Finance

Africa Finance Corp. attracts fresh capital from Asia and the Middle East

Samaila Zubairu is President & CEO of the Lagos-based Africa Finance Corporation.

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The Africa Finance Corporation (AFC) has raised $400m in a new syndicated loan to support the development of infrastructure on the continent and aid in the post-pandemic recovery.

Strong interest from investors led to the offering being 2.5 times oversubscribed, leading to a total facility of $100m above the initial target. This is the AFC’s first three-year facility since 2018.

“The proceeds will facilitate upcoming infrastructure projects that address the continent’s developmental challenges,” the AFC said in a statement.

Moody’s recently improved its outlook for AFC’s investment grade credit ratings to ‘stable.’ Its senior unsecured ratings at A3 and short-term issuer ratings at P-2 are the second highest of any institution in Africa.

Key participating lenders as bookrunners and mandated lead arrangers include Absa Bank, Bank of China (London branch), First Abu Dhabi Bank PJSC, ICBC (London), Mashreq Bank PSC of Dubai, MUFG Bank of Japan, Nedbank (London branch), Rand Merchant Bank (a division of FirstRand Bank, London branch), Standard Chartered Bank and SMBC Bank International, acted as Bookrunners and Mandated Lead Arrangers.

On their side, the Korea Development Bank and Standard Bank of South Africa acted as Mandated Lead Arrangers, while MUFG Bank Ltd and ICBC (London) also acted as Facility Agent and Documentation Agent, respectively.

Last year, the AFC revealed plans to step up its infrastructure financing in Africa with a new asset management division, AFC Capital Partners. Its debut offering, the Infrastructure Climate Resilient Fund (ICRF) is planning to raise $500m this year and $2bn over the next three years.

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Lagos State issues pre-qualification notice for the concession of the Lagos Blue Line Rail Project

On Wednesday this week, the Lagos Metropolitan Area Transport Authority (LAMATA) issued a request for application for the pre-qualification of the concession of the Lagos Blue Line Rail Project, which will run from Marina to Okokomaiko. The line is part of the broader Lagos Rail Mass Transit (LRMT) network currently being developed under the Lagos Strategic Transport Master Plan. The development of the master plan was supported and funded by the World-Bank and notably identified 14 Bus Rapid Transit (BRT) corridors, six rail lines and one monorail. While Lagos started with the construction of the bus rapid transit corridors, two of which are already operational, the state is now building two rail lines, known as the Blue and Red ones. The Blue Line counts 13 stations and will run on a 27km East-West axis from Badagry to Marina on Lagos Island. The Red Line will run on a 37km North-South axis from Agbado to Marina and is under-construction after breaking ground in 2021. The Blue Line will be the first to be operational but the project has been split into two phases to ease its development. The first phase is a 12.5km stretch from Mile 2 to Marina that will start operating at the end of 2022 and will function as a proof-of-concept for Lagos’ future metro system. The second phase consists in doing the rail works on the remaining 14.5km stretch. It is for this second phase that the Lagos State Government is now seeking reputable and experienced railway developers, EPC contractors, rolling stock and equipment manufacturers, operators, and financiers. “These service providers will be expected to form Consortia comprising of all the required service providers, and should provide technical, operational and financial capabilities to enhance their qualification,” LAMATA said in its notice. Applications and expressions of interest must be submitted to KPMG by March 2nd, 2022.

Tanzania and Burundi want to boost trade with a new railway link

On Sunday, the East African nations of Tanzania and Burundi signed an agreement seeking to build a $900m railway that would connect them both and boost trade. The Memorandum of Understanding (MoU) signed in Kigoma paves the way for the construction of a 282km line from Uvinza in western Tanzania to Burundi’s capital Gitega. It was inked by both countries’ finance and transport ministers. The two governments will jointly seek financing for the railway, Tanzania Finance Minister Mwigulu Nchemba said. Tanzania is increasingly sourcing capital to expand its railway network and become a trade hub for the sub-region. Last December, it signed a $1.9bn contract with Turkish contractor Yapi Merkezi to build a 368km section of standard gauge railway. The project is part of a 1,219km SGR line that Tanzania is already building to link Dar es Salaam with the port city of Mwanza on the shores of Lake Victoria.