AFC advocates credit enhancement guarantees to attract private capital
President and Chief Executive Officer of AFC, Samaila Zubairu
• Invests Over $3b In Nigeria Since Inception
For Nigeria to benefit more from the Africa Finance Corporation (AFC) infrastructure investment projects across the continent, the government needs to provide credit enhancement guarantees that would help mobilise private capital in transportation and energy sectors.
Already, the institution has a current investment profile of $1.6 in Nigeria out of a balance sheet of $8.6 billion to bridge the country’s huge infrastructure deficit, a challenge that is often blamed for its poor economic performance and low job-creating capacity.
The AFC noted that it has extended over $3billion in credit facilities to Nigeria since inception. According to the President and Chief Executive Officer of AFC, Samaila Zubairu, because transport and energy sectors are areas that can easily attract private sector funding due to over 80 percent investment opportunity that exist in the sectors, government should invest less in the two sectors and provide investment enhancement in form of guarantee and safe mechanisms to woo private funding.
Zubairu, who spoke at a press briefing in Lagos at the weekend, said the Nigerian government can invest more in health, security, education, sanitation, water among others.
“We had experience of government cancelling concessions, we have seen what happened at the Lekki expressway. People will be shy to do such an investment. So, the government should step up to say that if anything happens, we will compensate you.
“ We want the government to focus on health, security and education for the future workforce because we need to invest now for the quality of the workforce that we seek.”
Reviewing AFC’s performance, Zubairu said the corporation’s yearly profits increased by 26.6% to $209.7 million in 2021.
Similarly, the company exceeded its $200 million mark for the first time in its 15-year history, from $165.5million posted in the corresponding period in 2020. The corporation’s total assets rose by 16.3% to $8.56 billion.
He said that the dramatic increase can partly be attributed to investments in high impact assets in targeted sectors across Africa.
He announced that AFC Capital Partners (ACP) opened as an independent asset management business with the launch of its first product, the Infrastructure Climate Resilient Fund, with a target to raise $500 million in 12 months and $2 billion over the next three years for investment in robust energy, transport, buildings and other infrastructure.
“Africa’s strong recovery from the global pandemic, creation of the African Continental Free Trade Area, and AFC’s launch of new investment vehicles like the Infrastructure Climate Resilient Fund combine to provide a compelling opportunity for institutional and private sector investors to join the Corporation in projects that offer both transformative impact across the ESG spectrum and strong risk-adjusted returns, said CEO Zubairu.
“AFC’s reach on the continent is now larger than it has ever been, with investments expanding to 35 countries and cumulative disbursements rising by 14% to $9.9 billion (2020: $8.7billion).
The Executive Director and Head of Services, AFC, Sanjeed Gupta said lack of access to reliable power, inferior transport networks and poor telecommunications infrastructure are currently limiting economic growth and sector development, preventing millions of Africans from fulfilling their potential.
He pointed out that by providing diverse solutions, risk capital and the expertise needed, AFC is helping to fill the continent’s infrastructure void and drive sustainable economic growth.
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