Background and Objectives
The African Financing Partnership (AFP) is a collaborative, co-financing platform amongst Development Finance Institutions (DFIs) active in private sector project financing in Africa. The AFP is a component of the AfDB's mission to help reduce poverty in Africa by mobilizing resources for private sector development on the continent. The objective of the AFP is to bring together DFI partners with a similar mission so that further results could be delivered through combined efforts.
The AFP is based on the partnership strategy set out in the Strategy Update for the Bank's Private Sector Operations, approved by the AfDB Board of Directors in January 2008. There is evident need for partnerships, including with external development finance institutions, to enhance the effectiveness and efficiency of financing in Africa.
An AFP MOU is being signed between the core group of eight DFIs called the AFP Promoting Partners. The MOU endorses improvement in efficiency across multilateral and bilateral financing institutions, achieving best practices, reducing cost and “doing more with less.” The partners include:
- Deutsche Investitions UND Entwicklungsgesellschaft MBH (DEG)
- Development Bank of Southern Africa Ltd. (DBSA)
- European Investment Bank (EIB)
- Industrial Development Corporation of South Africa Ltd. (IDC)
- International Finance Corporation (IFC)
- Nederlandse Financierings Maatschappij Voor Ontwikkelingslanden N.V. (FMO)
- Société de Promotion et de Participation pour la Coopération Economique S. A. (PROPARCO)
Following the signing of the MOU, the AFP would expand to include other DFIs and commercial financial institutions partners as AFP Participating Partners. The AFP legal models would range from pure cofinancing structures, through the quasi syndication phase of involving smaller DFIs and commercial partners along with syndication under a Bloan approach and to the potential establishment of AFP as a special purpose vehicle.
Areas of Focus / Sub-Sectors
The two main areas of focus are:
- Harmonization: creating common best practices and collaboration between DFIs operating in Africa;
- Additionality: using DFI capital to leverage private capital for catalyzing greater investments in development in Africa.
The three main sectors of operations under the AFP are:
- Infrastructure – Power, Transport, ICT and Water/Sanitation;
- Industries – Extractive Industries, Agribusiness and Healthcare; and
- Financial Institutions – African DFIs, Banks, Microfinance, Guarantees
The AFP aims at the efficient mobilization of resources for investment in project financing in Africa. The beneficiaries would include infrastructure and industrial related projects with large funding requirements. This would lead to the creation of jobs and socio-economic development on the continent.
Results and Milestones
In 2010, the AFP Secretariat managed to meet a number of key operational milestones including signing of the Memorandum of Understanding, finalizing advanced drafts of the Confidentiality Agreement and the Non Disclosure Agreement. The Secretariat also created a detailed pipeline of projects under the AFP's, enhanced collaboration. This instrument has the potential to mobilize debt and equity resources of up to US$ 25 billion. An AFP Priority Matrix was also developed, outlining the key focus sectors, exclusion policies and contact details at each of the partner DFIs.
Administration and Governance Structure
The AFP Secretariat is established at AfDB, in the Private Sector Department (OPSM). The AFP has a steering committee composed of the heads of strategic business or private sector departments for Africa at the respective AFP Promoting Partners. This AFP Committee meets at least twice a year, including at the Annual Meetings of the AfDB. AFP focal points at each DFI will participate in monthly conference calls on the AFP projects pipeline and other coordination matters.
Major Activities in 2011-2012 / Additional Resources Required
The AFP Framework Confidentiality Agreement will be signed in early 2011, with the finalization of the Operational Guidelines to follow. The AFP pipeline will be instrumental in identifying key projects to pilot the collaboration outlined in the operational guidelines. Experience developed from the collaborative efforts will serve to strengthen the partnership. Operationalizing the AFP will be the key priority for 2011/12.
The AFP Secretariat is creating an AFP website in collaboration with a website design firm. In addition to information about the AFP and its partners, a password protected area of the website would also serve as a data room for posting critical project documents by the lead AFP Partners. The website will be a key information portal for AFP activities and collaboration.
A number of events will also be organized to stimulate interest from the private sector on the work of the AFP, and also to mobilize and leverage private capital flows.
Experiences, Challenges, and Ways Forward
With eight anticipated promoting partners taking the lead in two to three AFP projects per year, the partnership is estimated to finance 10 to 20 projects in Africa, which could reach well above US$10 billion in total financing. This institutional coordination and facilitation necessitates an AFP Secretariat to ensure the strengthening of relationships and partnerships amongst the participating DFIs.
Technical Department and Task Manager
Antón LEIS GARCÍA, Coordinator, African Financing Partnership Secretariat
Tel: (216) 7110 2374
Partnerships and Cooperation Unit Focal Point
Belinda Chesire, Senior Cooperation Officer
Tel: (216) 7110 3611