African Development Bank (AfDB) Commits $20 Million Investment to Infrastructure-focused Private Equity Fund in Africa
The African Development Bank Group’s Board of Directors has granted approval for a $20 million equity investment in the Africa50 Infrastructure Acceleration Fund I. This move aims to support the fund’s objective of attracting private capital for infrastructure development throughout Africa.
The Africa50 Infrastructure Acceleration Fund I is a pan-African private equity fund focused on strategic infrastructure sectors such as power, energy, digital infrastructure, social infrastructure, transportation, logistics, water, and sanitation. It aims to mobilize up to $500 million for investment and value creation in these areas.
Africa50, the sponsor of the fund, is an infrastructure investment platform established by African governments and the African Development Bank. By bringing together infrastructure project development and financing, Africa50 has successfully executed various projects in the private sector, particularly those operating within the Public-Private Partnership (PPP) framework.
Given the limited fiscal capacity of African governments, which currently provide the majority of infrastructure funding in the continent, the mobilization of private capital plays a crucial role in closing the infrastructure financing gap in Africa.
The Africa50 Infrastructure Acceleration Fund I serves as a means to fulfill Africa50’s mandate of attracting private capital and stimulating increased investment in African infrastructure, with a particular focus on engaging private and institutional investors.
Abdu Mukhtar, the African Development Bank’s Director for the Industrial and Trade Development Department, emphasized that the Bank’s investment in the fund highlights its strategic nature. The Bank prioritizes investments in strategic infrastructure sectors that contribute to bridging Africa’s significant infrastructure financing gap, estimated to range between $68 billion and $108 billion annually.
“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 said.
In response to the approval, Wale Shonibare, the African Development Bank’s Director for Energy Financial Solutions, Policy and Regulations, expressed that the Bank’s endorsement of the Africa50 Infrastructure Acceleration Fund I is in line with its High Five objectives.
“It also strengthens the Bank’s already existing partnerships with the Africa50 Group on initiatives such as the African Sovereign Investors Forum and the Alliance for Green Infrastructure in Africa,” Shonibare added.
Alain Ebobissé, CEO of the Africa50 Group, said: “We are highly appreciative of the African Development Bank’s support for the Africa50 Infrastructure Acceleration Fund I. We look forward to continuing to work collaboratively with the African Development Bank and other investors to make a meaningful contribution to improving the infrastructure landscape on the continent.”
The Africa50 Infrastructure Acceleration Fund I aims to utilize private capital for investing in infrastructure projects. By doing so, it can have several positive impacts, such as job creation, improved access to healthcare and education through digital technologies, increased financial services and inclusion through fintech investments, and mitigating the effects of climate change. The fund is estimated to generate 3,278 full-time equivalent jobs between 2023 and 2035, including 1,676 jobs specifically for women. Moreover, it is expected to facilitate regional integration by enhancing transportation and logistics infrastructure, leading to higher levels of trade within and between African regions.
To address the infrastructure financing gap in Africa, the African Development Bank and its partners will continue to offer growth capital and infrastructure equity, supporting the urgent need to attract private sector funding.
