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<p>Africa Finance Corporation was created 12 years ago as a Public Private Partnership between African governments and African private sector, principally to invest and develop in the infrastructure space. In the past five years the AFC has seen investment of $6.6 billion in 30 African countries. Sanjeev Gupta, Executive Director for Financial Services, Africa Finance Corporation spoke to CNBC Africa’s Kenneth Igbomor about what more has to be done in terms of investing in Africa.</p>


Africa Investment Forum: AFC’s Sanjeev Gupta on the need to change the narrative on Africa

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<p>What do an up and coming international airport in Rwanda, a wind farm in Cape Verde and a special economic zone in Gabon have in common? They are all projects that the Africa Finance Corporation has funded. CNBC Africa spoke with Samaila Zubairu, CEO of AFC to hear his take on the discussions happening during this year’s Africa CEO Forum.</p>


Africa Finance Corporation expresses support to regional integration

<p><strong>JOHANNESBURG, South Africa, 7 November, 2018</strong> – The African Development Bank President Akinwumi Adesina on Tuesday made an impassioned call for investors to join the partnership platform offered by the Africa Investment Forum and “grab the chance to fast track the continent’s investment and development agenda&#8221;.</p>
<p>His message was a clarion call to regional and global investors, financial sector leaders and prominent government officials who filled the Africa Room auditorium of the Sandton Convention Centre in Johannesburg, South Africa, for a plenary session entitled “Delivering As One for Africa,” on the first day of the Forum.</p>
<p>“We must fast track Agenda 2063,” Adesina urged. “To deliver as one. We are impatient to get there,” he added.</p>
<p>The opening plenary featured heads of leading Development Finance Institutions and Forum partners, including Patrick Dlamini, CEO, Development Bank of Southern Africa; Professor Benedict Oramah, President, the Africa Export-Import Bank; Dr. Bandar M. H. Hajjar, President, Islamic Development Bank; Admassu Tadesse, President, Trade and Development Bank; Alain Ebobisse, CEO, Africa 50; Mallam Samaila Zubairu, CEO, Africa Finance Corporation.</p>
<p>The Bank’s partners acknowledged that with all the multilateral institutions in the room they had the capital needed to tilt the investment balance and channel much needed investments into Africa.</p>
<p>Officially kicking off the Forum, Manemolla David Makhura, Premier of Gauteng referred to the Africa Investment Forum as ‘historic and the ‘first of its kind.’  He further indicated that Africa needs to move from poverty to prosperity. ‘We want the 21st to be the African century,’ he told delegates.</p>
<p>The Africa Investment Forum is the first ever transaction-based Forum, “This is not an event. It is a platform where governments, private sector, investors, and project promotors come together. We develop quality bankable projects, de-risk them and actually make sure it happens,” Adesina said.</p>
<p>‘We are committed to fast track development. We know countries do not develop from aid but by the discipline of investment. We require broad-based partnerships and collective effort with the private sector and institutional investors,” Adesina further noted, before commending the leadership of Ghana’s President Nana Akuffo-Addo, also present at the opening ceremony.</p>
<p>Panel  members  shared  their  vision and perspectives  on  investments  in  Africa and stressed the urgent need to transition to a new way of working together. This will take scaling up, speeding up and synergizing.</p>
<p>Panelists acknowledged the critical role of African leaders who set the tone in terms of policy and creating conducive environments for businesses to thrive.</p>
<p>The Africa Investment Forum is part of a much bigger drive by the African Development Bank to tap into the vast pool of global capital to fund its ambitious plan to transform Africa. The Bank estimates the continent needs between US$130 billion and US$170 billion a year to fund its critical development needs. Due to tightening budgets, traditional funding sources such as national governments and development institutions like the African Development Bank alone are unable to meet Africa&#8217;s capital needs.</p>
<p>Global institutional investors and asset owners control US$ 131 trillion Asset Under Management, of which Adesina said, even one percent would be sufficient to close the infrastructure financing gap, estimated at between US$68-US$108 billion.</p>
<p>The Africa Investment Forum runs from 7-9 November, 2018.</p>
<p>&nbsp;</p>


It is time for the continent to ‘Deliver As One For Africa’ when it comes to investment: Adesina

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<p>The Republic of Ghana marked its sevent anniversary as a member state of the Africa Finance Corporation by becoming a sovereign shareholder in the Corporation, making an initial equity investment of 10 million dollars.</p>


