BUSINESS REPORTER
Africa Finance Corporation (AFC), Africa’s leading infrastructure solutions provider, reported record performance in its latest full-year earnings, with profit surpassing the US$200m, for the first time since inception 15 years ago, driven by high impact investments and its strong credit profile.
Despite the pandemic and commodity-driven headwinds impacting AFC’s operating environment, the institution saw its annual profits increase by 26.6% to US$209.7m in 2021 from US$165.5m. The profit meant AFC has surpassed the US$200m mark for the first time in its 15-year history.
Total assets rose by 16.3% to a record US$8.56bn.
The dramatic increase can partly be attributed to investments in high impact assets in targeted sectors across Africa. The Corporation leveraged on its investment-grade credit rating and reputation to mobilise finance from international markets to help reduce Africa’s infrastructure deficit.
“This has been a year of solid progress in our core objectives of building value to Africa’s economies through instrumental infrastructure driving growth and job creation,” said Samaila Zubairu, President and CEO of AFC. “As the proverb goes, the best time to plant a tree was 20 years ago; the second-best time is today. We have proven over our 15-year history that you can successfully build a track record in infrastructure investment in Africa—and there has never been a better time to do so.”
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 US$9.9bn (2020: US$8.7bn). AFC increased Member States by five to 33, with the accession of Burkina Faso, Democratic Republic of Congo, Egypt, Morocco and Niger. Zimbabwe is one of the 35 members of the AFC.
Among projects during 2021, AFC invested US$150m for the development of cashew and cotton integrated industrial parks in Benin and Togo; provided a US$200m corporate facility to BUA Industries Limited for the construction of a sugar refinery and ethanol plant in Nigeria; and invested US$175m in the Baomahun Gold Project in Sierra Leone.
AFC Capital Partners opened as an independent asset management business and launched its first product, the Infrastructure Climate Resilient Fund, with a target to raise US$500m in 12 months and US$2bn over the next three years for investment in robust energy, transport, buildings and other infrastructure.
The past year also saw AFC successfully launch two new products through the Syndications unit – the A/B Bond and Credit Insured B Loans – both of which will significantly deepen capacity to channel capital from global investment markets into the African continent.
The Corporation continued to diversify funding, with a 21.5% boost to borrowing year-on-year at US$6.19bn (2020: US$5.09bn). AFC successfully accessed the global debt markets by issuing US$1.8 billion in new loans and bonds during the year. This included the US$250m million tier-2 capital loan from the U.S. International Development Finance Corporation; US$750 million Reg S / 144A seven-year Eurobond (the Notes due 2028 were priced at 175 bps over US Treasuries to yield 2.991%, and were 3.5 times oversubscribed) and a €100 million Euro-denominated ten-year loan facility by KfW – Ipex, a subsidiary of the KfW Group, among others
Additionally, AFC raised new equity, increasing total equity by 7.8% to US$2.24 billion.
Moody’s Investor Service boosted its outlook on AFC’s credit ratings to “stable,” highlighting the resilience of the Corporation’s credit profile through the Covid-19 pandemic. The decision affirms the second-highest investment-grade ranking of any African institution, with a long-term issuer and senior unsecured rating of A3 and short-term issuer rating at P-2.
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, Zubairu said.
“With this growth in trade, our demographic trends and rapid industrialisation, we are seeing exponential growth in opportunity for diversification and beneficiation across an array of countries and sectors,” he said.
“As an investor, I cannot promote strongly enough the breadth of opportunities on offer alongside the right partners.”
AFC was established in 2007 to catalyse private sector-led infrastructure investment across Africa.
It is the second highest investment grade rated multilateral financial institution in Africa. AFC’s approach combines specialist industry expertise with a focus on financial and technical advisory, project structuring, project development and risk capital to address Africa’s infrastructure development needs and drive sustainable economic growth. It has invested over US$10bn in projects across 35 African countries.
