Latest news with #InfraCredit
Yahoo
15-05-2025
- Business
- Yahoo
Africa looks to unleash local capital as US drives global uncertainty
African policymakers and bankers are exploring ways to unlock trillions of dollars tied up in the continent's institutional funds to build infrastructure amid growing uncertainty around international investment caused by erratic US trade policies. 'There is about $4 trillion in Africa, mostly in banks, pension funds and foreign reserves,' Samaila Zubairu, CEO of the Africa Finance Corporation, a Lagos-based multilateral lender, told Semafor during this week's Africa CEO Forum in Abidjan, citing research by his institution. 'The issue is, how we get it to flow into projects.' The topic was a recurring talking point for business leaders during this week's conference, with the need to deploy local capital becoming more acute after the White House dismantled its main foreign aid body USAID, piling new pressure on African government finances. Ethiopis Tafara, vice president of the International Finance Corporation, the World Bank's private investment arm, told delegates there was a need to mobilize private capital to plug gaps left by the withdrawal of aid. Governments and the private sector need to engage in more dialogue, he said, to help administrations shore up the 'bankability' of projects that could not be funded with public money. Zubairu said AFC, which specializes in infrastructure development, is in talks with authorities in Angola, Botswana, and Kenya to replicate InfraCredit, a Nigerian credit institution that supports pension fund investments in infrastructure projects, with the west African country's sovereign wealth fund providing guarantees on local currency debt. AFC is an equity investor, along with the Nigerian Sovereign Investment Authority, which strengthens InfraCredit's capital base. African investors have long wanted to unlock private capital from existing institutional funds. The thinking is that if more domestically held capital supports major projects then the continent could draw larger pools of international funds at more favorable interest rates. In areas such as infrastructure, for example, Africa is estimated to have a $100 billion a year funding gap. One way to bridge that shortfall, analysts say, would be to unlock a larger portion of African funds, which have been concentrated in more conservative assets such as fixed income and treasury bills. 'Raising financing domestically for our critical infrastructure projects is a huge priority for our continent,' said Acha Leke, chairman of McKinsey's Africa group. 'We've estimated that if African pension funds doubled their current allocation to back such projects to 4%, this could unlock more than $20 billion of additional financing per year.' One institution that has had some success in changing that mix has been Africa50, a development finance platform that seeks to help tackle infrastructure gaps. Last year Africa50's Infrastructure Acceleration Fund announced it had raised $225 million, predominantly from African development banks and funds, and hopes to hit a $500 million target this year. Joseph Atta-Mensah, a senior fellow at the African Centre for Economic Transformation think tank in Accra has argued that Africa's relationship with the World Bank and International Monetary Fund must change in order to drive economic development. 'Africa needs to make the international financial infrastructure work in its favour,' he wrote in a London School of Economics blog. The continent 'needs a new global financial architecture — one that reduces dependence on expensive commercial debt and expands access to concessional finance,' Atta-Mensah wrote. 'Innovative instruments like debt-for-climate or debt-for-investment swaps can tie sustainability to solvency.' While private capital from angel investors has played a vital role in helping to build the foundation of Africa's startup investment space, it has been heavily reliant on international funds once the startups need venture capital. There's been a push to further professionalize and expand the impact of local angel investors, according to Fadilah Tchoumba, president of Africa Business Angels Network. 'We're really focusing on accelerating local capital participation by refining our key investment vehicles to give more potential investors confidence,' said Tchoumba. 'We've also doubled down on recruiting even more African angel investors to expand our local capital base while also building partnerships with domestic and international financial institutions to increase their impact.' Pension funds can be a catalyst for solving Africa's financing crisis, according to the Africa Private Capital Association. But encouraging capital allocators to deploy capital in Africa is a challenge. Sign in to access your portfolio
Zawya
13-03-2025
- Business
- Zawya
AFC chief pushes to unlock billions from African pension funds
LONDON: The Africa Finance Corporation said it was accelerating efforts to mobilise the continent's money for investments and tapping investors in the Middle East and Asia, as developing nations grapple with seismic shifts in geopolitics and funding flows. Samaila Zubairu, chief executive of the AFC - a development finance institution owned by Nigeria's central bank and other African financial institutions - said in an interview the lender was ready to weather a world in which the United States and Europe cut financial aid and turn increasingly inward. "The only thing we want ... to change, is to get domestic capital more available for investment within the continent," Zubairu said. "We would accelerate our initiatives to mobilize domestic capital from African pension funds, African institutional investors, to invest domestically," he said, adding that in the long term, some $15-$20 billion could come from domestic pension funds. U.S. President Donald Trump's America First agenda and cuts in U.S. aid money could drain billions from projects