US$500 million equity for agric investment

DOREEN NAWA

The 2019 Africa Investment Forum has seen a US$500 million equity closed for the Africa Infrastructure Investment Fund to speed up investments in agriculture.

Another landmark is the financial close for the Africa Guarantee Fund US$175 Equity transaction to support Small and Medium Size Enterprises, and US$350 million for South Africa’s beef agro-processing project.

The 2019 Africa Investment Forum 

opened on Monday in Johannesburg, South Africa living up to its promise to move from commitment to action.

The opening ceremony attended by President Cyril Ramaphosa of South Africa; President Nana Akufo Addo of Ghana; President Paul Kagame of Rwanda; and Prime Minister of Mozambique Agostinho do Rosario.

In an opening address as host country, President Ramaphosa urged investors to move beyond pledges.

“The time is now to move with speed to ensure that we unlock our potential as Africa. Indeed our continent is ripe for investments, but more importantly, it is also brimming with enormous 

profitable opportunities,”  President Ramaphosa said.

The Africa Investment Forum is an innovative, multi-stakeholder transactional marketplace 

conceived by the African Development Bank, aimed at raising capital, advancing projects to the bankable stage, and accelerating financial closure of deals.

“As the investor community, your presence here shows your unwavering will to help us and support us to succeed. I invite you, therefore, to join us as we pass the flickering torch of 

progress across every border of this great continent until the light of development and economic prosperity illuminates every African village, every African town, every African city, in every African household,” he said.

The inaugural Africa Investment Forum secured investment interests for deals valued at US$38.7 billion in less than 72 hours. 

“A lot of progress has been made on these investment interests, with a highly dedicated team of partners working around the clock to accelerate financial 

closure for transactions,” African Development Bank President Akinwuni Adesina said.

Another transaction tabled last year – a US$600 million transaction for COCOBOD to help improve processing and value addition for cocoa - has also reached financial close, and will be signed during this edition of the Forum. 

Similarly, South Africa’s US$350 beef agro-processing project has reached financial close.

“Promise made, promise kept,” Dr Adesina said. 

He noted that Mara Phones Ashish Takkhar made a commitment during the 2018 Forum. 

“In 2019, he delivered. It is a new, more confident Africa. A continent now aware of its place in the world and determined to be a global investment haven. And Africa is harnessing investors’ interests and investments. Welcome to the Africa Investment Forum, the place to be for investors,” Dr Adesina said.

AfDB increases capital to US$208 billion

Adesina during the board meeting

By DOREEN NAWA

THE African Development Bank (AfDB) has increased the bank’s capital by 125 percent to US$208 billion, an increase of US$115 billion, the Bank’s President Akinwumi Adesina announced on October 31, 2019 after a meeting of the board in Abidjan, Ivory Coast.
During the meeting, the shareholders of the pan-African financial institution agreed to double the African Development Bank’s authorized capital to $208 billion.
And after the tough negotiations, Dr Adesina told journalists that the "historic decision" will allow the African Development Bank to meet its mandate.
“This is a joyful day for Africa, a historic day, this will give us greater stability for the future,” says Dr Adesina.
The capital increment, the biggest throughout the entire existence of the African Development Bank since its foundation in 1964, is a striking demonstration of certainty by investors.
With this increment, the capital of the Bank will dramatically increase from US$93 billion to US$208 billion. This will further strengthen the Bank’s initiative on advancing financial development for the continent.
The increase in capital guarantees that the Bank will maintain its sterling AAA rating, all steady, from the top rating organizations.
The African Development Bank launched solicitation for a general capital increment two years ago, to hasten the achievement of its High 5 developmental strategies, the sustainable developmental goals and the African Union’s Agenda 2063.
“This intermediate scenario allows the AfDB to continue its loan growth focused on its High Fives priorities while maintaining robust capital adequacy metrics that support its credit profile,” says David Rogovic, a Vice President – Senior Analyst in Moody’s Sovereign Risk Group.
The African Development Bank was established to foster sustainable economic development and social progress in its member-states, thus contributing to poverty reduction, has 53 African countries as well as 26 non-African states as members.
The Bank carries out the mission by mobilizing and allocating resources for investment in member-countries and providing policy advice and technical assistance to support development efforts.
Three scenarios had been discussed over the past two years for the African Development Bank’s capital increase: increases of 100 percent, 150 percent and 200 percent.
Dr Adesina’s team, supported by several African shareholders, advocated this third option, arguing that it was essential for the Bank’s “High 5” plan to continue (enlighten, feed, industrialize, integrate Africa and improve people’s quality of life).
Non-regional shareholders have long favoured a more moderate enhancement, sometimes with reservations about the effectiveness of the bank’s disbursements and operations.
These foreign shareholders who include United States, France, England, etc represent 41.1 percent of the Bank’s shareholding.
They are the most highly rated shareholders and those whose equity participation – and the implicit guarantee that they will come to the bank’s rescue in the event of a crisis – is the most reassuring for AfDB lenders.
During Dr Adesina’s presidency, at the helm since September 2015, the AfDB significantly increased its lending, in line with the Nigerian leader’s ambitious programme. The bank’s outstanding loans increased from US$ 17.83 billion in 2015 to US$ 26.3 billion at the end of 2018, nearly 80 percent of which was made up of sovereign loans. A ramp-up supported mainly by debt, whose stock increased from US$22.8 billion in 2015 to US$33.365 billion last year.