Ghana becomes sovereign shareholder in AFC

<p data-reactid="38">LONDON (Reuters) &#8211; With some mining companies increasingly reluctant to own outright the infrastructure that keeps their projects going, an African development institution is linking up with investment funds to help fill the gap.</p>
<p data-reactid="38">The Nigerian-based Africa Finance Corporation has already expanded its debt or equity funding for resources projects from oil into mines, including a bauxite scheme in Guinea.</p>
<p data-reactid="47">Now it is testing the water on a modest scale with investments that separate infrastructure, such as power supplies, roads and railways, from the mines themselves.</p>
<p data-reactid="48">Some miners remain keen on controlling these facilities, notably producers of bulk commodities such as iron ore. Others, however, have been selling off such assets &#8211; or seeking partners for new infrastructure &#8211; to limit their huge capital needs.</p>
<div class="DPSlot_container_2dHIN DPSlot_inline_1oeo6">For investment funds and bankers, this offers the prospect of predictable returns as infrastructure providers typically charge users fees set under long-term contracts. This contrasts to mining production itself, where the swings and uncertainties of the commodities price cycle raise the investment risk.</div>
<div></div>
<p data-reactid="51">Development bodies including the AFC &#8211; which is owned by the Nigerian central bank, African financial institutions and industrial groups &#8211; want an alternative route into projects that can generate cash and ensure African resources are exploited to support economic development and job creation.</p>
<p data-reactid="52">“I certainly see this as an opportunity for high quality infrastructure assets,” Osam Iyahen, vice president responsible for natural resources at Lagos-based AFC, told Reuters in a telephone interview.</p>
<p data-reactid="53">Resources companies have traditionally built their own transport links and power stations to secure supplies to and from their mines and smelters.</p>
<p data-reactid="54">Full ownership has helped to avoid costly interruptions to operations and ensure some control over costs. Railways, for instance, are often reserved for a miner’s exclusive use, meaning it does not have to compete for track access or worry about the risk of blockages caused by other services.</p>
<p data-reactid="55">But when commodity markets crashed in 2014-15, firms struggling under heavy debt burdens began selling anything that was not essential. Metals prices have since stabilised, but much of the industry is wary of returning to the old model and accruing high levels of debt.</p>
<p>Some, including Swiss-based miner and trader Glencore, have emphasised spreading the high cost of infrastructure. Through joint ventures they can retain influence over how assets are built and run, while getting full ownership off their balance sheets. “Partnerships to grow the business will remain a key element of our approach,” Glencore chief executive Ivan Glasenberg said this month.</p>
<h3>STRANDED RESOURCES</h3>
<p data-reactid="58">AFC joined a consortium earlier this year that is investing $205 million in Guinea’s Bel Air bauxite mine. Production at the project run by Alufer Mining is scheduled to start in the third quarter of next year, helping to feed global demand for aluminium.</p>
<p data-reactid="59">A fellow consortium member is U.S.-based Orion Mine Finance, which lists its share of the investment as $85 million in the form of loans, equity and offtake &#8211; sharing in the project’s future output.</p>
<p data-reactid="60">However, investing in mega-projects is risky and the Simandou deposit in Guinea &#8211; one of the world’s biggest untapped reserves of iron ore &#8211; offers a cautionary tale for development bodies. Last year the International Finance Corp, the private sector investment arm of the World Bank, decided to sell its 4.6 percent stake after a decade of involvement.</p>
<p data-reactid="61">Simandou has yet to be developed and needs hundreds of kilometres of new railway track to operate. Rio Tinto has agreed to sell its stake in the project to China’s Chinalco, although the deal has yet to be finalised.</p>
<p data-reactid="62">GRAPHIC &#8211; Stalled Guinea project <a href="http://tmsnrt.rs/2pjm7a6">tmsnrt.rs/2pjm7a6</a></p>
<p data-reactid="63">Iyahen said the global problem of resources being stranded underground by a failure to invest in infrastructure is particularly acute in Africa.</p>
<p data-reactid="64">AFC is moving cautiously. The aim in the first instance, Iyahen said, is “to prove the concept” with relatively small investments. He estimated it could put a total of around $200 million into three or four projects next year.</p>
<p data-reactid="65">One early deal was to join up with private equity firm African Infrastructure Investment Managers to buy the Bakwena toll road in South Africa. AFC put up $20 million as its share of the $160 million purchase.</p>
<p>In this case the road was already in place &#8211; it has been operating fully since 2004 &#8211; and is designed to boost agriculture, manufacturing and tourism as well as mining.</p>
<h3>DESIRED CHARACTERISTICS</h3>
<p data-reactid="68">While no longer forced sellers, mining companies are determined to maximise cash in a business where projects can take billions and years before they start turning a profit.</p>
<p data-reactid="69">Raising capital for big schemes is a problem as investors remain shaken by the commodity crash but they are still interested in smaller-scale, less risky involvement.</p>
<p data-reactid="70">“Financial investors, including infrastructure funds, continue to look at opportunities in the sector,” said Simon Nichols, UK head of mining at KPMG. They are focusing on types of infrastructure such as ports and railways which have the characteristics they want: “long duration assets with long term, inflation-linked, stable cash flows”, he said.</p>
<p>Outside Africa, Glencore sold its coal train fleet in Australia last year to a joint venture between an infrastructure fund and a railway holding company. In Canada, Teck Resources agreed to sell its 66 percent in the Waneta Dam hydroelectric project, which supplies its zinc and lead smelting and refining operations in British Columbia, to existing partner BC Hydro. The assets raised more than $800 million each.</p>
<h3>QUESTION OF SCALE</h3>
<p data-reactid="73">With precious and base metals, relatively small amounts of material are often shipped from the mine head so if there are problems with rail transport, alternatives might be available.</p>
<p data-reactid="74">Credit Suisse mining banker Stephen Davy said these producers were more likely to continue to sell their infrastructure.</p>
<p data-reactid="75">However, bulk commodities such as iron ore have to be moved in huge quantities, often limiting options to rail and sea.</p>
<p data-reactid="76">“In those cases, it’s particularly important to control the infrastructure because you make money or lose money on your efficiency in the logistic chain,” Davy said.</p>
<p data-reactid="77">Rio Tinto said this week it would to expand its own fleet of driverless trucks supporting its iron ore mines in Australia’s Pilbara region by fitting 48 vehicles with autonomous technology.</p>
<p data-reactid="78">Australia’s Fortescue Metals Group, another large iron ore producer, tried to sell a minority stake in its rail and port unit in 2013, which analysts estimated could have raised up to $5 billion.</p>
<p data-reactid="79">No sale happened then. Banking sources said the group was looking again at separating its infrastructure arm from its mining assets, but CEO Nev Power dismissed the possibility.</p>
<p>“Fortescue has no plans to sell or change the ownership structure of our wholly owned and highly efficient infrastructure,” Power said in a statement.</p>


