Why global and pan African investors need to set their sights on the 2019 Africa Investment Forum

By Bajabulile Swazi Tshabalala*

The year 2019 will be one of the defining moments in Africa’s investment landscape. Bigger, bolder and more ambitious projects await delegates and investors as we prepare to kick off the second edition of the Africa Investment Forum.

A multi-billion-dollar petrochemical project in Egypt and the Kigali Innovation City Project in Rwanda, are only two of the projects which featured during the maiden edition of the Forum held in November last year.

Alongside a greater emphasis on helping transactions reach bankability and in pushing ahead the regional integration agenda, project sponsors and investors continue to flock to our digital Platform, with interest already shown in 151 projects from 34 African countries worth $112.4 billion.

Following the immense success in November 2018, the Africa Investment Forum, a brainchild of the African Development Bank, is becoming a firm fixture in the calendars of the global investment community. The 2018 event saw nearly 2,000 participants, representing 83 countries, out of which some 277 were delegates from development finance institutions that are active in Africa.

The 2018 Forum was instrumental in showcasing up to 49 different transactions at different stages of development and with a total value of close to $40 billion. These projects were presented to a large audience of investors and financiers. Judging from the interest generated, the Forum promises to play a major role in catalyzing investment flows into Africa, so instrumental in moving the continent forward into the future.

Some of the key projects for which the Forum is expected to play an invaluable role, include the Desert to Power initiative – which aims to provide 10,000 MW of solar-generated electricity to 250 million people across the Sahel. Projects like the Inga Hydro-electric scheme in the Democratic Republic of the Congo, and other major cross-border infrastructure projects in road and rail, are all highly transformative projects with important social and economic impacts.

The timing of the coming into being of the Forum is fortuitous, coming on the heels of the Africa Continental Free Trade Area and the Single African Air Transport Market, ratified by the majority of African Union members.

New investments made possible through the Africa Investment Forum have the potential to spur an explosion in trade, contribute to Africa’s re-industrialization and promote cross-border regional economic integration.

Indeed, while the platform continues to ramp up and grow, the Forum offered some very important lessons. In particular, additional resources are required to adequately prepare projects which are crucial for Africa’s development. Well-prepared projects minimize negative environmental and social issues, while maximizing development and economic outcomes, thus contributing to enhanced bankability. This notwithstanding, projects originated through the Forum will benefit from the Bank’s wider ecosystem and the numerous instruments and partnerships with other development finance institutions which will help transform project ideas into actual investments that create jobs and economic opportunities on the ground.

While the Forum is a practical and transactional platform for project deals and potential financers to interact, it has also become a staging post for new financing product innovations that compliment and contribute to de-risking and making investment opportunities more attractive for investors. Examples of recent innovations in this regard include the co-guarantee platform that was established in 2018 by the African Development Bank alongside its partners the Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC), African Trade Insurance Agency (ATI) and GuarantCo.

As we prepare again to put Africa on global investors’ radars, I would like to see tied to the Forum more activities with the potential of bringing increased dynamism and depth to African domestic capital markets; initiatives that help mobilize African domestic resources into projects coming to this platform for funding.

Beyond this, there are opportunities for the African diaspora whose annual remittances to the continent now top $60 billion a year, making it an immense pool of money that can actively participate in Africa’s development story and benefit from the myriad investment opportunities.

I would like to see diaspora bond issuances and/or collective investment vehicles discussed and presented at the Forum, as they can represent significant financing that can be put to work for the benefit of Africa’s development.

I also strongly encourage and welcome greater participation of the South African institutional investment management industry.

We look forward to a successful Forum and to greater acceleration of the development of the continent.

*AFDB. Bajabulile Swazi Tshabalala is Vice President for Finance and Chief Finance Officer, African Development Bank