Un­lock­ing growth

The fund is in­vested in en­ergy and rail, the two sec­tors that will drive eco­nomic growth

Financial Mail - - CORPORATE REPORT -

The US$435M Pan-african De­vel­op­ment Fund (PAIDF) 2 learnt some valu­able lessons from the pioneer PAIDF 1 fund, and promptly put these into prac­tice.

For ex­am­ple, no more than 10% of the fund may be in­vested in a sin­gle project. The fund is fur­ther lim­ited to 20% per coun­try, and 40% per sec­tor.

“This was a pol­icy we im­ple­mented as a re­sult of lessons we learnt on the PAIDF 1 fund, to re­duce un­due con­cen­tra­tion risk” says Emile du Toit, head of PAIDF 2. “We are now fo­cused more on prop­erly al­lo­cat­ing or mit­i­gat­ing risks, such as mar­ket, po­lit­i­cal, op­er­a­tional and cur­rency risks.”

Two projects in PAIDF 1 per­formed well be­low ex­pec­ta­tions: the Sea Wolf off­shore oil rig busi­ness in Nige­ria (which failed due to overgear­ing and an ex­po­sure to a fall­ing oil price), and the Yu telecoms busi­ness in Kenya (which was ex­ited af­ter their In­dian-based op­er­a­tional part­ner pulled out of the telecoms sec­tor).

Harith CEO Tshepo Mahloele keeps a Yu T-shirt on dis­play in his of­fice as a re­minder of what mis­takes to avoid. “We were en­ter­ing a fairly com­pet­i­tive mar­ket against in­cum­bent op­er­a­tors in Kenya, and we were over­ex­posed to mar­ket risk. This is not some­thing that we want to re­peat,” says Mahloele.

Of the $435m raised in PAIDF 2, roughly $100m has been in­vested in four projects: three of them in the en­ergy sec­tor (see page 8) and one in rail. The Amandi Power project will add 190 MW of ca­pac­ity to the Ghana na­tional grid, suf­fi­cient to power 120,000 homes.

The plant has been de­signed to switch be­tween heavy fu­els and gas, which would al­low it to har­ness the coun­try’s large nat­u­ral gas fields when these be­come com­mer­cially avail­able. Amandi Power is one of two in­de­pen­dent power pro­duc­ers (IPPS) li­censed by the Ghana­ian gov­ern­ment, the other be­ing Cen­power Gen­er­a­tion, cur­rently con­struct­ing a 350 MW light crude oil and gas-fired, com­bined cy­cle power plant at the port of Tema, near the cap­i­tal Ac­cra.

African Fi­nance Corp is a ma­jor share­holder in Cen­power, and has agreed to pool its power as­sets with Harith un­der Project Edi­son, creat­ing an African power be­he­moth with a com­bined gen­er­at­ing ca­pac­ity of 1,575 MW sup­ply­ing power to more than 30m peo­ple in 10 coun­tries. Even more sub­stan­tial

Emile du Toit: Fo­cus on mit­i­gat­ing risk

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