How a Nigerian based funding body plans to turn mining infrastructure on its head

<p>With some mining companies increasingly reluctant to own outright the infrastructure that keeps their projects going, an African development institution is linking up with investment funds to help fill the gap.</p>
<p><img decoding="async" loading="lazy" class="aligncenter wp-image-41178 size-full" src="http://cnbc.africa/wp-content/uploads/2017/02/mining.jpg" alt="Lonmin posts solid results despite Marikana massacre" width="800" height="490" /></p>
<p data-reactid="46">The Nigerian-based Africa Finance Corporation has already expanded its debt or equity funding for resources projects from oil into mines, including a bauxite scheme in Guinea.</p>
<p data-reactid="47">Now it is testing the water on a modest scale with investments that separate infrastructure, such as power supplies, roads and railways, from the mines themselves.</p>
<p data-reactid="48">Some miners remain keen on controlling these facilities, notably producers of bulk commodities such as iron ore. Others, however, have been selling off such assets &#8211; or seeking partners for new infrastructure &#8211; to limit their huge capital needs.</p>
<div class="DPSlot_container_2dHIN DPSlot_inline_1oeo6"></div>
<p data-reactid="50">For investment funds and bankers, this offers the prospect of predictable returns as infrastructure providers typically charge users fees set under long-term contracts. This contrasts to mining production itself, where the swings and uncertainties of the commodities price cycle raise the investment risk.</p>
<p data-reactid="51">Development bodies including the AFC &#8211; which is owned by the Nigerian central bank, African financial institutions and industrial groups &#8211; want an alternative route into projects that can generate cash and ensure African resources are exploited to support economic development and job creation.</p>
<p data-reactid="52">“I certainly see this as an opportunity for high quality infrastructure assets,” Osam Iyahen, vice president responsible for natural resources at Lagos-based AFC, told Reuters in a telephone interview.</p>
<p data-reactid="53">Resources companies have traditionally built their own transport links and power stations to secure supplies to and from their mines and smelters.</p>
<p data-reactid="54">Full ownership has helped to avoid costly interruptions to operations and ensure some control over costs. Railways, for instance, are often reserved for a miner’s exclusive use, meaning it does not have to compete for track access or worry about the risk of blockages caused by other services.</p>
<p data-reactid="55">But when commodity markets crashed in 2014-15, firms struggling under heavy debt burdens began selling anything that was not essential. Metals prices have since stabilised, but much of the industry is wary of returning to the old model and accruing high levels of debt.</p>
<p>Some, including Swiss-based miner and trader Glencore, have emphasised spreading the high cost of infrastructure. Through joint ventures they can retain influence over how assets are built and run, while getting full ownership off their balance sheets. “Partnerships to grow the business will remain a key element of our approach,” Glencore chief executive Ivan Glasenberg said this month.</p>
<h3>STRANDED RESOURCES</h3>
<p data-reactid="58">AFC joined a consortium earlier this year that is investing $205 million in Guinea’s Bel Air bauxite mine. Production at the project run by Alufer Mining is scheduled to start in the third quarter of next year, helping to feed global demand for aluminium.</p>
<p data-reactid="59">A fellow consortium member is U.S.-based Orion Mine Finance, which lists its share of the investment as $85 million in the form of loans, equity and offtake &#8211; sharing in the project’s future output.</p>
<p data-reactid="60">However, investing in mega-projects is risky and the Simandou deposit in Guinea &#8211; one of the world’s biggest untapped reserves of iron ore &#8211; offers a cautionary tale for development bodies. Last year the International Finance Corp, the private sector investment arm of the World Bank, decided to sell its 4.6 percent stake after a decade of involvement.</p>
<p data-reactid="61">Simandou has yet to be developed and needs hundreds of kilometres of new railway track to operate. Rio Tinto has agreed to sell its stake in the project to China’s Chinalco, although the deal has yet to be finalised.</p>
