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Africa Finance Corporation (AFC) today reached an important milestone by launching a project development facility (the Facility) with the Dutch Development Bank – The Nederlandse Financierings-Maatschappij voor Ontwikkelings Landen N.V (FMO).  The Facility will make early stage investments in projects under development, pre-financial close, in the infrastructure sector across sub-Saharan Africa.  
 
Improved governance and macroeconomic conditions have not increased Africa’s share of global private infrastructure investment, despite the substantial and growing demand for infrastructure. Few  bankable infrastructure projects have closed in Africa in recent years, principally due to a lack of early stage development risk capital and the expertise to take such projects to financial close.  AFC is an African-led multilateral financial institution, established in 2007, whose mission is to improve African economies by proactively developing and financing infrastructure, industrial and financial assets.  In respect of early stage projects, AFC was established to help address two major gaps in the development and financing of infrastructure projects in Africa:- the lack of availability of early stage risk capital; and the lack of adequate project development and project structuring capacity to drive projects from vision to bankability and delivery.  AFC thus offers a unique value proposition by providing early stage risk capital and project development  advisory services, in order to increase the pipeline of bankable and well structured infrastructure projects in Africa, in addition to its more usual debt, equity and advisory offerings.
 
Currently in its sixth year of operation, AFC is playing a major role in bridging the Continent’s critical infrastructure investment gap by undertaking the leading role in a number of projects under development.  In Ghana, AFC is working with local and international partners to develop a 340MW combined cycle thermal independent power project.  The project is at an advanced stage of development and financial close is expected by mid-2013, with commercial operations expected to commence in 2016.  In Cape Verde, AFC is the largest equity investor in a USD90 million, 26MW wind farm  - Cabeolica - the first commercial wind farm public private partnership (PPP) in Africa.  The project, now fully operational, comprised the development, construction, and operation, of the facility.  It now provides approximately 25% of the Island State's power in an economic, environmentally safe and sustainable manner.
 
The USD15 million Facility will fund early-stage equity investments in projects under development by AFC,  and third party developers, including those referred to the Facility by FMO. The Facility will be managed by AFC and will typically fund technical advisory services and third party expenses. These include:- feasibility  assessments and market studies, environmental reviews, financial modeling services, technical design, and legal services.  The geographical focus of the Facility is sub-Saharan Africa, excluding South Africa and its sector focus is:- power, transportation, oil and gas infrastructure, agribusiness and social infrastructure.
 
FMO is the Netherlands  development bank, established in 1970, with a footprint in key emerging markets.  At the launch ceremony in the Hague, Jurgen Rigterink, Chief Investment Officer, FMO, remarked ”the need for financing early stage risk in emerging markets can only be effectively addressed and fulfilled when institutions form strategic partnerships.   FMO is delighted to partner with AFC, which is uniquely placed to manage the facility given its local presence in the region, its extensive track record and proven expertise in project development.  FMO believes that this Facility will assist in bringing key infrastructure  projects to market, thereby creating development impact and reinforcing AFC's and FMO’s role  as  leading  private sector investors in Africa."
 
Commenting on AFC’s long term project development strategy, Andrew Alli, President & CEO, AFC said “AFC offers a unique value proposition by providing early stage risk capital and advisory services to fast track infrastructure projects under development. Financial institutions need to form strategic partnerships in order to manage the risks involved in long term project development financing.   Discussions initiated in 2008 with FMO, one of the leading DFIs active in Africa, which is fully committed to the continent's economic development, have culminated in this shared Facility, with a pipeline of projects ready for execution immediately.  We are glad to be working with an institution that has similar objectives and risk appetites to AFC. This collaboration demonstrates the ability to forge strategic partnerships to drive economic transformation in  Africa”.