The African Development Bank Group’s Board of Directors has approved a $20 million equity investment to mobilize private funding for infrastructure development across the continent.
The fund was a component of the Africa50 Infrastructure Acceleration Fund 1, according to a statement on the bank’s website.
A pan-African infrastructure private equity vehicle called the Africa50 Infrastructure Acceleration vehicle I is raising up to $500 million for investments.
The fund also aims to enable value creation in key sectors of strategic infrastructure, such as water and sanitation, power, energy, digital and social infrastructure, and transportation and logistics.
Africa50, a platform for government and bank infrastructure investments, is the fund’s sponsor.
“Africa50 brings infrastructure project development and financing under one roof,” the announcement states. It has a proven track record of doing projects under the public-private partnership model and investing in the private sector.
“The closing of the infrastructure financing gap in Africa depends on the mobilization of private capital.”This is especially true considering the constrained financial resources of African governments, which now serve as the continent’s main source of funding for infrastructure.
The fund was created as a vehicle to assist Africa50 in carrying out its goal of mobilizing private capital and expediting further investment flows into African infrastructure by focusing on private and institutional investors.
Abdu Mukhtar, Director of the AfDB’s Department of Industrial and Trade Development, claimed that the Bank’s involvement in the Fund highlighted its strategic role.
This, according to Mukhtar, demonstrates the Bank’s preference for investing in important infrastructure sectors that help close Africa’s infrastructure funding gap, which is thought to be between US$68 billion and US$108 billion per year.
“The Bank’s investment will support Africa50 to crowd-in private capital into African infrastructure through a private equity fund vehicle that private investors better understand and are more comfortable investing in,” Mukhtar continued.
Wale Shonibare, Director of Energy Financial Solutions, Policy, and Regulations at the AfDB, stated that the Bank’s support for the Africa50 Infrastructure Acceleration Fund I was consistent with its High Five goals.
Additionally, it deepens the Bank’s current collaborations with the Africa50 Group on projects like the African Sovereign Investors Forum and the Alliance for Green Infrastructure in Africa, according to Shonibare.
Alain Ebobissé, the chief executive of the Africa50 Group, said: “We are grateful for the AfDB’s support of the Africa50 Infrastructure Acceleration Fund I.
“We look forward to continue our cooperative relationship with the African Development Bank and other investors in order to significantly contribute to the development of the continent’s infrastructure.
“The Africa50 Infrastructure Acceleration Fund I can contribute to employment creation, improved healthcare access, and increased access to education through digital technologies by leveraging private funding for infrastructure construction.
Through investments in fintech, it will increase access to financial services, promote financial inclusion, and lessen the effects of climate change.
The fund is expected to generate 3,278 full-time equivalent employment between 2023 and 2035, including 1,676 positions for women, according to the chief executive.
He stated that the fund was anticipated to support regional integration by enhancing the transportation and logistics network, which may result in more inter- and intra-regional trade.
To support the urgent need for accelerated private sector funding and close the infrastructure financing gap in the continent, the AfDB and partners in the new fund will keep providing growth capital and infrastructure equity.