AFC’s $400mn syndicated loan & Africa’s post-pandemic recovery

The Africa Finance Corporation (AFC) has successfully secured a $400 million syndicated loan for infrastructure projects across the continent, exceeding the initial target of $300 million. The Senior Director and Head of Treasury and Financial Institutions at the AFC, Banji Fehintola, shared insights on the significant appetite from investors and the positive implications for Africa's post-pandemic recovery. Banji Fehintola highlighted the overwhelming response from the market, with the transaction being 2.5 times oversubscribed. This success reflects confidence in the AFC's credit profile and a growing interest in African investments. The $400 million raised will play a crucial role in supporting the continent's recovery efforts amid the ongoing challenges posed by the pandemic. Fehintola emphasized the importance of mobilizing capital to address the disproportionate impact of the pandemic on Africa. Unlike developed economies with extensive quantitative easing measures, African countries have faced capital outflows, making initiatives like the syndicated loan critical for driving investment in key sectors. The AFC has been actively raising and deploying capital since 2020 to facilitate the recovery process. The AFC's focus spans several sectors, including power, transportation, natural resources, telecoms, and financial institutions. With a robust pipeline of projects, the organization aims to enhance liquidity and readiness to fund vital infrastructure developments. Fehintola discussed the strategic approach to capital deployment in 2022, highlighting plans for a net borrowing of at least $2 billion across diverse funding sources. Maintaining an exceptional A3 rating has been pivotal for the AFC in attracting funding at competitive rates. Fehintola outlined the key factors underpinning the institution's rating, such as strong capital buffers, asset quality, liquidity, and market access. The AFC's consistent rating stability has positioned it as a reliable investment avenue for global investors seeking exposure to the African market. Despite the challenges posed by shifting monetary policies and rising borrowing costs, Fehintola expressed confidence in the AFC's ability to navigate the market dynamics successfully. The organization's track record of prudent financial management and strategic diversification has instilled trust among investors, reinforcing the appeal of African assets in the global capital markets. Looking ahead, Fehintola remains optimistic about Africa's investment prospects, emphasizing the continent's resilience and untapped opportunities for foreign investors. While acknowledging the complexities of the current economic landscape, he asserted that well-positioned credits and viable projects would continue to attract capital inflows, paving the way for a strong recovery post-pandemic. In conclusion, the AFC's successful fundraising endeavors underscore its commitment to advancing infrastructure development in Africa and catalyzing sustainable growth across key sectors. The syndicated loan represents a significant milestone in the organization's efforts to drive economic recovery and promote investment opportunities in the region.