The African Development Bank (AfDB) is preparing to kick off its first-ever Africa Investment Forum (AIF), planned to take place in November in Johannesburg, South Africa, Egypt’s Country Manager of the AFDB Malinne Blomberg, told Daily News Egypt.
“It is not a one-time event. It will be a permanent platform that will help fast-track the implementation of commitments from previous forums,” said Blomberg, adding that financing Egypt’s and Africa’s development has to be a collective and cooperative task, requiring broad-based partnerships, especially, with the private sector.
Blomberg noted that the good news is that Africa is the next investment frontier, and Egypt a top foreign direct investment destination, adding “we need to bridge the gap between available capital and bankable projects. Problems that hinder closure for potentially bankable projects must be resolved in new win-win arrangements for the private sector, investment equity funds, development finance institutions, the public sector, and other relevant stakeholders.”
tNotably, the partnership between Egypt and the African Development Bank Group, which has lasted for almost half a century, has over 100 projects and programmes with a financial commitment of nearly $7bn, according a previous press statement of the AFDB in July.
Moreover, African businesses are rapidly growing in number and sophistication, presenting excellent investment opportunities with relatively high returns, said Blomberg, adding, “the challenge of positioning themselves for investment consideration in front of institutional investors and global corporates remains.“
Africa’s infrastructure requirements continue to increase and are now estimated by the AfDB to be between $130bn and $170bn a year, far higher than the long-accepted figure of $93bn a year, noted Blomberg.
“This quantum of resources are not available to a single government, institutional investor or multilateral development bank,” said Blomberg adding that the AfDB is making its own substantial contribution, but this does not close the gap.
Blomberg mentioned that the AfDB is championing the AIF—a multi-stakeholder, multi-disciplinary platform dedicated to advancing projects to bankable stages, raising capital, and accelerating the financial closure of deals.
AIF offers investors access to a structured platform offering bankable, de-risked projects
DNE, received a document from the AfDB upon request mentioning that the AIF is Africa’s investment market place, through which the African Development Bank, along with its partners, will structure deals, screen and enhance projects, attract co-investors, and facilitate transactions to close Africa’s investment gaps.
The marketplace will reduce intermediation costs, improve the quality of project information and documentation, and increase active and productive engagements between African governments and the private sector. Essentially, the AIF offers investors access to a structured platform offering bankable, de-risked projects within an enabling environment.
“This unprecedented platform will reduce intermediation costs, improve the quality of project information and documentation, and increase active and productive engagements between African governments and the private sector,” noted the document, adding that the preparatory work on engagements has already begun and will continue throughout the year.
Egyptian economy continues to grow, reforms noticed internationally
The document mentioned that the bank is currently working on three main areas with Egypt, which are identifying a pipeline of investments in Egypt to be showcased at the AIF to attract financing and accelerate bankability.
The second main area is identifying investments by Egyptian firms on the continent to be showcased at the AIF to attract financing and accelerate bankability, while the third main area is mobilisation of Egyptian investors and financiers that may provide debt, equity or guarantee schemes to projects at the AIF.
The forum will therefore become Africa’s own investment marketplace for accelerated economic transformation, said the document, adding that it will be a unique forum as it will be 100% transactional.
There will be no political speeches, the only thing allowed will be “transactions, transactions and transactions” to accelerate Africa’s economic development, mentioned the document.
“The time is ripe for such a bold initiative. The Egyptian economy is growing, and the reforms in Egypt have been noticed internationally. Africa on the whole is on an encouraging growth trajectory, with markets expanding, and a massive youth population ready and eager for work,” said the document.
The African Development Bank is working with numerous partners and stakeholders, including the Egyptian government and private sector companies for the success of the Africa Investment Forum, in order for it to be the biggest collective investment opportunity of any African generation, said the document.
“There are some extraordinary deals to be had in Africa. The Africa Investment Forum is in a perfect position to identify and shape these deals for investors, fund managers and others managing substantial assets. Together, we offer the world a collective Deal of the Century for investment in and the development of Africa,” clarified the document.
High 5s main focal areas of AFDB
The focus is on the African Development Bank’s High 5s, which are Light up and Power Africa; Feed Africa; Industrialise Africa; Integrate Africa; and Improve the Quality of life for the people of Africa, mentioned the document.
The High 5s, if achieved, will allow Africa to meet about 90% of the Sustainable Development Goals and Agenda 2063. This makes the bank’s High 5s a genuine accelerator of the African economic development, noted the document.
