Africa Finance Corporation secures $250m capital loan from US development bank

The Africa Finance Corporation (AFC), the leading infrastructure solutions provider in Africa, has announced that it has successfully secured a…

The Africa Finance Corporation (AFC), the leading infrastructure solutions provider in Africa, has announced that it has successfully secured a $250 million tier-2 capital loan from the U.S. International Development Finance Corporation (DFC).Established in December 2019, the DFC is the United States Government’s development bank established with a lending capacity of up to $60 billion to provide financing for solutions to some of the most critical challenges facing the developing world. The DFC expanded and modernized the tools of the Overseas Private Investment Corporation (OPIC).

A statement by the AFC on Tuesday in Lagos said that the facility to AFC, which consists of a $250 million tier-2 capital loan, would strengthen AFC’s investment capacity by enabling it to provide competitive financing solutions for closing Africa’s infrastructure deficit as well as complementing AFC’s strategy of diversifying its investor base.

Commenting on the announcement, the President and CEO of Africa Finance Corporation, Samaila Zubairu, said: “Africa and the United States have enjoyed a longstanding partnership spanning several decades. Indeed, AFC has partnered with the US on several infrastructure initiatives, including the Power Africa initiative, and regularly receives investments from US-based investors in its Eurobond issuances.

“This announcement therefore marks a natural evolution as the US Government seeks to play a greater role in Africa’s development by establishing a dedicated DFI. Crucially, this funding will also ensure the Corporation is able to continue fulfilling its objectives in the wake of the ongoing COVID-19 pandemic, which has placed a greater responsibility on development finance institutions in helping to drive a sustainable recovery across Africa.”

The statement added that the CEO of DFC, Adam Boehler, also stated that “DFC is proud to expand our relationship with a key infrastructure investor in Africa. This financing advances DFC’s strong commitment to Africa by supporting investment in the modern infrastructure that is essential to economic growth and expanded connectivity with the world.”

The AFC, an investment grade multilateral finance institution, was established in 2007 with an equity capital base of $1.1 billion, to be the catalyst for private sector-led infrastructure investment across Africa. With a current balance sheet of approximately $6.6 billion, AFC is the second highest investment grade rated multilateral financial institution in Africa with an A3/P2 (negative outlook) rating from Moody’s Investors Service.

AFC successfully raised $700 million in 2020, $1,150 billion ($650 million and $500 million) in 2019, $500 million in 2017 and $750 million in 2015 through Eurobond issuances; out of its Board-approved $5 Billion Global Medium-Term Note (MTN) Programme. All Eurobond issues were oversubscribed and attracted investors from Asia, Europe and the USA.