Africa Has Investment Potentials -Says IFC

The International Finance Corporation (IFC) has said Africa remains a region with enormous potential for private investors, despite economic headwinds and reduced liquidity that are creating challenges in managing risks and mobilizing partners around investments.

This was contained in a report released on Wednesday at the Africa CEOs Forum held in Abidjan. IFC, therefore, infers that even in difficult economic and risk environments, methods of financing which better mitigate risk can be more widely adopted to fund successful investments on a larger scale in Africa.

The 25 page report, titled: “New Horizons in African Finance, Reducing Risk and Mobilizing Financing on a New Scale,” was jointly launched by Jindong Hua -Vice President (VP) of IFC and Amir Ben Yahmed, Chief Executive Officer of Jeune Afrique and also founder of Africa CEOs Forum.

Mr. Jindong Hua elaborated on how companies and investors can invest on an increasing scale by adapting and tapping into enduring trends of rapid urbanization, increasing stability in a young and growing population, expanding internet connectivity, rising incomes and shifting consumption patterns continue to create an abundance of commercial opportunities across the continent.

He, however, said without vibrant and economic partnerships, growth cannot be achieved hence there is the need to build shared prosperity. Jingdong Hua, who doubles as the Treasurer of IFC, further said projects highlighted in the report demonstrate how innovative structuring and approaches can mitigate risks and crowd in institutional investors to allow for a higher probability of investment success.

Hammering on the contents of the report, Mr. Jingdong Hua said Africa is a region with enormous potential for private investors, yet its declining commodity prices, depreciating currencies and slowing global growth have increased uncertainty on the continent and sharply reduced liquidity that companies used to expand activities in recent years.

Continuing, he added that economies face significant challenges to diversify and export wider range of goods and services, yet there are opportunities which can be explored. The VP of IFC assured that though there is a global economic turmoil, all hope is not lost since companies looking to seize significant opportunities in Africa can benefit from additional sources of financing, as well as tools that crowd in more private sector participants and mitigate risk, spreading it among different investor classes and over longer time frames.

According to him, companies can make use of tools such as blended finance, co-financing, local debt and equity instruments stressing private equity and public-private partnerships are currently available for investors to take advantage to address risks associated with low-income and fragile states.

The Founder of Africa CEOs Forum, Amir Ben Yahmed, on his part said the annual gathering of business and government leaders from around Africa is demonstrating the continued interest in private investment on this continent. Investors are looking for new approaches for dealing with changing market conditions and this report offers ideas and solutions for investors to consider and act upon, he noted.

He mentioned some of the successful recently financed projects in Africa, with details of project structures and risk mitigation tools highlighted in the report.  The Azito 3 power project in Cote d”Ivoire, an Ecobank Transnational SME lending program in conflict-affected West Africa and fragile states, a Cargill-SIB partnership to support agriculture coops, also in Cote D'lvoire.

Also, a local currency bond issued by Bayport Financial Services in Zambia Bridge International Academies funding for expansion in Kenya and other Africa countries and Africa Improve Food Holding's nutritious food production project in Rwanda, which is a large regional private equity fund raised by Helios Investment Partners and a restructuring and privatization of Eleme Petrochemicals in Nigeria.

By Maame Agyeiwaa Agyei ([email protected])