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
A Joint Development Agreement with Scatec Solar, Norfund and Africa50, for development of a 100 MWDC solar power plant in Jigawa state, Nigeria. Total project cost will be about $150 million, with financial close expected in 2017 and operations in 2018.
- Africa 50's role: Act as a project development and long-term equity partner (24%). Facilitate interactions with government entities and prospective leaders, particularly AFDB.
- Partners: Senior debt will be provided by OPIC, Islamic development Bank, and AFDB.
- Fundamentals: Reliable solar resources and direct access to the grid under a 20 year Power Purchase Agreement with Nigerian Bulk Electricity Trading.
- Development Impact: The plant will produce about 200GWh of power per year, contributing to Jigawa state’s $2 billion development plan and helping Nigeria meet its climate change commitments, with an estimated 120,000 tons of CO2 emissions avoided annually.
Benban Solar Plant in Egypt
A Joint Development Agreement with Scatec Solar, Norfund and Africa50, for development of 400 MWDC solar power plants in Benban, Egypt, developed under Egypt’s Feed-in-Tariff program. Total project cost will be about $450 million. Financial close was reached on October 27, 2017. Operations should start in early 2019.
- Africa 50's role: Act as project development and long-term equity partner (25%). Facilitate relations with the Government of Egypt, an Africa50 shareholder, and other investors.
- Partners: Senior debt is provided by EBRD, Islamic Development Bank, and the Islamic Corporation for the Development of the Private Sector.
- Fundamentals: Excellent solar resources and interconnection facilities funded under a cost sharing agreement. Power 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 plant, which supports Egypt’s ongoing reform and diversification of the power sector, will produce about 900 GWh of power per year, avoiding 350,000 tons of CO2 emissions annually. It will also create hundreds of jobs, with the emphasis on hiring locals.
Malicounda Power Plant in Senegal
An agreement with Senelec, Senegal’s electricity provider, for competitive selection of a strategic sponsor to develop a 120 MW combined cycle thermal power plant at Malicounda. The plant, situated in Mbour department 85 km from Dakar, will initially run on fuel oil, but will be converted to natural gas when this becomes available from recently discovered gas fields. Private sector participation follows the Build, Own, Operate and Transfer model (BOOT). The plant will produce at least 956 GWh a year. The Power Purchase Agreement has a duration of 20 years, with a competitive feed-in tariff rate arrived at through a public tender. The electricity generated will be fed into the network through an existing distribution substation.
- Africa 50's role: Africa50 will work with the consortium to secure financing and supervise construction and operation of the plant.
- Partners: Aside from support of the national electricity company, the project benefits from the strong support of the Senegalese government. The first phase foresees selecting the strategic sponsor and other partners.
- Fundamentals: The infrastructure to assure fuel supplies is in place and an existing distribution station is available to feed power into the grid. Conversion to locally produced gas will further assure supply and lower costs. An advantageous 20-year Power Purchase Agreement will help attract investors.
- Development impact: The project fits in with Senegal’s strategy to increase energy production while, in the medium term, reducing the cost of electricity for consumers. Moreover, the plant will help satisfy base loads, facilitating the integration of intermittent renewable power into the country’s network.
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.