AFC Capital Partners eyes new sources of capital in Hong Kong

Africa stands on the brink of an economic transformation, thanks to a young population and an abundant supply of the natural resources and critical minerals that the world needs to decarbonise.

Elie Aloko, Vice President, Business Development at AFC Capital Partners (ACP), is engaging investors around the world – from Asia, in particular – to turn this promise into reality. 

ACP is the asset management arm of Africa Finance Corporation (AFC), an investment-grade multilateral finance organisation established in 2007 to accelerate industrial and infrastructure development in Africa.

To date, AFC has invested over US$13.5 billion across 36 African countries.

“We want to see more investment coming from Asia, to develop infrastructure and set up productive industries in Africa,” Mr Aloko said, speaking to Hong Kong Means Business at the recent Belt and Road Summit in Hong Kong.

“It’s no longer a story where Africa is a solution to the world by providing the natural resources, but how Africa can be part of that solution with globally competitive industries, creating value through local manufacturing and processing,” he added. 

ACP was established three years ago with a mandate to manage capital from African and overseas institutional investors – such as pension funds, insurance companies and sovereign wealth funds – to help diversify AFC’s sources of funding. 

These investors tend to be unaware of the opportunities that Africa offers.

“The Belt and Road Summit is a great platform to engage with professional institutional investors, and tell them what is happening in Africa,” Mr Aloko said.

“Whether we like it or not, Asian private and institutional capital has been remote from Africa. We don’t see the traction we want to see.”

Mr Aloko took to the stage at the Belt and Road Summit in Hong Kong to introduce the Infrastructure Climate Resilient Fund (ICRF), which aims to mobilise and deploy US$1 billion in Africa.

The world’s largest multilateral climate fund, the UN Green Climate Fund, has already committed US$240 million to the ICRF. 

“We see ourselves as an investors’ gateway to Africa,” Mr. Aloko said. “Our role in the coming years will be to mobilise large pools of capital from all over the world, including Asia, to invest in bankable infrastructure and industrial projects.”

In April, AFC published its first State of Africa’s Infrastructure Report, a new annual study that aims to quantify and prioritise infrastructure investment in Africa.

This report has already helped AFC map out strategic trade corridors and landmark projects that can fast-track sustainable growth in Africa.

Many investors from outside Africa have a high perceived risk on the continent, Mr Aloko said, pointing to a 2020 Moody’s study that showed lower default rates for infrastructure debt in Africa compared to other regions of the world, apart from the Middle East.

“There’s a strong bias in how Africa risk is perceived. We are not saying Africa is without risk, but the perception of risk is higher than what the actual numbers reveal.”

Original article published in https://hkmb.hktdc.com