<p data-reactid="63">Iyahen said the global problem of resources being stranded underground by a failure to invest in infrastructure is particularly acute in Africa.</p>
<p data-reactid="64">AFC is moving cautiously. The aim in the first instance, Iyahen said, is “to prove the concept” with relatively small investments. He estimated it could put a total of around $200 million into three or four projects next year.</p>
<p data-reactid="65">One early deal was to join up with private equity firm African Infrastructure Investment Managers to buy the Bakwena toll road in South Africa. AFC put up $20 million as its share of the $160 million purchase.</p>
<p>In this case the road was already in place &#8211; it has been operating fully since 2004 &#8211; and is designed to boost agriculture, manufacturing and tourism as well as mining.</p>
<h3>DESIRED CHARACTERISTICS</h3>
<p data-reactid="68">While no longer forced sellers, mining companies are determined to maximise cash in a business where projects can take billions and years before they start turning a profit.</p>
<p data-reactid="69">Raising capital for big schemes is a problem as investors remain shaken by the commodity crash but they are still interested in smaller-scale, less risky involvement.</p>
<p data-reactid="70">“Financial investors, including infrastructure funds, continue to look at opportunities in the sector,” said Simon Nichols, UK head of mining at KPMG. They are focusing on types of infrastructure such as ports and railways which have the characteristics they want: “long duration assets with long term, inflation-linked, stable cash flows”, he said.</p>
<p>Outside Africa, Glencore sold its coal train fleet in Australia last year to a joint venture between an infrastructure fund and a railway holding company. In Canada, Teck Resources agreed to sell its 66 percent in the Waneta Dam hydroelectric project, which supplies its zinc and lead smelting and refining operations in British Columbia, to existing partner BC Hydro. The assets raised more than $800 million each.</p>
<h3>QUESTION OF SCALE</h3>
<p data-reactid="73">With precious and base metals, relatively small amounts of material are often shipped from the mine head so if there are problems with rail transport, alternatives might be available.</p>
<p data-reactid="74">Credit Suisse mining banker Stephen Davy said these producers were more likely to continue to sell their infrastructure.</p>
<p data-reactid="75">However, bulk commodities such as iron ore have to be moved in huge quantities, often limiting options to rail and sea.</p>
<p data-reactid="76">“In those cases, it’s particularly important to control the infrastructure because you make money or lose money on your efficiency in the logistic chain,” Davy said.</p>
<p data-reactid="77">Rio Tinto said this week it would to expand its own fleet of driverless trucks supporting its iron ore mines in Australia’s Pilbara region by fitting 48 vehicles with autonomous technology.</p>
<p data-reactid="78">Australia’s Fortescue Metals Group, another large iron ore producer, tried to sell a minority stake in its rail and port unit in 2013, which analysts estimated could have raised up to $5 billion.</p>
<p data-reactid="79">No sale happened then. Banking sources said the group was looking again at separating its infrastructure arm from its mining assets, but CEO Nev Power dismissed the possibility.</p>
<p>“Fortescue has no plans to sell or change the ownership structure of our wholly owned and highly efficient infrastructure,” Power said in a statement.</p>
<div class="Attribution_attribution_o4ojT" data-reactid="80">
<p class="Attribution_content_27_rw" data-reactid="81">editing by David Stamp</p>
</div>


Africa development body, funds see opportunity in mining infrastructure

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<p>Nigeria&#8217;s Home grown school feeding program aims to feed 24 million children in schools across the country. With 70 Naira per child a day, the government hopes to increase enrolment in primary schools and improve nutrition.</p>


Is Nigeria’s school feeding programme sustainable?

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<p>Successful development and infrastructure financing in Africa require collaborative efforts of the government, private investors and entrepreneurs, who must put forward bankable projects.</p>


Africa Finance Corporation

Africa Investment Forum: AFC’s Sanjeev Gupta on the need to change the narrative on Africa