in Africa. European countries are also slashing aid funding, with Britain redirecting much of it to boost defence spending. Africa's low savings rates and shallow markets have stymied efforts to mobilise local pools of cash. FUND ALLOCATION Zubairu said the AFC, which deploys $2.5-$3 billion each year, would scale up fund allocation "prudently" by choosing projects other backers could pile into. It launched the pilot project InfraCredit to support pension fund investments in much-needed infrastructure projects, with oil-rich Nigeria's sovereign wealth fund providing guarantees on local currency debt. The project has mobilised some 230 billion naira ($152 million), including investments from 21 pension funds, which previously invested almost exclusively in government debt. Zubairu said he expected to launch similar programs as early as this year in Botswana, Angola and Kenya. "This is the kind of program that we think needs to be replicated at scale," he said. "If we do programs like this, then you see a lot more billions available for investment." Pension funds had also placed money in the Infrastructure Climate Resilience Fund, boosting a $52 million commitment from the European Investment Bank, he said. Investors from the Gulf and Europe are also looking to place money in other AFC projects, such as ARISE Integrated Industrial Platforms which designs and finances industrial projects. RETHINKING RESERVES Trump has yet to publicly signal his plans for U.S. investment in the Lobito Corridor, a railway project linking resource-rich Democratic Republic of Congo with Zambia and Angola's Atlantic port of Lobito. Former U.S. President Joe Biden visited the site in December, during his only trip to Africa. Zubairu said he was confident Trump would see the value in backing the corridor, though it was a strong, bankable framework that would move forward regardless. Longer-term, African countries should rethink how they view reserves, focusing less on how many months of import cover they provide and more on how they can leverage them for investment and growth in a capital stock. "How are we utilizing our savings? How are we ensuring that our savings work for our economies?" he said, adding governments needed to be "very intentional" about capitalizing financial institutions. The AFC is also eyeing bond more sales in the Middle East - after their first sukuk issue last month- and in China, after securing AAA credit ratings from S&P Global (China) Ratings and China Chengxin International Credit Rating Co. "We're expanding the frontiers of financing sources available for Africa," he said. ($1 = 1,510.0000 naira) (Reporting By Libby George and Karin Strohecker, editing by Clelia Oziel and Bernadette Baum)
Reuters
10-03-2025
- Business
- Reuters
AFC chief pushes to unlock billions from African pension funds
Summary Companies Africa's domestic capital could invest $15-$20 bln long term AFC targeting projects to lure and leverage outside capital Lobito Corridor will progress regardless of U.S. money - AFC LONDON, March 10 (Reuters) - The African Finance Corporation said it is accelerating efforts to mobilise the continent's own money for investments, and tapping investors in the Middle East and Asia, as developing nations grapple with seismic shifts in geopolitics and funding flows. Samaila Zubairu, chief executive of the AFC - a development finance institution owned by Nigeria's central bank and other African financial institutions - said in an interview the lender is ready to weather a world in which the United States and Europe cut financial aid and turn increasingly inward. "The only thing we want ... to change, is to get domestic capital more available for investment within the continent," Zubairu said. "We would accelerate our initiatives to mobilize domestic capital from African pension funds, African institutional investors, to invest domestically," he said, adding that in the long term, some $15-$20 billion could come from domestic pension funds. U.S. President Donald Trump's America First agenda, and cuts in U.S. aid money, could drain billions from projects in Africa. European countries are also slashing aid funding, with Britain redirecting much of it to boost defence spending. Africa's low savings rates and shallow markets have stymied efforts to mobilise local pools of cash. Zubairu said the AFC, which deploys $2.5-$3 billion each year, would scale up fund allocation "prudently" by choosing projects other backers could pile into. It launched the pilot project InfraCredit to support pension fund investments in much-needed infrastructure projects, with oil-rich Nigeria's sovereign wealth fund providing guarantees on local currency debt. The project has mobilised some 230 billion naira ($152 million), including investments from 21 pension funds, which previously invested almost exclusively in government debt. Zubairu said he expects to launch similar programs as early as this year in Botswana, Angola and Kenya. "This is kind of program that we think needs to be replicated at scale," he said. "If we do programs like this, then you see a lot more billions available for investment." Pension funds had also placed money in the Infrastructure Climate Resilience Fund, boosting a $52 million commitment from the European Investment Bank, he said. Investors from the Gulf and Europe are also looking to place money in other AFC projects, such as ARISE Integrated Industrial Platforms which designs and finances industrial projects. Trump has yet to publicly signal his plans for U.S. investment in the Lobito Corridor - a railway project linking resource-rich Democratic Republic of Congo with Zambia and Angola's Atlantic port of Lobito. Former U.S. President Joe Biden visited the site during his inaugural - and only - trip to Africa. Zubairu said he was confident Trump would see the value in backing the corridor, though it was a strong, bankable framework that would move forward regardless. ($1 = 1,510.0000 naira)
