AFC welcomes Ethiopia as 40th member state

Ethiopia has officially become the 40th member state of the African Finance Corporation (AFC), marking a significant milestone in the organization's mission to bridge Africa's infrastructure gap. With a pipeline of projects in critical sectors amounting to approximately $300 million, the AFC is poised to make a substantial impact on the continent's development landscape. Sanjeev Gupta, the Executive Director of Financial Services at AFC, recently discussed the organization's membership expansion drive and its implications for the people of Ethiopia and the broader African continent. In a recent interview on CNBC Africa, Gupta highlighted the importance of membership growth for AFC, emphasizing the need for more African countries to sign up to enable the organization to operate effectively. With 40 out of 54 African countries now on board, AFC aims to continue its expansion drive and work towards engaging the remaining 14 nations. The addition of Ethiopia as a member holds particular significance given the country's strategic importance and rapid economic growth. Gupta underscored the opportunities present in Ethiopia across various sectors such as energy, logistics, mining, and lithium production for EV batteries. As a multilateral institution, AFC operates on the African continent based on treaties and bilateral agreements with member countries, granting it the necessary authority and privileges to facilitate investments and development projects. By formalizing its partnership with Ethiopia, AFC can now expedite its engagement in the country and contribute to its economic progress. Gupta also delved into the unique business model of AFC, which distinguishes it from other development finance institutions (DFIs). As a public-private partnership with a focus on mobilizing African capital for African development, AFC adopts a proactive approach to investment by taking early-stage development risks to incubate and scale up projects. This approach has enabled AFC to invest billions of dollars across multiple African countries while remaining profitable and maintaining a strong credit rating. Looking ahead, AFC estimates that Africa needs to invest $150 billion annually in critical infrastructure by 2025 to meet its development targets. However, a widening financing gap coupled with fiscal challenges and high debt levels present significant hurdles for African governments. Gupta stressed the need for a paradigm shift in viewing Africa not as a problem in need of solutions, but as a continent with the potential to offer solutions to global challenges such as food security, energy supply, and supply chain diversification. By positioning Africa as a lucrative investment destination that can benefit global investors through strategic partnerships with institutions like AFC, Gupta advocates for a more collaborative and mutually beneficial approach to infrastructure development on the continent.