Changing the Game for African Infrastructure
Africa50 Overview March 2017 Africa50’s mission
An innova ve instrument for transforma onal change in infrastructure development and financing in Africa
2 Strategic Objec ves
§ Become the leading strategic investor in commercially viable and financially a rac ve private and PPP infrastructure projects in Africa
§ Increase the number of bankable private and PPP infrastructure projects in Africa
§ Raise significant capital from public (government and government related) and private sources, with private funds significantly exceeding public funds over me.
§ Tap long term savings from within and outside the con nent by crea ng an asset class a rac ve to ins tu on investors
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3 Africa50 has been successfully established
• Incorporated in Casablanca IFIs, Public African Private Financial states investors Ins tu ons • Legally and financially independent
• Two separate companies: Project Development and Project Finance
• Three classes of investors:
o African states Africa50 - Africa50 – 1 2 Project Project Development Finance o Interna onal financial ins tu ons Early stage Investment risk capital in bankable funding projects o Pension funds, sovereign wealth funds, and private Project Project sector en es Company Company • Target capital: $3 billion
4 Africa50 has reached a milestone and fundraising con nues
Target $3bn ~$2bn
$830m ~$170 m
Fundraising stage August 2016 End of 2016/ Final close Early 2017 Investors AfDB, Benin, Burkina Faso, Other African African states, Cameroon, Congo, Côte states, central Central banks, DFIS, d’Ivoire, Djibou , Egypt, banks, DFIs Private investors Gabon, The Gambia, (sovereign wealth Ghana, Kenya, funds, insurance Madagascar, Malawi, Mali, companies, pension Mauritania, Morocco, funds etc.) Niger, Nigeria, Senegal, Sierra Leone, Sudan, Togo, Tunisia, Bank Al Maghrib, BCEAO
5 African infrastructure suffers from a large financing gap
Project development financing gap
Annual infrastructure financing gap $6.5 bn $130 bn Addi onal Addi onal $2.5 bn funding $50bn investment needed needed
$80 bn $4.0 bn
Average annual Current investment need investment (2015) (2016 - 2025) Average annual Current project project development development funding need spending (2016 - 2025) (2015)
Source: ICA, McKinsey ‘Lions on the move (2016)’, Africa50 es mates 6 Barriers to bridging the infrastructure financing gap
1 2 3 4 Enabling Limited number of Limited government Limited public environment/ early risk-takers and capacity to resources regulatory credible private implement projects constraints players
Budgetary Not enough well- Slow progress in Early-stage constraints and prepared projects establishing investors and strong inefficient use of are ready for enabling private sponsors resources limit the financing and environments are wary of Africa number of projects implementation conducive to PPPs due to a perception the public sector of high risk can fund
Public sector Private sector
Source: AfDB 7 Africa50 as a bridge between the public and private sectors
Leverage government and AfDB Become a leading African ownership to support investees infrastructure investor
• Substan al government ownership • Improve infrastructure in Africa by combined with private sector developing bankable projects and management catalyzing investments into shareholder o Construc ve rela onships with countries government shareholders • Leverage public funds to raise private Clear mandate to a ract private o capital from long term ins tu onal investors by genera ng market based investors in Africa and elsewhere returns on equity
• Strong sponsorship from the AfDB • Operate commercially with an appropriate financial return while • Support from other development banks promo ng economic development
8 Africa50’s compara ve advantage
Integrated approach Scalability A one stop-shop for all project An investment pla orm designed to stages, including early stage grow over me to support project development increasing financing needs
Speed Flexibility A private sector approach A nimble organiza on able to to the processing of adapt to public and private transac ons sponsor needs
9 Africa50’s ability to leverage its investments
Project development Project financing
Assuming a 30% Africa50 share of project Assuming a 30% Africa50 share of equity development cost (illustra on not to scale) (illustra on not to scale)
Africa50 project $4.5m $27m Africa50 equity development investment investment
$15m Total project development investment
$90m Total equity investment Total equity investment $90m at financial close
Total project $300m Total project costs $300m costs at financial x65 mul plier close x11 mul plier
10 Africa 50’s target sectors and investment criteria
Target Sectors Selec on criteria
• Sectors • Only public-private o Priority: Power (genera on, partnerships and private transmission, distribu on and projects with good cash flow distributed power); transport predictability (airports, ports, roads, logis cs) o Other: ITC, water and sanita on • Strong sponsor with solid technical and financial track • Instruments record o Early stage risk capital to develop projects • Adequate returns o Project development support to commensurate with the the government and private project risk profile investors o Equity and quasi-equity in • Significant development bankable projects impact
11 Nova Sco a Solar Plant in Nigeria
• A Joint Development Agreement with Scatec Solar, Norfund and Africa50, for development of a 100MWDC solar power plant in Jigawa state, Nigeria. Total project cost will be about $150 million, with financial close expected in 2017 and opera ons in 2018.
• Africa 50’s role: project development and long-term equity partner (24.5%). Facilitate interac ons with Government en es and prospec ve lenders, par cularly AfDB. • Strong partners: Senior debt will be provided by OPIC, Islamic Development Bank, and AfDB. • Strong fundamentals: Reliable solar resources and direct access to the grid under a 20-year Power Purchase Agreement with Nigerian Bulk Electricity Trading. • Strong development impact: The plant will produce about 200 GWh of power per year, contribu ng to the state’s $2 billion development plan, and helping Nigeria meet its climate change commitments, with an es mated 120,000 tons of CO2 emissions avoided annually.
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