At the November 2 opening of the 2022 Africa Investment Forum, panelists called on African investors to increase financing for African infrastructure to make the sector attractive to foreign investors.
The panel, “Mobilizing financial capital: What investment model will attract world capital to Africa?” featured representatives of the African private sector. They included Charles Kié, CEO of Genesis Holdings; Vincent Le Guennou, CEO of Africa50 Infrastructure Acceleration Fund, an infrastructure acceleration fund and investment platform created by African governments and the African Development Bank; Florizelle Liser, CEO of Corporate Council on Africa of the U.S; Oscar Onyema, CEO of the Nigerian Exchange Group; and Simon Tiemtoré, Vista Bank CEO.
Panelists focused on investment models offering the most competitive secured capital commitments and how development finance and capital investment can use mixed financing to make Africa more favorable for investments.
This has become critical given the urgent need to better mobilize private capital for high-impact sectors in Africa, such as health infrastructure, to bolster the continent’s recovery in the wake of the Covid-19 pandemic.
Panelists highlighted Africa’s infrastructure finance deficit – of roads, energy, rail, gas and oil pipelines, health infrastructure, and education and training, among others. They proposed an array of local solutions for attracting better international capital.
Liser said: “Before Covid-19, no one believed that we could develop a state-of-the-art pharmaceutical industry in Africa. But with the pandemic, we began to produce RNA messenger vaccines in Africa. I’m happy that investors are looking at Africa with fresh eyes.”
Each year, Africa needs between $68-108 billion to finance infrastructure to accelerate its growth and socioeconomic development. They said countries could mobilize these amounts from domestic sources, provided governments demonstrate budgetary discipline and collect domestic savings more judiciously.
According to Kié, “If we lower budget deficits in Africa by 6%, that would mean annual savings of $60 to 100 billion, which is exactly what Africa needs to meet its infrastructure finance deficit. If we collect an additional 10 % of domestic resources, we will save about $200 billion annually, which is largely sufficient to cover the deficits we are talking about here.” He invited African governments to create macroeconomic conditions that are attractive to investors.
Kié called for restructuring the African banking sector to give it greater capacity for capitalization, especially among regional monetary and economic communities.
Onyema sees the potential of more financing arrangements inside and beyond Africa, ranging from philanthropic institutions to stock exchange investments. “We can scale through capital markets,” he said, citing Nigeria as an example, “which raised green bonds to finance climate-sensitive projects and is currently working in partnership with the Luxembourg Stock Exchange to create greater interest among foreign investors.”
Tiemtoré is an optimist. He said African investors had begun showing interest in financing infrastructure on the continent. “The cash and the puzzle pieces are there, and we can find local resources for infrastructure before calling for foreign capital.” According to him, Vista Bank will invest in health and agri-food industry infrastructure in Africa thanks to African – and particularly American – capital.
Panelists cited Africa50 is an even more interesting example of how investors can get involved in realizing development infrastructure in Africa. Co-founded by the African Development Bank and African governments, Africa50 is interested in infrastructure development from start to finish, from conception to delivery. It prioritizes African public and private finance mobilization on a global scale. “If African investors don’t believe in this and don’t raise funds for African infrastructure, who will? For now, African investors are giving us positive feedback on our projects, so we will go to the international market afterward, says Le Guennou. He cited a green bankable $4 billion solar project in Egypt that will produce 1.5 gigawatts of clean energy for more than 1 million people.
Le Guennou stressed: “When we have sufficient funds and project success stories, we will attract enough interest so that project loan costs will drop.” He estimates that between now and 2050, Africa50 investments will make it possible for an additional 20 million Africans to use clean energy.
Aubrey Hruby, principal researcher at the Atlantic Council and founder of Tofino Capital, moderated the session.
The 2022 Africa Investment Forum Market Days will end on November 4, when investment deals agreed upon will be announced.
*AfDB
