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Ice cubes in the Sahara desert



Disclosure: I’ve recently been involved in a small paid project for the AFC. It’s possible that this has biased my view so apply the necessary discount to what I say in this piece.

A few weeks ago, I was discussing with some friends and wondering why it is so hard to find pockets of excellence in Nigeria. That is, places in government and the private sector that consistently produce excellence, not because of Nigeria, but in spite of it. Brazil has a lot of corruption and a notoriously painful bureaucracy. Yet, Embraer makes planes that do not fall from the sky and generated $6bn in revenues in 2015. One third of the lawmakers in India’s parliament had criminal cases against them when they were elected in 2014 but the quality of precision engineering that goes on at Mahindra Aerospace is of the highest standard you can find anywhere in the world.

So how does one find ice cubes in the Sahara desert? I’m talking about organisations or even industries that can hold their own in any part of the world and operate to a very high standard. Maybe I will jinx them by writing this article, but I want to make the case for the Africa Finance Corporation (AFC). They clock 10 years next month and I dare say that they have quietly managed to achieve some level of excellence that stands up to scrutiny.

Professor Charles Soludo, as CBN governor, came up with the idea to use some of Nigeria’s very healthy reserves (back when Nigeria was ‘liquid’) to kick-start infrastructure development, not just in Nigeria, but across Africa. President Obasanjo liked the sound of it so he let him run with it. Other African countries were invited to the party and eventually, just over $1bn was raised as seed capital from the CBN (roughly $460m) and other private sector shareholders. Today, that balance sheet now stands at $3bn. The corporation has not lost money in any of its 10 years so far.

To the meat of what the AFC was set up to do – infrastructure financing. How well has it done this? The thing with Africa is that what might be mainstream elsewhere will probably be innovative on the continent. Of all the renewable energy forms, I personally hate wind farms almost with a passion. But the AFC achieved something remarkable with the first commercial wind farm project in Sub-Saharan Africa when it helped to fund a 25MW one in Cape Verde. It’s not a demonstration project or ‘dividend of democracy’ type of thing. It is a functional project that is operating at a profit. If someone comes to you claiming they want to lay a cable under the Atlantic Ocean from Europe to Lagos and they need money to do it, raise your hands if you will have the heart to fund such a project.

Infrastructure financing is not easy anywhere in the world but in Africa, it is a special level of difficult. The AFC has stepped up to do some really hard things across Africa to show that it can be done and done profitably. You need an African organisation to do this ‘clearing of the bush’ so others can rush in.

The AFC began under Obasanjo and has now survived Yar’Adua and Jonathan. It will survive Buhari, too. It was a close run thing though – some people did the usual thing they do when a new government comes into office by ‘probing’ it for evidence that it was not properly set-up in 2007. It has lived to tell that tale. Today, my sense of the place is of a well run and remarkably stable organisation that is able to focus on what it was set-up to do. It has not been used as a political football by our indisciplined politicians (Dear God, please don’t let me regret saying this). From 6 African member countries when it started, there are now 13 of them across the continent and more are getting ready to join. It has invested in 28 African countries so far – the ‘Africa’ in its name is not there for decoration.

What might one learn from this? The obvious lesson is that the hand of politics in Nigeria is leprous – if you avoid political interference in an organisation, you avoid leprosy. Some luck and the sequence of events is also important. Soludo started it and even though he had no say in His Eminence, Sarkin Kano, succeeding him, it was a fine thing that Sanusi Lamido Sanusi as CBN governor was enthusiastic about the idea as well. He took it and ran with it. As a Nigerian, you must know that the chance of your successor uprooting your work, often for the fun of it, is very high indeed. Continuity cannot be taken for granted.

A wise man said that institutions are the extended shadow of one man. In that sense, it is very important to hire properly for a new organisation like this and once done, allow the people you’ve hired to do the job you hired them for. There is a core of AFC that has been in place for most of the last 10 years, even as many other directors and employees have come and gone. Making the Nigerian government a minority shareholder from the beginning was also a very smart idea. It would be a very different organisation today if the government owned 51% of the shares. Bringing in other African countries and making it an Africa thing from day one, was a nice icing on the cake of this happy chain of events.

That’s how you get excellence. And it was started and given the space to run by Nigeria. It sounds hard to believe – Nigeria started something good and did not destroy it with its own hands a few hours later? So strange.

Raise your glasses. Happy 10th, AFC. Bring on the next 10.

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