African-led multilateral financial institution the Africa Finance Corporation (AFC) and the Dutch Development Bank (FMO) recently launched a project development facility.
The $15-million facility will make early-stage investments in projects under devel- opment and in prefinancial close in the infrastructure sector in sub-Saharan Africa, excluding South Africa.
The facility will also fund early-stage equity investments in projects under development by the AFC and third-party developers. The facility will be man- aged by the AFC and will typically fund technical advisory services and third-party expenses. These include feasibility assessments and market studies, environmental reviews, financial modelling services, technical design and legal services.
The sector focus will be on power, transportation and oil and gas infrastructure, as well as agribusiness and social infrastructure.
Improved governance and macroeconomic conditions have not increased Africa’s share of global infrastructure investment, despite the sub- stantial and growing demand for infrastructure. The AFC aims to improve African economies by develop- ing and financing infrastructure and industrial and financial assets.
Further, it also aims to help address two major gaps in the development and financing of infrastructure projects in Africa – the lack of avail- ability of early-stage risk capital and the lack of ade- quate project development and project structuring capa- city to drive projects from vision to bankability and delivery.
In addition to its usual debt, equity and advisory offerings, the AFC will pro- vide early-stage risk capital and project development advisory services in order to increase the pipeline of bank- able and well-structured infrastructure projects in Africa.
One such investment is in Ghana, where the AFC is working with local and international partners to develop a 340 MW combined-cycle thermal independent power project. The project is at an advanced stage of development, finan- cial close is expected by midyear and commercial operations are expected to start in 2016.
In Cape Verde, the AFC is the largest equity investor in a $90-million 26 MW wind farm – the first commercial wind farm public–private partnership in Africa.
The fully operational project comprises the development, construction and operation of the wind farm. It provides about 25% of the island State’s power in an economic, environmentally safe and sustainable manner.
“The FMO believes that this facility will assist in bringing key infrastructure projects to market, creating development impact and reinforcing the AFC’s and the FMO’s role as leading private-sector investors in Africa,” concludes FMO chief investment officer Jurgen Rigterink.