Supporting commercially sustainable projects through two business lines
Africa50 focuses on medium to large scale infrastructure projects that have a significant development impact while offering an appropriate return to investors. It not only invests in fully developed projects, but also accelerates the provision of infrastructure by supporting project development in its early stages. By bringing project development and financing together in one institution, Africa50 can provide support at every stage of the project cycle. Its operations are carried out through two business lines:
The primary objective of Africa50 Project Development is to increase the number of investment-ready, "bankable" infrastructure projects. In addition to providing financing at earlier stages of projects, Africa50’s staff actively contributes to project development, engaging with stakeholders along the deal cycle, with a particular focus on mobilizing political support. It overcomes obstacles to moving projects to financial close and mitigates risk by innovative structuring and financial appraisal. Aside from providing financing and guarantees, project cycle activities can include doing feasibility studies, obtaining permits and approval for land acquisition, and negotiating contracts.
Africa50 Project Development typically takes significant minority stakes of $2-10 million in projects or platforms, playing an active role alongside the main sponsor and partnering with other developers when beneficial. With a focus on remaining flexible and understanding of African realities, it balances profitability and development impact, targeting a modest return on investment on a portfolio basis to ensure sustainability.
Sourcing projects through Africa50 Project Development and other partners, Africa50 Project Finance engages stakeholders post financial close. Following a private equity model, it provides primarily equity and quasi equity with flexible exit options, while accessing preferential debt from the AfDB and DFIs. It typically takes significant minority stakes of over $20 million, focusing on profitability as well as development impact, and playing an active role regardless of the type of investment. Returns are differentiated based on risk, impact and location. Africa50 Project Finance may also invest in and sponsor private sector funds to mobilize institutional investor capital.
Africa50’s primary target sectors are transport and power, which represent almost 70% of projected infrastructure investment needs between now and 2025, and have a significant economic and transformative impact.
Power includes renewable and conventional generation, power transmission and distribution, and mid and downstream gas infrastructure.
Transport includes roads, airports, ports, and logistics.
Projects in information and communications, water and sanitation, as well as other infrastructure sub-sectors, are eligible on a case-by-case basis.
Click on the project headings below for full project details.
Nova Scotia Solar Plant in Nigeria
Scatec Nigeria is a ground-mounted 100 MW solar photovoltaic power plant located near Dutse in Jigawa state, on 200 ha of land which is currently used as farmland.
- Africa 50’s role: Act as a project development and longterm equity partner. Facilitate interactions with government entities and prospective lenders.
- Partners: Africa50, Scatec Solar, Norfund
- Fundamentals: The plant enjoys reliable solar resources and direct access to the grid under a 20-year Power Purchase Agreement with Nigerian Bulk Electricity Trading. The power is expected to be evacuated through a dedicated 132 kV overhead transmission line that is expected to connect the plant to the Dutse substation, located 3.7 kilometers from the project site.
- Development Impact: The plant is expected to produce about 200 GWh of power a year, increasing generation capacity by 2%, which is expected to contribute to alleviating the energy deficit currently addressed with expensive and polluting diesel generators. It is expected to avoid about 120,000 tons of CO2 emissions annually and could reduce indoor pollution if grid extensions allow households to transition from firewood and kerosene to grid power. It is expected to create 200-300 jobs during construction and 10-15 during operations.
Benban Solar Plant in Egypt
Development and construction of six solar power plants totalling 400 MW under Egypt’s Feed-in-Tariff program. Total project costs are expected to be about $450 million. Financial close was reached in October 2017 and the first two plants became operational in April and May 2019. All the plants are expected to achieve commercial operation by October 2019.
- Africa 50’s role: Africa50 is a project development and long-term equity partner (25%).
- Partners: Africa50, Scatec Solar and Norfund. Senior debt is provided by the European Bank for Reconstruction and Development, the Islamic Development Bank, and the Islamic Corporation for the Development of the Private Sector.
- Fundamentals: The 42-plant Benban Solar Park site has ample solar resources and interconnection facilities funded under a cost-sharing agreement. Power is sold to the Egyptian Electricity Transmission Company under a 25-year Power Purchase Agreement, backstopped by the Government of Egypt. Benban’s links to the infrastructure of the Aswan Dam will help combine hydro, wind, and solar power.
- Development impact: The plants, which supports Egypt’s ongoing reform and diversification of the power sector, are expected to produce about 870 GWh of power per year, avoiding 350,000 tons of CO2 emissions annually, which is expected to position Egypt as a major regional solar power producer. Africa50’s six plants are projected to create about 1,000 jobs during the construction phase.
Malicounda Power Plant in Senegal
A 120 MW combined-cycle thermal power plant at Malicounda, 85 kilometres from Dakar. It will initially run on fuel oil but is expected to be converted to natural gas when this becomes available from recently discovered fields. The electricity generated is expected to be fed into the network through an existing distribution substation.
