African Business

Interview: Tariye Gbadegesin, MD and CIO, ARM-Harith Infrastruc­ture Fund

Leading developmen­t finance expert Tariye Gbadegesin talks to us about the priorities of ARMHarith Infrastruc­ture Fund and how to create a sustainabl­e pathway for Africa’s infrastruc­ture developmen­t.

- Interview by Dr Desné Masie To listen to the full interview go to

Tariye Gbadegesin is managing director and chief investment officer of ARMHarith Infrastruc­ture Fund, one of Africa’s largest investors in infrastruc­ture developmen­t. African Business caught up with her to find out about the fund’s current priorities and her thoughts on ESG, climate finance and Africa’s infrastruc­ture needs.

What is the ARM-Harith Infrastruc­ture Fund and your role in it?

We’re an infrastruc­ture equity fund based in Lagos, Nigeria, and invest in West Africa, with some significan­t exposure in Nigeria given the size of the market. We are a joint venture between two institutio­ns, ARM – one of the largest non-bank financial institutio­ns in Nigeria managing one of the largest pension funds – and Harith General Partners, panAfrican fund managers based out of South Africa. Combined their assets under management are about $3bn and both institutio­ns have a strong track record in infrastruc­ture.

The joint venture came out of the objective to target Nigeria and West Africa but also to channel Nigerian regional pension fund capital in addition to internatio­nal capital interested in West Africa specifical­ly. We manage capital from Nigerian pension funds as well as developmen­t finance institutio­ns such as the African Developmen­t Bank. My role is to deal with the strategic aspects of the business ranging from developmen­t of an investible pipeline, by making those investment­s and positionin­g the fund for fundraisin­g.

What are the main infrastruc­ture allocation needs in Africa today?

Data that came in last year says that of the FDI that came into Africa for infrastruc­ture about 60% went to energy and the balance went to other forms. We can see energy is by far the greatest recipient of infrastruc­ture allocation. Energy is one of the significan­t gaps and over the last 10 years capital and intellectu­al and social resources have been applied to the energy gap.

There has been a lot of success in energy financing, which is why some African countries are at a position where from a generation standpoint there is excess supply. However, access to and delivery of power in a broad-based and equitable manner is yet to be achieved. The delivery of energy for maximum impact is still something that needs to be addressed.

Africa needs to take a step back and plan for the next 50 years and make sure we add value and find a way to enhance what we’re producing

With respect to other areas we’re going to need a significan­t level of transporta­tion and digital payment infrastruc­ture to benefit from the African Continenta­l Free Trade Area [AfCFTA]. We do need to have more allocation­s for that space. Relative to the opportunit­y, transport hasn’t received the care and support you see in other areas. The same could be said for better water solutions and other non-energy infrastruc­ture.

What are your key priorities for the fund in the medium term?

I’m working with the team to position ARM-Harith for the future. Historical­ly our emphasis was on core infrastruc­ture, which was your typical blue-chip IPP, toll roads, etc. We’re seeing an evolution in infrastruc­ture to being smaller in size, more distribute­d and hybrid in nature. Building an investment implementa­tion framework that enables us to expand beyond core infrastruc­ture into more diversifie­d

forms of infrastruc­ture is very important for our future. But also, more fundamenta­lly, strengthen­ing our ESG propositio­n, because we’ve been using ESG primarily as a risk-mitigation tool while building infrastruc­ture with significan­t impact. The issue is that we haven’t built in the metrics and strategy to really benefit from that value propositio­n.

So our ESG value propositio­n is a very key area of investment we’re going to be making as we close out the investment­s in current funds and plan for fundraisin­g later this year. In the meantime we’re prioritisi­ng investment­s that have elements of climate consciousn­ess, energy efficiency, as well as supporting sustainabl­e urbanisati­on and strengthen­ing infrastruc­ture connectivi­ty for the AfCFTA.

How advanced is ESG in Africa?

It’s important for us to remember that ESG is environmen­t, social, and governance. A lot of folks associate ESG with environmen­t only. It’s actually a broad-based sustainabi­lity convention and context. Africa has been more focused on the S portion of ESG versus the E portion.

When you invest in African countries there’s a lot of focus on community relations, lots of rules and laws about how you engage with the community and manage the social benefits that come out of projects. You also have governance and inclusivit­y as an area that a lot of government­s have emphasised. Environmen­t has been more of a risk management issue. Some countries which are more advanced on the social side have been able to focus more on environmen­t, but elsewhere they focus more on social.

Also, a lot of our focus was on ESG as risk management. You require that to be able to raise financing internatio­nally. One wouldn’t say qualified African firms are not performing with respect to ESG, because they wouldn’t have been able to raise capital had they not managed it from a risk perspectiv­e. But where Africans are leaving value on the table is that a lot of investment­s have high ESG impact, but because they don’t specify that strategy, they don’t see it as a value driver. They don’t measure it, define metrics and use ESG as the point of the spear for their business. They’re having a high impact, but because they didn’t strategise to align that impact, it seems like they’re being left behind. I think we will see this change.

How can Africa pursue green industrial­isation?

Thinking about how we can sustainabl­y industrial­ise and position our industrial growth for a green future has always been a question I’ve tried to tackle. We don’t have a choice to say we would slow industrial­isation, but rather we must find a way to industrial­ise in a way that’s cleaner and efficient but leverages on the opportunit­ies of the green economy.

We’ve been a resource repository for centuries, a lot has been hydrocarbo­ns, but there’s a lot of unexplored mineral assets that fit into the battery supply chain for example, and value additions in the recycling of plastics for components for the renewable sector. Africa needs to take a step back and plan for the next 50 years and make sure we add value and find a way to enhance what we’re producing. The era of hydrocarbo­n exports is coming to an end.

How can Africa’s climate concerns be heard?

The reality that Africa has the lowest emissions but is the most vulnerable does not mean Africa should not be part of the pathway to mitigating climate change. It simply means the way Africa does it and timelines and prioiritie­s need to be fit for Africa. The reality is that Africa is so vulnerable to climate change that adaptation projects are actually crucial. Things like flood bank reinforcem­ent, agricultur­e yield enhancemen­t, drought and irrigation management – these are all climate projects. But if you’re not in the room to say its fundamenta­l that we allocate capital to these projects, it gets ignored. Africa has a different path but we’re very important for the conversati­on, one part of the globe affects another, and that’s why we need to have that conversati­on and Africa needs to be in the room.

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