Africa Finance Corporation (AFC) has launched a $2 billion facility to aid bank-driven economic recovery in Nigeria and other African countries.
This was announced at the AFC Live Infrastructure Solutions Summit today. The funds would be distributed through AFC loans to commercial banks, regional development banks, and central banks across Africa.
This action was prompted by worldwide crises such as the COVID-19 pandemic and, more recently, the Russia-Ukraine conflict. AFC stated that it will fund up to 50% of the facility and mobilize the remaining funds through its network of international partners and investors.
What they are saying
The press release partly reads, “Africa Finance Corporation (AFC) (www.AfricaFC.org) is pleased to announce the launch of a US$2billion facility to support bank-driven economic recovery in Africa, and the resilience of African economies. AFC has committed to funding up to 50% of the facility and mobilizing the rest through its network of international partners and investors. This announcement was made today at the AFC Live infrastructure Solutions Summit.”
The AFC stated that the facility would be able to acquire financing at a competitive rate by using the AFC’s established access to global funding. Its said “The facility, dubbed “African Economic Resilience”, will be disbursed via loans from AFC to select commercial banks, regional development banks and central banks in various African countries, providing them with much needed hard currency liquidity to finance trade and other economic activities in their various jurisdictions. These institutions will be able to leverage AFC’s proven access to global funding to access financing at competitive rates.”
Speaking on the rationale behind the launch, Head of Treasury and Financial Institutions, Banji Fehintola said, “The COVID-19 pandemic set back Africa’s economic growth trajectory and further widened the trade financing gap. Before the continent could get over that, the Russia-Ukraine conflict brought with it a new set of challenges, which have the same effect of negatively impacting growth prospects across the continent. As such, we are determined to play a leading role in shaping the continent’s recovery and resilience, not only through the work we do in bridging Africa’s infrastructure gap but also through targeted interventions such as this $2billion COVID-19 economic resilience facility.”
Governor Chukwuma Soludo, Governor, Anambra State and Former CBN Governor said, “The AFC is a metaphor or a summary of what Africa needs. We require disruptive thinking, and this is what AFC in my view provides.”
What you should know
- With several bond issuances in the last two years, including a 10-year US$500 million Eurobond in 2019, a 5-year US$700 million Eurobond in 2020, and a 7-year $750 million Eurobond at its lowest yield in 2021, AFC has built experience in mobilizing global capital for critical infrastructure projects in Africa.
- AFC Capital Partners, an independent asset management arm, was recently formed to raise $2 billion to fund climate adaptation infrastructure projects in Africa.
- Through the Rebuilding Economic Resilience facility, AFC will use this same money mobilization experience to promote COVID-19 economic recovery in Africa.