New agro investment vehicle to inject $2b in Nigeria, other African countries
09 November 2023 |
5:12 am
Again, African leaders have expressed concern over setbacks in attracting capital to the continent but promised to continue to de-risk the market, create more market-friendly policies, and proactively pitch opportunities across countries to the rest of the world.
Investment Forum (AIF) in Marrakesh, Morocco.
• Market will hit $1tr in 2030, says Adesina
• Leaders demand better deal, AIF mobilises $143b since 2018
Again, African leaders have expressed concern over setbacks in attracting capital to the continent but promised to continue to de-risk the market, create more market-friendly policies, and proactively pitch opportunities across countries to the rest of the world.
The leaders, who converged at the ongoing Africa Investment Forum (AIF) Market Days in Marrakesh, Morocco, said they are determined to mobilise huge resources to alter the course of history and rewrite the African story.
The promise came on the heels of the emergence of AIF, a joint project of the African Development Bank (AfDB), Africa 50, Africa Export-Import Bank, Development Bank of South Africa among others, as Africa’s investment mediator.
In response to the Feed Africa commitment of AfDB, the bank and other partners at AIF unveiled a platform known as the Alliance for Special Agro-Industrial Processing Zones to mobilise equity funding for the continent’s agro-ecosystem.
The initiative, according to Adesina, is aimed at mobilizing, at least, $2 billion in financing and investment commitments from alliance members and partners over the next five years.
Meeting this financing goal will deliver an additional 15 to 20 Special Agro-Industrial Processing Zones (SAPZ) projects in various countries across the continent, he said.
“The Alliance will raise funds through various investment windows for project preparation, project development and construction, and financing for tenant companies. By doing so, the Alliance will bridge critical financing gap, complement existing initiatives, and mobilise resources towards our common goal of enhancing agricultural value addition in Africa.
“The Alliance will also provide project preparation finance, equity and debt investments, technical assistance, project tracking and oversight. It will help with improving administrative, policy and investment incentives,” he told the audience during a session on agro-businesses.
The new initiative followed the success of the Feed Africa Summit, which AfDB, in partnership with the Senegalese government and the African Union, held in January in Dakar. The summit, attended by 34 Heads of State and Government, according to the AfDB boss, has successfully mobilised $72 billion towards implementing food and agriculture delivery compacts.
Earlier in his opening ceremony, yesterday, the President of AfDB, Akinwumi Adesina, said the forum attracted $143 billion in investment interest, including the $15.5 billion Abidjan-Lagos highway, since its inception in 2018, and sealed deals of about $11 billion.
“Since the launch of the Africa Investment Forum in 2018, it has drawn more than 16,500 participants, and generated investment interest of nearly $143 billion.
“At the 2022 AIF Market Days, the Abidjan-Lagos highway corridor was able to secure $15.5 billion of investment interest. This corridor will transform the entire West African region and speed up regional integration and trade.
“Also last year, investment interests were secured for $3.6 billion for the East Africa railway corridor, linking Tanzania, Democratic Republic of Congo and Burundi.
“We are delighted that the Africa Investment Forum has so far closed on deals’ investment gaps worth $11 billion, ranging from liquefied natural gas, renewable energy, agribusiness, industrial manufacturing, creative industry, housing and transport,” Adesina said, adding that the forum has drawn over 16,500 participants from across the globe.
The presence of dozens of African political leaders, including heads of state, hundreds of investors and fund managers, all multilateral and development partners, he said, has demonstrated that Africans are ready for business and, indeed, would do what is necessary to push through to the frontier of global investment.
According to him, data have supported rising optimism about Africa as the next frontier of the global economy.
Adesina stressed: “African economies witnessed a real GDP growth of 3.8 per cent in 2022, higher than the world average of 3.5 per cent. Five of the six pre-pandemic top-performing African countries are projected to be back in the league of the world’s 10 fastest-growing economies from 2023 to 2024…
“Africa’s population will reach 2.5 billion by 2050, when the continent will account for 25 per cent of the global population. The New York Times recently affirmed in a headline, what we know – that the world is becoming more African. With a youth population of 477 million, people between the age of 15 and 25, Africa will be the key to supplying the global labour force.
“The size of the food and agriculture market in Africa will be worth $1 trillion by 2030, in less than seven years from now. The African Continental Free Trade Area (AfCFTA) presents a consolidated market size of $3.4 trillion. The future of electric vehicles in the world depends on Africa.”
The size of the electric vehicles value chain is estimated to increase from the current $7 trillion to $57 trillion by 2050, he said, with Africa accounting for the largest source of green metals for the development of electric vehicles, including platinum (70 per cent), cobalt (52 per cent), manganese (46 per cent), bauxite (25 per cent) and graphite (21 per cent).
He called out the $20 billion desert-to-power project across 11 countries in the Sahel zone as a flagship AfDB is developing to support Africa on renewable energy. When completed, the project would be the largest solar zone in the world.
Adesina wondered what would keep investors away from Africa – a continent with a debt default rate of 2.1 per cent compared to Eastern Europe (over 10 per cent) and Asia (eight per cent). He said the odds are losing hold with African private equity activity surging to a five-year high of $7.7 billion last year.
At a presidential panel attended by five heads of state and government, there was a robust engagement on challenges facing the continent, especially as it had to do with funding of critical infrastructure. Panelists also highlighted country-by-country efforts to clear the hurdles.
President Julius Maada Bio of Sierra Leone called for aggressive diversification of economies and attributed the desperation of youths to leave the continent to the low knowledge index of the economy.
According to him, hundreds of African youths who die in the Atlantic while crossing to Europe are searching for jobs exported by African countries, owing to failure to add value to their commodities. He said value addition is a necessary option for growing resilient national economies across the continent.
“There is a need to make our economies more resilient. We need to pursue demographic dividends to make the youth a blessing rather than a curse,” Bio said, noting that the continent needs to move from talking to action.
For Somali President, Hassan Sheikh Mohamud, there are a lot of obstacles to trade and investment in the continent. He urged his colleagues to work towards removing the obstacles to make the continent a destination of global investment.
Rwandan Prime Minister, Édouard Ngirente, noted that time is ticking fast and the government could not afford to continue lamenting missed chances but rather move quickly and build the economy citizens desire.
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