Downstream
pipeline, processing facilities, gas to power
water treatment, storage and logistics
social housing, hospitals, education
Private Sector Led Projects
- Public Private Partnerships (PPPs) and concessions may be considered if the project will be controlled substantially by private sector entities
Project Development Stage
- Investments may only be made in projects at the development stage that have a business plan or have conducted a minimal level of assessment, which demonstrates the viability of the project
- A project is classified as being in the project development stage when there is a significant level of coordination and structuring required to take the projects from concept to bankability.
Eligible Uses of Funds
Funds shall be used for third party advisory services and expenses required to take the project from concept to bankability, covering items such as:
- Financial feasibility, assessment and structuring
- Environmental scoping and impact assessments
- Documentation and negotiation of project and financing agreements
- Financial modelling
- Market assessments and commercial feasibility
- Technical design and advisory
- Resource assessment review