ABC partners US IDFC for Nigerian projects to access $60bn funding
DFC no longer requires initial 25% US shareholding Finance Corporation can provide up to 25 years long debt financing in huge quantum up to $1 billion. Agency collaborates with UBA, Union Bank, Sterling bank, etc., in providing both lines of credit and guarantees.
Charles Abuede
THE AMERICAN BUSINESS COUNCIL has said that it has partnered with the US International Development Finance Corporation for project financing in Nigeria and other subSaharan African countries worth over 60 billion dollars. The business council, during a recent virtual briefing with journalists, revealed its plans to fund infrastructure, healthcare and agribusiness sectors, amongst others to create jobs in the economy.
Margaret Olele, the council’s chief executive officer, disclosed that the American Business Council is working with the US mission and that they have recognised that it was crucial to discuss the financial opportunities that are available from in the US for sub-Saharan Africa.
Vibhuti Jain, regional director for Africa at the DFC, speaking during the panel session further revealed that the US government’s development bank supports private sector investment that yields development outcomes aligning with the US foreign policy to deliver a commercial return. Hence, the bank’s strong focus on Africa.
“With the DFC’s official launch in January 2020, our capital exposure limit has increased from 29 billion (dollars) to 60 billion (dollars). In particular, our authorizing legislation has increased our focus on low-income economies. Essentially, countries like Nigeria and many other countries in the region are of particular importance to DFC,” she said.
Vibhuti spoke of the flexible financing tools of the DFC, which no longer requires the initial 25% US shareholding in development policy.
“We are committed to stronger collaborations with the US government and their agencies operating in Africa in the State Department of Commerce, and we see the whole of government’s approaches to forcing deals, supporting clients and forming partnerships that are critical to boosting growth in the region.
“We work all across the globe but in particular subSaharan Africa with the largest regional exposure. The DFC invests with a triple aim to increase yield development impact which we’ve looked at very broadly across a variety of matrix, from job creation to empowerment of women and vulnerable groups, supporting some by boosting economic growth, infrastructure development and supporting financial inclusion and support US foreign policy. We also look at return on capital to make sound investments,” the DFC director further stressed.
Speaking on the financing from the US DFC, Vibhuti Jain explained that the finance corporation can provide long debt financing and guarantees of up to 25 years in huge quantum from $1 million to $1 billion.
“Essentially, we are a long term credit provider. We also provide political risk insurance anywhere from exposure to one million up to one billion dollars and this covers things like the act of violence, expropriation risks, and currency convertibility.”
So we are able to make some equity investment in the companies we will be targeting in series B and C raises where we all will be minorities. Right now the programmes are new and we will focus on transactions where we can invest potentially alongside another likeminded institution. Also, we invest in private equity funds as support for private sector investment, with our technical development programmes that are intended to promote longer-term DFC financing.
Representing the US Trade and Development Agency (USTDA) during the virtual briefing was Claire Sierawski, Power Africa Country Manager West Africa for USTDA, who disclosed that the agency’s mission is to provide grants ranging from $500,000 to $1.5 million depending on the size of the project.
Meanwhile, the agency is in collaborations with some tier-one financial institutions in Nigeria such as United Bank for Africa (UBA),
Union Bank, Sterling Bank, etc., in providing both lines of credit and guarantees.
“We have two main buckets of tools: One is preparation – Growth impact assessment, financial models, fieldwork, and geotechnical analysis. All of this is important to have a solid project that will be bankable – this is done by supporting project preparation. The financing agency can provide grants between 500,000 to 1.5 million depending on the size of the project,” Claire stated.
The West African country manager, who is also a clean energy expert, said that the development agency’s mission comes in three folds, namely:
• Jobs creation in Nigeria through sustainable infrastructure development.
• Sustainable infrastructure in emerging economies in the energy, transportation, ICT, healthcare and agribusiness sectors.
• Building partnerships between US companies and Nigerian companies between both the US Government and the Nigerian Government.
In the meantime, one of the key focus of the DFC in the wake of covid-19 is to create more resilient healthcare system on the continent. We have issued a call for proposal about three weeks ago for an interested applicant with health care opportunities.
Meanwhile, Nigeria, Africa’s biggest economy and the most populous nation on the continent with an estimated Gross Domestic Product of $375 billion is strategically positioned in the development equation of the West African sub-region and indeed the continent at large. With all indicators pointing to a desirable future, investing in Nigeria will necessitate development in terms of critical infrastructure, agriculture, financial services, and healthcare, among others.
Undoubtedly, the Nigerian investment environment has over the years revealed its funding inadequacies to efforts by the international economic and finance community, which in one way or another has become of crucial importance to stakeholders and private investors.
Similarly, Africa’s emerging market economies such as Nigeria and other subSaharan African nations can leverage this investment opportunity with a commitment to the tune of over $500 million with high interests calling from international investors in agriculture, critical infrastructure, financial services, healthcare, ICT sectors, etc.