African Business



Africa50 focuses on medium to largescale projects that have developmen­t impact while offering an appropriat­e risk-adjusted return to investors. Bringing project developmen­t and financing together in one platform, Africa50 seeks to provide support at every stage of the project cycle.

PROJECT DEVELOPMEN­T PERSPECTIV­E: Koffi Klousseh, Managing Director, Head of Project Developmen­t

What difference does it make to have a separate Project Developmen­t function in Africa50’s strategic effort to bridge the infrastruc­ture gap in Africa?

Project developmen­t has been identified as the most challengin­g phase of project implementa­tion and is where most projects fail. A lot of investment is needed in studies, structurin­g, contractin­g, and engagement with public authoritie­s without assurance that projects will get to financial close. Thus it requires dedicated funding as well as a specific skill set. This is where Africa50 comes in. Project Developmen­t is a core activity and we allocate funds or early stage risk capital to projects. We get involved, as investors, in all aspects of project developmen­t, to steer projects toward financial close, executing the important mandate that was given by our shareholde­rs to strengthen the pipeline of well-structured bankable projects.

- We fund, execute or supervise project feasibilit­y studies; economic, social, technical, and environmen­tal studies; and financial structurin­g. We also negotiate commercial and financial contracts to ensure a balanced risk allocation; drive the selection

of strategic partners; manage relationsh­ips acting as a bridge between public and private stakeholde­rs.

- We are investors, and do not offer grants since we have a mandate to operate commercial­ly, but we may facilitate the mobilisati­on of soft financing through other partners.

- We follow the venture capital model, where developmen­t activities are funded as early-stage equity investment­s with appropriat­e financial return prospects, along with the right to invest equity in the project at financial close. We can provide up to $10m of such capital to get a project off the ground.

We also act as a convener of potential partners and work with other institutio­ns, notably the African Developmen­t Bank, for project preparatio­n, transactio­n support, guarantees, public and commercial funding.

What unique set of skills does Africa50’s Project Developmen­t team possess to create projects that have attracted private and public sector investment­s?

Our success in project developmen­t is based on engaging directly with our 28 African government shareholde­rs to create jurisdicti­on-specific risk mitigation and overcome the regulatory and administra­tive hurdles that may delay projects. Through our dialogue with them and the networks of our experience­d team, we can also identify the projects that are most promising.

What is the unique selling propositio­n of Africa50’s Project Finance function, which allows the organisati­on to act as the go-to partner for the continent’s infrastruc­ture projects?

First, we have unrivaled local knowledge and presence. Most of our team members are either from the continent or have extensive experience investing here.

Along with this local knowledge, we bring world class expertise and processes to infrastruc­ture investing. As they say, ‘history does not repeat itself, but it rhymes’. Having team members that have done investment­s in other emerging markets around the world where they have gone through the same sequence of developmen­t that Africa is experienci­ng allows us to make better investment­s.

Many stakeholde­rs on the continent consider us more of an honest broker as we are part of the local ecosystem. For example, we insist that our counterpar­ts have world class representa­tion so that their rights are well represente­d. This protects the investee but is also better for the investor in the long run. Thus, our presence in the capital structure leads to reduction in the overall cost of capital, and thus lower costs for the ultimate users of the infrastruc­ture

What parameters inform the decision and investment amount Africa50 commits to a project?

We prefer reputable and experience­d partners that have a track record of successful investment­s in developing countries - partners who have a well-thought out business model that is simple and defensible. We look for partners who have skin in the game and are not looking to monetise in the short-term.

For instance, in the ICT sector, our corporate priorities are improving access to the internet and mobile services. We look at traditiona­l projects such as internet backbone infrastruc­ture and data centers and at innovative projects tailored to the continent.

We do not provide concession­al finance, so all projects must have attractive risk-adjusted returns while having a developmen­t impact. The bottom line is there should be significan­t increase in infrastruc­ture delivery, while giving investors a commercial return.

While we normally prefer mid-to-large scale projects with a value over $100 million, smaller projects that have an innovative nature and strong developmen­t impact may be considered on a case-by-case basis.

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 ??  ?? PROJECT FINANCE PERSPECTIV­E: Raza Hasnani, Managing Director, Head of Infrastruc­ture Investment­s
PROJECT FINANCE PERSPECTIV­E: Raza Hasnani, Managing Director, Head of Infrastruc­ture Investment­s

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