Changing the Game for African Infrastructure. Africa50 Overview March 2017

Transcription

1 Changing the Game for African Infrastructure Africa50 Overview March 2017

2 Africa50 s mission An innova(ve instrument for transforma(onal change in infrastructure development and financing in Africa 2

3 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. 3

4 Africa50 has been successfully established African states IFIs, Public Financial Ins<tu<ons Private investors Incorporated in Casablanca Legally and financially independent Two separate companies: Project Development and Project Finance Three classes of investors: Africa50 - Project Development Early stage risk capital funding Project Company Investment in bankable projects Africa50 Project Finance Project Company o African states o Interna<onal financial ins<tu<ons o Pension funds, sovereign wealth funds, and private sector en<<es Target capital: $3 billion 4

5 Africa50 has reached a milestone and fundraising con=nues ~$2bn Target $3bn $830m ~$170 m Fundraising stage Investors August 2016 End of 2016/ AfDB, Benin, Burkina Faso, Cameroon, Congo, Côte d Ivoire, Djibou<, Egypt, Gabon, The Gambia, Ghana, Kenya, Madagascar, Malawi, Mali, Mauritania, Morocco, Niger, Nigeria, Senegal, Sierra Leone, Sudan, Togo, Tunisia, Bank Al Maghrib, BCEAO Early 2017 Other African states, central banks, DFIs Final close African states, Central banks, DFIS, Private investors (sovereign wealth funds, insurance companies, pension funds etc.) 5

6 African infrastructure suffers from a large financing gap Project development financing gap Annual infrastructure financing gap $6.5 bn $130 bn $50bn Addi(onal investment needed $2.5 bn Addi(onal funding needed $80 bn $4.0 bn Average annual investment need ( ) Current investment (2015) Average annual project development funding need ( ) Current project development spending (2015) Source: ICA, McKinsey Lions on the move (2016), Africa50 es(mates 6

7 Barriers to bridging the infrastructure financing gap 1 Limited public resources Enabling Limited number of Limited government environment/ early risk-takers and capacity to regulatory credible private implement projects constraints players Budgetary constraints and inefficient use of resources limit the number of projects the public sector can fund Not enough wellprepared projects are ready for financing and implementation Slow progress in establishing enabling environments conducive to PPPs Early-stage investors and strong private sponsors are wary of Africa due to a perception of high risk Public sector Private sector Source: AfDB 7

8 Africa50 as a bridge between the public and private sectors Leverage government and AfDB ownership to support investees Become a leading African infrastructure investor Substan=al government ownership combined with private sector management o Construc<ve rela<onships with government shareholders o Clear mandate to a;ract private investors by genera<ng market based returns on equity Strong sponsorship from the AfDB Support from other development banks Improve infrastructure in Africa by developing bankable projects and catalyzing investments into shareholder countries Leverage public funds to raise private capital from long term ins<tu<onal investors in Africa and elsewhere Operate commercially with an appropriate financial return while promo<ng economic development 8

9 Africa50 s compara=ve advantage Integrated approach A one stop-shop for all project stages, including early stage project development Scalability An investment plaporm designed to grow over (me to support increasing financing needs Speed A private sector approach to the processing of transac(ons Flexibility A nimble organiza<on able to adapt to public and private sponsor needs 9

10 Africa50 s ability to leverage its investments Project development Assuming a 30% Africa50 share of project development cost (illustra(on not to scale) Project financing Assuming a 30% Africa50 share of equity (illustra(on not to scale) $4.5m Africa50 project development investment $27m Africa50 equity investment $15m Total project development investment $90m Total equity investment at financial close $90m Total equity investment $300m x65 mul'plier Total project costs at financial close $300m x11 mul'plier Total project costs 10

11 Africa 50 s target sectors and investment criteria Target Sectors Sectors o Priority: Power (genera<on, transmission, distribu<on and distributed power); transport (airports, ports, roads, logis<cs) o Other: ITC, water and sanita<on Instruments o Early stage risk capital to develop projects o Project development support to the government and private investors o Equity and quasi-equity in bankable projects Selec=on criteria Only public-private partnerships and private projects with good cash flow predictability Strong sponsor with solid technical and financial track record Adequate returns commensurate with the project risk profile Significant development impact 11

12 Nova Sco=a Solar Plant in Nigeria A Joint Development Agreement with Scatec Solar, Norfund and Africa50, for development of a 100MW DC 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 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. 12