On October 19 in London, at a business round table organized by the Business Council for Africa, Invest Africa, and the Africa Expert Network, CEO Alain Ebobisse outlined Africa50’s operations and progress. He emphasized that Africa50 is a development finance institution, but that in practice it is “run almost like a private sector fund which is supported by government shareholders.”
At the recent shareholders meeting in Dakar, the Democratic Republic of Congo and Guinea joined Africa50, bringing total country shareholders to 25. Uganda and Mauritius may follow suit soon, and the number of member countries should get close to 30 in the next six months, he noted. At present, members are concentrated mostly in West Africa, but Africa50 hopes to extend membership to more southern and eastern African countries. While Africa50 can also invest in non-member countries, the returns should be higher so that members do not find themselves subsidising non-members.
A key role for the fund is to develop bankable projects, investing early-stage risk capital and allocating human resources to build up the project pipeline, Mr. Ebobisse explained. In addition, Africa50 invests in later-stage projects that are have a funding gap. It mobilises long term savings from inside and outside Africa, not only from its government shareholders but also from commercial entities. “We like to offer commercial entities that are looking for investments the protection that Africa50 can bring by being close to its government shareholders to mitigate risks and channel funds into Africa,” Mr. Ebobisse emphasized. Africa50 is still evaluating on how best to do this, possibly through a third-party fund that will be managed separately.
He explained that the power sector in Africa is both the most commercially developed sector and the one requiring the most investment. Africa50 is interested not only in generation, but also in transmission and distribution. Transmission projects can be developed as public- private partnerships, while distribution can also be made attractive for private investment. Africa50 also wants to finance projects in midstream and downstream gas, much of which is currently exported from Africa to world markets. “We want to make sure we build enough pipelines and processing facilities to also bring gas to businesses and populations in Africa,” Mr. Ebobisse emphasized. Turning to the transport sector, the other priority of Africa50, he underlined that the focus is on the most commercial projects, such as airports, ports and logistics.
He then outlined recent investments in Nigeria, Egypt and Senegal. Commenting on Africa50’s 30% stake in a 120MW heavy fuel oil project in Senegal that can later be converted to gas. He said the government asked Africa50 to work with the local utility to select a strategic partner, who will be the majority shareholder. In exchange, Africa50 has the right to invest up to 30% in the project. “We love these kinds of projects,” Mr. Ebobisse said, “because they are proprietary deals. We get in before everybody else does and then help select the sponsor that will come in and work with us.”
Commenting on Africa50’s role as a bridge between the private and public sectors, Mr. Ebobisse underlined that the fund is “close enough to government shareholders to be able to unlock some of the issues that affect infrastructure projects.” “We are not seeking to control companies in which we are investing. We are minority shareholders; we are about catalysing and enabling things to happen, as opposed to running things… we expect the strategic partner to take that role, and we will be a good addition to the shareholding to help achieve common goals.”
Finally, he noted that Africa50 will not offer debt financing. “We see ourselves as having a complementary role with other DFIs, primarily the African Development Bank, which will be the first source of debt financing.”
Round table attendees included executives from African Capital Investments, Afrexim Bank, AIG, AP Møller Capital, Barclays Capital, Bibimoney, BMI Research, Choice Farms Ltd, DPI, DLA Piper, Eversheds Sutherland, Exchange Data International, Fieldstone Africa, FTI Consulting, G3 Good Governance Group, GuarantCo, KPMG, Mitsui & Co., Moody’s, Nex Rubica Capital, Oando Trading, Ofek Limited, PIDG, PwC, SeedsLife Investment Group, Squire Patton Boggs, Standard Chartered Bank, Abraaj Group, Harvest Fresh Group, and the Foreign and Commonwealth Office.