AfDB invests USD 18 million to help fill infrastructure finance gap in Africa

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The Board of Directors of the African Development Bank (AfDB) has approved a USD 18 million private equity investment in infrastructure in sub-Saharan Africa.

The recipient of the investment is the InfraCo Sub-Saharan Infrastructure Fund (ISSIF), aiming at target capitalization of USD 200 million of equity with a first closing of USD 100 million expected third quarter 2012 to participate in greenfield and brownfield infrastructure projects. The ISSIF will catalyze additional funds for infrastructure projects, which will create employment and bring essential skills and technical knowledge to sub-Saharan Africa.

Infrastructure requirements in the sub-Saharan market are estimated at USD 94 billion annually over the next decade. This considerable deficit severely impedes Africa’s economic development. The power and transport sectors are especially lacking in investment. Population growth and increasing urbanization has left many countries with a power shortage. The lack of regional transport infrastructure has resulted in vastly greater import/export and transport costs in Africa than in other countries. African governments, traditionally the main investors in basic infrastructure, would greatly benefit from private sector investments to fill the gap.

Hence, the ISSIF represents a key alternative for  private-led financing for the infrastructure sector in Africa.  The ISSIF is sponsored by InfraCo Limited, a donor-financed fund launched by the Private Infrastructure Development Group and EleQtra LP, a group of companies specializing in the development, financing and ownership of greenfield infrastructure projects. The ISSIF will provide scarce equity capital for infrastructure projects, create jobs and enhance the transfer of knowledge in Africa. These infrastructure investments are crucial to release constraints on long term sustainable growth and private sector development

Mrs Tas Neside Anvaripour, AfDB’s manager of the infrastructure finance division said: “Buttress by a strong pipeline due to Infraco’s role as a project developer, ISSIF is expected to have immediate access to quality projects and help them to get to bankability stage”.

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