Africa 50's role: Africa50 worked with Senelec (the Senegalese utility) to select a strategic partner (Melec PowerGen). The consortium of sponsors is currently working on securing debt financing. Construction is expected to commence in the coming months.
- Partners: Africa50, Senelec and Melec PowerGen. The African Development Bank is the Mandated Lead Arranger.
- Fundamentals: The plant is a significant addition to power production in Senegal and is expected to reduce the supply gap. Conversion to locally produced gas is expected to further lower the costs and provide for cleaner energy production. A 20-year Power Purchase Agreement with a competitive feed-in tariff should help to attract investors, under a Build, Own, Operate and Transfer (BOOT) model.
- Development impact: The plant fits in with Senegal’s strategy to increase energy production while reducing costs. It is expected to increase generation capacity by around 17%, while reducing costs by 14%, which could potentially result in a 3-7% fall in tariffs. The plant also is expected to help satisfy base loads, facilitating the integration of intermittent renewable power into the country’s network. About 150 jobs are expected to be created during construction.
Nachtigal Hydropower Plant
The construction and operation of a 420 MW hydropower plant in Cameroon near Nachtigal Falls, 65 kilometers from Yaoundé, as well as a 50-kilometer transmission line to Nyom. It is projected to be completed in 2023 and operated under a 35-year concession.
Africa 50's role: Africa50 acquired 15% of the equity stake in the Nachtigal Hydro Power Company (NHPC) from the Government of Cameroon
- Partners: The shareholding of NHPC is comprised of EDF (40%), IFC (20%), the Republic of Cameroon (15%), Africa50 (15%), and STOA (10%).
- Fundamentals: The project consists of roller compacted concrete dams, a headrace channel, a power plant with seven generating units, a generation substation, and a transmission line. The reservoir of 421 hectares is expected to hold 27.8 cubic hectometers of water. The total cost of €1.2 billion will be funded with equity and a blend of DFI and commercial banks loans. The lender group coordinated by IFC includes 11 DFIs and four commercial banks coordinated by Morocco’s Attijariwafa Bank. The World Bank has provided a Partial Risk Guarantee.
- Development impact: Nachtigal is part of Cameroon’s plan to improve the reliability of its energy sector and access to power, with the plant intended to address about 30% of the country’s energy needs. The power is expected to be sold to the national utility company at a relative competitive price, thereby benefiting Cameroonian consumers and boosting the economic and industrial development of the country. The project is expected to create up to 1,500 direct jobs during construction (65% locally sourced), and many permanent jobs upon completion in 2023.
Kigali Innovation City
In November 2018, Africa50 signed a JDA Term Sheet with the Rwanda Development Board (“RDB”), pursuant to which Africa50 is to have exclusive rights to work with RDB to design, develop, finance, construct and operate certain components of the Kigali Innovation City (KIC). KIC is expected to house international universities, technology companies, biotech firms, and commercial and retail real estate in an area of 70 hectares. As a key component of the Rwandan government’s Vision 2020 development program, KIC aims to attract technology companies from all over the world to Rwanda to create an innovation ecosystem and further a knowledge-based economy.
KIC is projected to create over 50,000 jobs and generate US$150 million in ICT exports annually, as well as attracting over US$300 million in foreign direct investment. Over 2600 students are expected to graduate annually from its universities over 30 years, adding to Rwanda’s and Africa’s pool of tech-savvy entrepreneurs.
Kinshasa and Brazzaville Rail-Road bridge
On 7 November 2018, on the sidelines of the Africa Investment Forum, the African Development Bank (AfDB) and Africa50 signed a preliminary framework agreement with the Democratic Republic of Congo and the Republic of Congo setting forth the terms and conditions under which the African Development Banks and Africa50 could develop and finance the first road-rail bridge project linking their capitals - Kinshasa and Brazzaville. The framework agreement contemplates that the project will be developed as a public private partnership, with AfDB acting as the debt provider under the aegis of the Economic Community of Central African States. As the main developer, Africa50 would lead the project development, help select a strategic partner, and provide equity for construction.
This landmark project, part of the Programme for Infrastructure Development in Africa (PIDA) Priority Action Plan, consists of a 1.575-kilometer toll bridge over the Congo River. It is expected to include a single railway track, a doublelane road, sidewalks, and a border checkpoint at each end. It is expected to be connected to existing road infrastructure in both countries. The cost estimated in 2017 was US$550 million. The bridge is expected to improve transport networks between Kinshasa and Brazzaville. The two closest capitals in the world are currently only linked by ferries. Upon completion, the existing traffic of an estimated 750,000 people and 340,000 tons of freight a year, is projected to increase to over 3 million people and 2 million tons of freight by 2025.
Africa is simply tired of being in the dark. It is time to take decisive action and turn around this narrative: to light up and power Africa – and accelerate the pace of economic transformation, unlock the potential of businesses, and drive much needed industrialization to create jobs.