Financing in Sub-Saharan Africa
 

This lending source was established in 2002 and they currently have US Dollars 501 million in debt fund, which aims to address the lack of available long-term foreign current debt finance for infrastructure projects in sub-Saharan Africa. An additional US Dollars 365 million available in the form of committed funds with equity provided by certain European Governments, mezzanine and senior debt from several European financial institutions.

They provide financing in both, US Dollar and Euro, to private companies, or companies that will be soon privatized, for Greenfield projects or for refurbishment, expansion or upgrade of existing facilities.

While they lends on commercial basis, they aim to support projects that promote economic growth and reduce poverty, benefit broad-based population groups, address issues of equity and participation, and promote social, economic and cultural rights.

They invest in projects up to 15 years and their investment can range from a minimum of US Dollars 10 million or equivalent and up to a maximum of US Dollars 36 million or equivalent per project. All loans are provided without the need for political risk cover.

Funding can be provided for various sectors as follows:

  • Energy supply, including generation, transmission and distribution

  • Water/waste services

  • Telecommunications

  • Transportation

  • Gas transportation, distribution and storage

  • Mining, provided the financing is for related infrastructure services with access by third parties

  • Other activities that impact positively on the development of the relevant country’s basic infrastructure, including the manufacturing of components used in infrastructure such as cement and steel and infrastructure associated with agribusiness.

Funds can be available to support infrastructure projects developed by either majority private sector entities or majority public sector provided that the private sector is responsible for developing and managing the assets of the public sector entity on a risk sharing basis, including:

  • Private operating infrastructure companies

  • Special purpose vehicles or project companies

  • Privatized companies or companies that are about to be privatized and where the Government has contractually committed to such privatization

The lender’s main objective is to make a real and lasting impact on the development of sub-Saharan Africa’s infrastructure to facilitate economic growth and so, both directly and indirectly over time, contribute to the alleviation of poverty in the region. To be more specific, the lender’s objectives are:

  • To address the scarcity of long-term debt for significant private sector-based infrastructure development through the provision of long-term debt finances that can be tailored to suit the typically longer term nature of cash flow profiles arising in infrastructure.

  • To ensue as far as possible that all activity receiving support conforms to internationally acceptable environmental and social impact standards.

  • To be responsive to market needs by working with all participants such as host governments, private sector sponsors and non-governmental organizations, to create appropriate financing solutions to meet the challenges of private sector financing in the region, including where possible and appropriate the facilitation of local capital market involvement.

  • To operate on private sector commercial principles and so demonstrate the viability of long-term commercial lending into sub-Saharan Africa.

Types of Financing Offered

They offer several types of debt financing in the form of loans or guarantee instruments, but principally senior debt. Below is a list of the various type of financing they can offer:

Senior Debt Loans (US Dollars & EURO):

Senior loans can be provided up to a maximum amount of US Dollars 36 million or equivalent on a standalone basis or with one or more co-lenders, either through a predetermined “club” or in a “syndicated” transaction structured and negotiated by one or more lead arranger(s). They can consider both a lead role in such transactions or joining a club/syndicate arranged by other acceptable institutions.

Local Currency Senior Loans:

On case by case situation, they may offer a local currency loan to investee companies provided that the foreign exchange exposure can be suitably hedged or otherwise covered.

Mezzanine/Equity Related Products:

Subordinated loans or mezzanine finance may be offered to borrowers where such financing is required and provided that they can show sufficient robustness and stability of cash flow to support investment in such higher risk instruments. The term of such instruments will reflect the relevant risk profile.

Other Financing Forms:

Bridge financing can be offered on customary terms and on the basis that such financing will be converted into a term loan.

On limited basis, they can grant funds to help the development of costs of a project. Such costs could include feasibility studies, consultancy fees or costs associated with capacity building that could be incurred by either the developer or relevant government party that is sponsoring the project.

Countries Covered

Funds can be provided to the following countries:

Angola

Gabon

Nigeria

Benin

Gambia

Rwanda

Botswana

Ghana

Sao Tome

Burkina Faso

Guinea

Senegal

Burundi

Guinea Bissau

Seychelles

Cameroon

Ivory Coast

Sierra Leone

Cape Verde

Kenya

Somalia

Central African Republic

Lesotho

South Africa*

Chad

Liberia

Sudan

Comoros

Madagascar

Swaziland

Congo – Brazzaville

Malawi

Tanzania

Congo, Dem. Rep.

Mali

Togo

Djibouti

Mauritania

Uganda

Equatorial Guinea

Mozambique

Zambia

Eritrea

Namibia

Zimbabwe

Ethiopia

Niger

 

*All investments in South Africa are made on limited basis and that focus on the poorest regions.

Social and Environmental Impact

All projects to be considered must adhere to local and international environmental, social and health and safety standards.

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Samer Nassar & Associates