Main sessions, goals of Africa Investment Forum
AIF is a series of market-days, From 7-9 November 2018 in Johannesburg, the Africa Investment Forum event will convene project sponsors, borrowers, lenders, and investors to participate in concrete and focused sessions on investment opportunities through boardroom discussions, bi-lateral meetings, and workshops.
Forum will include co-financing sessions—private sessions (by invitation only), whereby these sessions will focus on specific projects that have qualified under the pipeline development work-stream (these may be partner projects).
There are also country dialogues—invitation-only sessions, which will present opportunities for governments to have frank conversations with the private sector about their country. This will be a safe space to share and influence the removal of stumbling blocks to specific pre-identified projects, in a way as to ease doing business in the country, and address regulatory frameworks.
The forum will include Success Stories Sessions (Done Deals)—public sessions, which will showcase the Point-to Point-Protocol (PPP) projects that have been a success on the continent. It will highlight bottlenecks and how they were overcome, instruments used, guarantee providers. These sessions will focus on how we replicate such projects at scale. Examples include the Abidjan Bridge, the Djibouti port, Desert to Power, etc, and hopefully an Egyptian example.
Additionally, fundraising sessions will provide the opportunity for the AfDB and its partners to raise funds for project preparation, sector engagement initiatives (eg gender or youth focus), flagship initiatives of different partners etc.
Exchange sessions will focus on Connecting Partners (Professional Networking).
AFDB will accelerate private sector investments
The AFDB and its partners will accelerate private sector investments in Africa through a combination of the efforts. The AIF will pool the collective efforts of development finance institutions, multilaterals, governments, and the private sector to originate and collate investment ready projects with transformative effects, said the document, adding, “this work-stream will onboard projects on to a digital platform, screen, and filter these projects and showcase them to investors.”
Project Preparation focus on working closely with Africa50, Infrastructure Consortium for Africa, and NEPAD Infrastructure Project Preparation Facility, amongst others, the AIF is aiming to scale up technical assistance, process harmonisation, seek funding and grants for feasibility studies, all with the objective of increasing the quantum of bankable projects on the continent.
Policy Environment is a main focus of the AIF, as this work-stream aims to improve regulatory reforms and consistency by advancing and promoting investment friendly regulation.
Credit Enhancement and Project Bankability’s work-stream aims to provide effective risk mitigation instruments with the creation of a Co-Guarantee Platform, on which the AfDB, development finance institutions and guarantee providers will collectively deploy innovative instruments to de-risk private sector investments at scale.
Institutional Investors work stream focuses on institutional investors, both local and global, to determine their investment needs, facilitate tailored structures, showcase Africa’s investment successes, and enabling policies that would be attractive to this class of investors.
The Africa Investment Forum is an open digital platform, where the AfDB and its partners will onboard projects, find co-investors, and facilitate transactions.
Through this platform, we will actively engage the private sector and tackle transactions/projects that have the capacity of transforming the continent.
This means that the AfDB does not need to be involved in every transaction, but is the convener. However, all transactions on the platform need to be either private sector projects or PPPs.
The AIF as a market place will bring together the African Development Bank and other global multilateral financial institutions to de-risk investments at scale.
Facts about Africa
The document said that Africa has a population of 1.2 billion. Planning for the future, by 2050, just 32 years from now, the growing population will reach a whopping 2 billion.
In the process Africa will overtake the populations of China and India combined. That is a huge asset, which we must unlocked. By 2030, the combined consumer demand and business spending in Africa are expected to reach $6.7tn. Our task at the AfDB is to unlock all these potentials and ensure Egypt has an active role in tapping this market.
Africa’s infrastructure financing needs are estimated to be around $150-$170bn a year. However, total finance committed in 2016, reached less than half of that ($63bn), leaving a financing gap of about $100bn per year. As it has been for decades, national governments are still the main providers of infrastructure finance in Africa.
These are huge numbers, which with growing populations can only become larger. The fact is, there is no individual benefactor, nor government, sovereign wealth fund, or multilateral development bank, which can provide the resources to meet Africa’s critical economic development needs.
African tax revenue, Foreign Direct Investment, foreign aid and remittances are improving. Within Africa, assets under management of domestic institutional investors will rise to $1.8tn by 2020, tripling from $634bn in 2014. Most of this money isn’t invested in Africa.