The African Finance Corporation (AFC), on Thursday, announced the launch of a US$2bn facility to support bank-driven economic recovery in Africa, and the resilience of its economics, in the wake of the global crises including the COVID-19 pandemic and more recently the Russia-Ukraine conflict.
The corporation said at the AFC Live infrastructure Solutions Summit that it is committed to funding up to 50% of the facility and mobilizing the rest through its network of international partners and investors.
The facility, dubbed “African Economic Resilience”, will be disbursed via loans from AFC to select commercial banks, regional development banks, and central banks in various African countries.
The institution will be provided with much-needed hard currency liquidity to finance trade and other economic activities in their various jurisdictions, enabling them to leverage AFC’s proven access to global funding to access financing at competitive rates.
Speaking on the rationale behind the launch, Head of Treasury and Financial Institutions, Banji Fehintola said “the COVID-19 pandemic set back Africa’s economic growth trajectory and further widened the trade financing gap.
“Before the continent could get over that, the Russia-Ukraine conflict has brought with it a new set of challenges, which have the same effect of negatively impacting growth prospects across the continent. As such, we are determined to play a leading role in shaping the continent’s recovery and resilience, not only though the work we do in bridging Africa’s infrastructure gap, but also through targeted interventions such as this $2bn COVID-19 economic resilience facility.”
Through this funding intervention, AFC said it will accelerate its developmental impact in Africa, driving the continent to a new phase of growth that is focused on maximum resource value capture and domestic job creation.
Over the last 15 years, AFC has built experience mobilizing global capital for critical infrastructure projects in Africa with several bond issuances in the last two years, including a 10-year US$500m Eurobond in 2019, a 5-year US$700m Eurobond in 2020 and a 7-year $750million Eurobond at its lowest yield in 2021 . Recently, an independent asset management arm, AFC Capital Partners was established with plans to raise US$2 billion to fund climate adaptation infrastructure projects in Africa. It is this same fund mobilization experience that AFC will leverage to support COVID-19 economic recovery in Africa through the Rebuilding Economic Resilience facility.