Africa Finance Corporation (AFC), Africa’s leading infrastructure solutions provider, reported record performance in its latest full-year earnings, driven by high impact investments and its strong credit profile.
Despite the pandemic and commodity-driven headwinds impacting AFC’s operating environment, the Corporation saw its annual profits increase by 26.6% to US$209.7 million in 2021, passing the US$200 million mark for the first time in its 15-year history, from US$165.5 million in 2020. Total assets rose by 16.3% to a record US$8.56 billion.
The dramatic increase can partly be attributed to investments in high impact assets in targeted sectors across Africa. The Corporation leveraged on its investment-grade credit rating and reputation to mobilise finance from international markets to help reduce Africa’s infrastructure deficit.
“This has been a year of solid progress in our core objectives of building value to Africa’s economies through instrumental infrastructure driving growth and job creation,” said Samaila Zubairu, President and CEO of AFC. “As the proverb goes, the best time to plant a tree was 20 years ago; the second-best time is today. We have proven over our 15-year history that you can successfully build a track record in infrastructure investment in Africa—and there has never been a better time to do so.”
AFC’s reach on the continent is now larger than it has ever been, with investments expanding to 35 countries and cumulative disbursements rising by 14% to US$9.9 billion (2020: US$8.7 billion). AFC increased Member States by five to 33, with the accession of Burkina Faso, Democratic Republic of Congo, Egypt, Morocco and Niger.
Among projects during 2021, AFC invested US$150 million for the development of cashew and cotton integrated industrial parks in Benin and Togo; provided a US$200 million corporate facility to BUA Industries Limited for the construction of a sugar refinery and ethanol plant in Nigeria; and invested US$175 million in the Baomahun Gold Project in Sierra Leone.
AFC Capital Partners (ACP) opened as an independent asset management business and launched its first product, the Infrastructure Climate Resilient Fund, with a target to raise US$500 million in 12 months and US$2 billion over the next three years for investment in robust energy, transport, buildings and other infrastructure.
The past year also saw AFC successfully launch two new products through the Syndications unit – the A/B Bond and Credit Insured B Loans – both of which will significantly deepen capacity to channel capital from global investment markets into the African continent.
The Corporation continued to diversify funding, with a 21.5% boost to borrowing year-on-year at US$6.19 billion (2020: US$5.09 billion). AFC successfully accessed the global debt markets by issuing US$1.8 billion in new loans and bonds during the year. This included:
- US$250 million tier-2 capital loan from the U.S. International Development Finance Corporation
- US$750 million Reg S / 144A seven-year Eurobond (the Notes due 2028 were priced at 175 bps over US Treasuries to yield 2.991%, and were 3.5 times oversubscribed)
- €100 million Euro-denominated ten-year loan facility by KfW – Ipex, a subsidiary of the KfW Group
- US$170 million 12-year syndicated multilateral loan facility led by Deutsche Investitions- und Entwicklungsgesellschaft (DEG)
- US$100 million ten-year loan facility from the Export-Import Bank of India
- US$400 million three-year club loan (2.5 times oversubscribed)
- US$194 million equivalent in five privately placed medium-term notes under the US$5 billion Global Medium-Term Note programme
Additionally, AFC raised new equity, increasing total equity by 7.8% to US$2.24 billion.
Moody’s Investor Service boosted its outlook on AFC’s credit ratings to “stable,” highlighting the resilience of the Corporation’s credit profile through the Covid-19 pandemic. The decision affirms the second-highest investment-grade ranking of any African institution, with a long-term issuer and senior unsecured rating of A3 and short-term issuer rating at P-2.
Africa’s strong recovery from the global pandemic, creation of the African Continental Free Trade Area, and AFC’s launch of new investment vehicles like the Infrastructure Climate Resilient Fund combine to provide a compelling opportunity for institutional and private sector investors to join the Corporation in projects that offer both transformative impact across the ESG spectrum and strong risk-adjusted returns, said CEO Zubairu.
“With this growth in trade, our demographic trends and rapid industrialisation, we are seeing exponential growth in opportunity for diversification and beneficiation across an array of countries and sectors,” said Zubairu. “As an investor, I cannot promote strongly enough the breadth of opportunities on offer alongside the right partners.”
- Total equity grew by 7.8% to US$2.24 billion total (2020: US$2.08 billion)
- Net interest income increased by 32% to US$220.7 million (2020: US$167.1 million)
- Operating income was up 18% to US$259.5 million (2020: US$219.3 million).
- Total comprehensive income increased by 20.2% to US$188.2 million in total comprehensive income (2020: US$156.5 million)
- Liquidity position down 21.2% to US$1.89 billion liquidity position (2020: US$2.4 billion).
- Interest income grew by 13% to US$384.3 million (2020: US$339.6 million).
- Net Interest Margin increased by 10% to 3.2% (2020: 2.9%)
Source: The Africa Finance Corporation (Published 1 April, 2022)