The Africa Finance Corporation is creating an independent asset management arm, AFC Capital Partners, which will debut with a $500million Infrastructure Climate Resilient Fund (ICRF).
AFC Capital Partners plans to raise $500m in the next year and $200billion over the next three years. They envisage the CIRF will act as a direct investor and co-investment fund to enhance the quality of African ports, roads, bridges, rail, telecommunications, clean energy and logistics.
Samaila Zubaira, Africa Finance Corporation (AFC) CEO and president said AFC Capital Partners will enhance their firepower to drive integrated infrastructure solutions that are core to Africa’s development post-COVID-19. “The Infrastructure Climate Resilient Fund will enable us to support climate adaptation as well as projects that reduce carbon emissions and catalyse our continent to build back better, with more climate-resilient and sustainable infrastructure.”
AFC Capital Partners will be led by Ayaan Zeinab Adams as CEO. The former leader of the private sector arm of the Green Climate Fund under the UN Framework Convention on Climate Change, as well as a form CIO and Senior manager of the World Bank Group’s IFC, Adams brings 27 years of experience in climate response and investment to her new role.
She played a key role in building the mandate of the Green Climate Fund Private Sector Facility and rapidly scaled its portfolio within three years to $21bllion invested across Africa, Asia-Pacific, Latin America and the Caribbean. She previously also served as UK-based CDC Group’s MD of Africa Funds.
Africa is in urgent need of infrastructure responsive to climate adaptation
Africa has contributed the least to climate change but is the continent most exposed because of housing, transport, industrial and energy structures unsuited to surviving storms, floods, droughts, wildfires and other hazards caused by extreme weather patterns.
The UN Office for Disaster Risk Reduction gauges that without urgent intervention, the cost of structural damage caused by natural disasters will increase to $415billion annually by 2030, from between $250-300bn right now.
Damage to rail tracks, roads, bridges, seaports and power grids will add to an infrastructure deficit currently sitting at $130-170bn a year. The UN Conference on Trade and Development estimates a total of $2,3trillion worth of infrastructure is needed across Africa.
“Significant financing is urgently required to build physical infrastructure that will survive the forces of climate change. The good news is that much of this investment is compatible with competitive returns for investors through leveraging the expertise, relationships and blended finance models that have been tried assessed for many years by Africa Finance Corporation.
The mandate of AFC Capital Partners is aligned to AFC’s in offering attractive investment opportunities to the global development finance and commercial investor community seeking long-term returns through structures that protect African built infrastructure from climate risks. The newly created fund, incorporated in Mauritius, will employ traditional project finance and private equity structures, supported by a blend of concessional finance, grants and ‘soft equity’.
“Our objective is to stay true to AFC’s track record, competency and investor interest without compromising on the ability to provide timely exits and a seamless entry by new investors on an arm’s length basis,” said Adams.