Africa Finance Corporation (AFC) announced that it has successfully secured a $250 million tier-2 capital loan from U.S. International Development Finance Corporation (DFC).
In addition to strengthening AFC’s investment capacity, it is also expected that the facility further complements AFC’s strategy of diversifying its investor base.
Why this matters
The proper provision of infrastructure is crucial for economic and social development across Africa. Physical infrastructure systems ensure that basic human needs are met.
The Association of Chartered Certified Accountants (ACCA) has suggested that cumulatively, between 2018 and 2040, the infrastructure investment gap in Africa is expected to stand at $1.59 trillion, with the amount of infrastructure investment needed expected to be 39% higher than under the current trends.
ACCA argued that in comparison with global benchmark, which requires about 19% increase over current investment levels, Africa is doing worse given that it needs to increase investment levels by 39% in order to close the forecasted infrastructure investment gap by 2040.
In line with the above, the $250 million facility, which AFC has asserted will strengthen its capacity to close Africa’s infrastructure deficit, is key and should be properly utilised.
What they are saying
Speaking on the development, Samaila Zubairu, President & CEO of Africa Finance Corporation said:
- “Africa and the United States have enjoyed a longstanding partnership spanning several decades. Indeed, AFC has partnered with the US on several infrastructure initiatives, including the Power Africa initiative, and regularly receives investments from US-based investors in its Eurobond issuances.
- “This announcement therefore marks a natural evolution as the US Government seeks to play a greater role in Africa’s development by establishing a dedicated DFI. Crucially, this funding will also ensure the Corporation is able to continue fulfilling its objectives in the wake of the ongoing COVID-19 pandemic, which has placed a greater responsibility on development finance institutions in helping to drive a sustainable recovery across Africa.”
Also commenting on the development, Adam Boehler, CEO of DFC submitted that:
- “DFC is proud to expand our relationship with a key infrastructure investor in Africa. This financing advances DFC’s strong commitment to Africa by supporting investment in the modern infrastructure that is essential to economic growth and expanded connectivity with the world.”
What you should know about the AFC
- AFC is a multilateral Financial Institution, created by sovereign African states to provide pragmatic solutions to Africa’s infrastructure deficit and challenging operating environment, by developing and financing infrastructure, natural resources and industrial assets for the enhanced productivity and economic growth of African states.
- AFC was established in 2007 with an equity capital base of US$1.1 billion, to be the catalyst for private sector-led infrastructure investment across Africa.
- DFC is the United States Government’s development bank established with a lending capacity of up to US$60 billion to provide financing for solutions to some of the most critical challenges facing the developing world. DFC expanded and modernized the tools of the Overseas Private Investment Corporation (OPIC). DFC was formed in December 2019,