AFC acquires US$300 million facility from Export-Import Bank of China

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By Prosper Ndlovu 

AFRICA Finance Corporation (AFC), one of the leading infrastructure development finance institutions on the continent, has announced its successful acquisition of a loan facility from the Export-Import Bank of China (CEXIM) of a US$200m five-year loan and a US$100m five-year stand-by facility for general corporate purpose. AFC revealed in a statement that the facility from CEXIM marks its inaugural financing facility from China. This follows the Corporation’s strategic focus to build a broad coalition of investors by diversifying its fundraising activities to include all sources of institutional capital in East Asia, in addition to its existing partners in Europe and North America. 

“Apart from the medium-term liquidity that this proposed facility will provide, it will also further provide contingent funding support, which is particularly important for liquidity risk management as well as opening up other financing and relationships with Chinese entities (both state-owned and private),” said AFC. 

“It has also been agreed that the signing of the facility agreement shall mark the first step into what will be a long and beneficial relationship with CEXIM, including AFC’s support to CEXIM’s Africa strategy, looking at their portfolio of assets and advising them on how to optimise its loan book on the continent.”  

President and chief executive at AFC, Samaila Zubairu, said the $300 million facility was a milestone as he noted that in the last two decades, China has grown from a relatively small investor, to becoming one of Africa’s largest trading partners. 

“This facility is therefore not only a milestone for the corporation and its strategy for the Far East, but also marks a natural evolution in the growing financial sophistication of China in Africa, a necessary development required to accelerate Africa’s journey towards closing the infrastructure deficit,” he said. 

“Moreover, AFC welcomes CEXIM’s commitment towards its Africa strategy, and we look forward to lending our expertise on how best to deliver sustainable infrastructure investment that should catalyse industrial growth on the continent.” 

Zimbabwe became the 19th member of AFC early this year with the new dispensation under President Emmerson Mnangagwa referencing infrastructure development as one of the top priorities in its economic turnaround efforts. 

Guided by the “Zimbabwe is open for business” mantra, AFC has recently indicated that it was already undertaking processes of exploring, alongside the Infrastructure Development Bank of Zimbabwe (IDBZ), opportunities for investment. The IDBZ has a national mandate to champion infrastructure development in Zimbabwe in the key sectors of energy, transport, housing, ICT, water and sanitation. The IDBZ has also been mandated to be the focal and national implementing entity for Green Climate Finance. 

Zimbabwe’s membership in the AFC is expected to significantly enhance the bank’s resource mobilisation efforts towards funding the country’s huge infrastructure needs. So far this year AFC has already marked some major milestones in the diversification of its membership and shareholding with the African Reinsurance Corporation and the Republic of Malawi joining the Corporation in February and March, respectively.

AFC is an investment grade multilateral finance institution that was established in 2007 with an equity capital base of US$1 billion. It is meant to be the catalyst for private sector-led infrastructure investment across Africa.  With a current balance sheet size of approximately US$4.2 billion, AFC is the second highest investment grade rated multilateral financial institution in Africa with an A3/P2 (Stable outlook) rating from Moody’s Investors Service. AFC successfully raised US$750 million in 2015 and US$500 million in 2017, out of its board-approved US$3 Billion Global Medium- Term Note (MTN) Programme. 

Both Eurobond issues were oversubscribed and attracted investors from Asia, Europe and the USA. The regional institution invests in high quality infrastructure assets that provide essential services in the core infrastructure sectors of power, natural resources, heavy industry, transport, and telecommunications. To date, the Corporation has invested approximately US$4 billion in projects within 28 countries across North, East, West and Southern Africa.

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