AFC Invests $1.6bn in 20 Projects in Nigeria

Nume Ekeghe

Africa Finance Corporation (AFC) has noted that on its balance sheet, the corporation has invested in 20 infrastructure projects in Nigeria worth $1.6bn from its balance sheet of $8.6 billion.

The President and Chief Executive Officer, AFC, Mr. Samaila Zubairu, also noted that for Nigeria and the rest of the African continent, credit enhancement and assurances should be given to attract Foreign Direct Investment (FDI) to fund infrastructure deficit.

Speaking at a media briefing in Lagos yesterday, Zubairu said: “On how much AFC has invested in Nigeria, the number is actually $1.6 billion currently, I mean earlier investments have been paid back, right now on the balance sheet of 8.6 billion, we have $1.6 billion as investments. We’ve invested in over 20 projects in Nigeria, 49 per cent is in natural resources, 38 per cent is in heavy industries, telecoms and technology, 11 per cent is in power and 2 per cent is in transport.

“We have discovered that the trend for infrastructure investment in Nigeria is same as that of the globe. So, if you look at our infrastructure deficits, and the opportunities to invest in infrastructure, transport and energy is about 80 per cent of the subset which is also consistent with the global average.”

“Now, it turns out that transport and energy is the area where you can easily attract private sector capital. So that is the area that governments should least invest in. And any government investment should be more in the form of credit enhancements.”

 What government needs to do in Nigeria is to provide the credit enhancement, provide the guarantees and provide the mechanisms for private capital to develop.”

Furthermore, on how to attract investments, he added: “So, we know that a toll road between Lagos to Ibadan will make money indeed, but because we have experience of government constantly, concessions, people will be shy to make an investment. We’ve seen what happened in the Lekki Expressway, people will be shy to make investments. So, government has to step up to say it would not happen and if it happens, we shall compensate you.

“So that kind of credit enhancement is what is required from government, once government can provide that there will be significant capital flow to Nigeria, for various infrastructure projects and indeed, to most of the African continent.”

Also, on its bank’s results, AFC saw its annual profits increase by 26.6 per cent to $209.7 million in 2021, passing the $200 million mark for the first time in its 15-year history, from $165.5 million in 2020 growing its total assets rose by 16.3 per cent to a record US$8.56 billion.

Other indices of its financial statement showed that total equity grew by 7.8 per cent to $2.24 billion total from $2.08 billion in 2020.

Net interest income increased by 32 per cent to $220.7 million from $167.1 million recorded in 2020. Also, operating income was up 18 per cent to $259.5 million from US$219.3 million cited in 2020.

Total comprehensive income increased by 20.2 per cent to $188.2 million in total comprehensive income from $156.5 million in 2020. Furthermore, liquidity position declined by 21.2 per cent to US$1.89 billion liquidity position as against $2.4 billion recorded in 2020 and interest income grew by 13 per cent to $384.3 million from $339.6 million in the previous year. Net Interest Margin also increased by 10 per cent to 3.2 per cent.

AFC’s reach on the continent is now larger than it has ever been, with investments expanding to 35 countries and cumulative disbursements rising by 14 per cent to $9.9 billion. AFC increased Member States by five to 33, with the accession of Burkina Faso, Democratic Republic of Congo, Egypt, Morocco and Niger.

Among projects during 2021, AFC invested $150 million for the development of cashew and cotton integrated industrial parks in Benin and Togo; provided a $200 million corporate facility to BUA Industries Limited for the construction of a sugar refinery and ethanol plant in Nigeria and invested $175 million in the Baomahun Gold Project in Sierra Leone.

The firm also added that AFC Capital Partners (ACP) opened as an independent asset management business and launched its first product, the Infrastructure Climate Resilient Fund, with a target to raise $500 million in 12 months and $2 billion over the next three years for investment in robust energy, transport, buildings and other infrastructure.

Zubairu further added: “Africa’s strong recovery from the global pandemic, creation of the African Continental Free Trade Area, and AFC’s launch of new investment vehicles like the Infrastructure Climate Resilient Fund combine to provide a compelling opportunity for institutional and private sector investors to join the Corporation in projects that offer both transformative impact across the ESG spectrum and strong risk-adjusted returns.

“With this growth in trade, our demographic trends and rapid industrialisation, we are seeing exponential growth in opportunity for diversification and beneficiation across an array of countries and sectors. As an investor, I cannot strongly promote the breadth of opportunities on offer alongside the right partners.”