13 July 2013, Lagos – Dr. Adesegun Akin-Olugbade, Executive Director, General Counsel, Africa Finance Corporation in this interview with Moses Nosike of Saturday Vanguard Business speaks on the need for power investment in Africa. Excerpts:
What is the Africa Finance Corporation doing in Nigeria and Africa as a whole?
The Africa Finance Corporation (AFC) is an African-led international finance institution, established in 2007 by a treaty between independent sovereign states. Currently, eight countries including Nigeria, Ghana, Guinea-Bissau, The Gambia, Sierra-Leone, Liberia, Guinea and Chad have signed the AFC Agreement. AFC is private-sector majority owned, focused on projects in Africa, with the mission to improve African economies by proactively acquiring, financing and managing infrastructure, industrial and financial assets. The Corporation’s authorised capital is US$2.0 billion, of which over US$1.1 billion of paid-up capital has been mobilised from private and public African institutions and member countries. Current Shareholders’ Funds total US$1.3 billion.
AFC is involved as a financier and developer of various infrastructure projects, and offers primarily advisory, financial arranging, project finance and private equity solutions, in addition to trade finance, other short-term structured finance products, project development and technical advisory services across the following focus sectors: Power, natural resources, heavy industry, transport infrastructure and telecommunications. AFC’s differentiating value proposition is to use private sector solutions to translate longstanding infrastructure challenges in Africa into bankable investments and executed projects. The Corporation is headquartered in Lagos, Nigeria.
Since its establishment in 2007, AFC has built a portfolio of signature projects and assets, creating an indelible infrastructure footprint across the African continent.
AFC is the lead investor in the award-winning Cabeolica project, a US$90.0 million, 26MW landmark renewable energy wind power project in Cape Verde. AFC is the Technical Adviser to the Central Bank of Nigeria (CBN) on the CBN’s US$2.0 billion Power and Aviation Intervention Fund (PAIF). AFC is a partner with Vigeo Holdings Limited and Tata Power Delhi Distribution Limited for the acquisition of power distribution assets in the current Nigerian Government power sector privatisation round.
AFC is also the lead investor in Cenpower Generation Company Limited (Cenpower), which is implementing the Kpone IPP project – a 340 megawatt combined cycle gas turbine power plant in Tema, Ghana. AFC is the lead investor in the Main One fibre optic cable project, enhancing West Africa’s connection to Europe and the rest of the world through faster and more technologically advanced broadband capacity.
AFC provided a US$50.0 million convertible debt investment in Athi River Mining (Kenya) Limited (ARM), the second largest cement operator in Kenya to support expansion initiatives across Eastern and Southern Africa, including: development and construction of a lime plant in Tanzania and expansion of ARM’s cement capacity in Kenya. The transaction marked AFC’s first bilateral investment in Kenya.
AFC provided financing for Ethiopian airlines fleet expansion in the acquisition of Africa’s first Boeing 777 airline. AFC also invested in the Bakwena toll road project in South Africa and the EURO 270.0 million Konan Bedie Toll bridge in Côte d’Ivoire, the landmark transport PPP project under construction in Francophone Africa, underscoring its interest in investing in PPPs/PFIs in its focal sectors across the African continent.
In addition to these investments, AFC continued its debt-raising efforts aimed at optimising the capital structure of the Corporation closing a US$200.0 million 10-year facility from the African Development Bank.
What development will the Corporation bring about in Nigeria and Africa through its recent partnership with Banque Quest Africaine de Development?
AFC is a key African partner selected to participate in the US Presidential Power Africa Initiative to accelerate investment in Africa’s power sector over the next five years. The key goal of the Power Africa Initiative is to increase access to clean, geothermal, hydro, wind and solar energy. It will help African countries develop newly-discovered resources responsibly, build out power generation and transmission, and expand the reach of mini-grid and off-grid solutions, by providing the capacity and resources to generate an additional 10,000MW of power.
The International Energy Agency has reported that sub-Saharan Africa will require more than US$ 300 billion in investment to achieve universal access to electricity by 2030. AFC will provide additional investments in energy projects annually, far in excess of its commitment to the Power Africa Initiative; and to provide not only access to finance, deal structuring and sector technical expertise, but also advisory services, project development capacity, funding to bridge the power infrastructure investment and access deficit. AFC will invest over US$250 million in the power sectors of Ghana, Kenya and Nigeria, while catalysing a further US$1billion in additional investments in sub-Saharan Africa energy projects.
What sector of the continent is the partnership targetting?
As mentioned earlier, AFC has eight member countries, predominantly English-speaking, in a continent of 53 sovereign states. The partnership with Banque Ouest Africaine de Development will enable access to Francophone and Lusophone African countries which are not currently members of the Corporation, specifically: Benin, Burkina-Faso, Côte d’Ivoire, Mali, Niger, Senegal and Togo.
Considering the level of development in Africa, what is your strategy to achieve results?
Africa’s growth requirement and its vast reserves of natural resources cannot be harnessed without increased collaboration in financing and project development between Public and Private sector Institutions. AFC’s mission is to foster economic growth and industrial development of African countries. The Memorandum of Understanding provides a strong framework for collaboration between BOAD and AFC through the facilitation of trade and provision of crucial infrastructure – specifically through membership in AFC of the BOAD member states, the origination and execution of infrastructure investment transactions, leveraging and capacity in the areas of project development, project structuring and technical appraisal.
How do you assess development in Nigeria and Africa which brought about this initiative?
The scale of Africa’s and indeed Nigeria’s infrastructure investment requirements can only be addressed by structured collaboration between the public and private sectors.
Africa’s infrastructure requirement and investment deficit is conservatively estimated at over US$40 billion per annum over the next ten years (Source: World Bank, 2011). The opportunities to finance, develop and accelerate the implementation of much needed infrastructure in Africa can only be achieved through collaborative partnerships.
To secure a platform for accelerated infrastructure investment and contribute to the economic growth and industrial development of Africa, AFC has established partnerships regionally, with other institutions such as the African Development Bank, African, BOAD, Export-Import Bank, PTA Bank, Islamic Development Bank, the Nigerian Sovereign Investment Authority (NSIA); and Internationally with the China Africa Fund, the Infrastructure Development Finance Company of India, etc.
*Moses Nosike, Vanguard