Assets for Africa
nvestec Asset Management has scored a major coup, winning the contract to manage the Emerging Africa Infrastructure Fund (EAIF) in the face of competition from over 30 asset management firms globally.
“We will initially be managing about US$670m, with a further $130m budgeted to be invested by the end of the year,” says the fund’s manager, Nazmeera Moola.
EAIF was established in 2002 as an initiative of the Private Infrastructure Development Group, under whose oversight it still falls, explains Moola.
Anchor equity capital is provided by the UK government, with further equity provided by
Ithe Swedish, Dutch and Swiss governments. “Effectively it entails using the private sector to allocate public sector money,” says Moola.
The fund’s objective is to provide long-term debt for periods of up to 15 years to private sector companies in sub-Saharan Africa for investment in infrastructure projects. “It fills a funding gap in the market not met by banks,” says Moola.
The overriding criterion for projects to be funded is that they must meet strict social and economic development objectives. Results so far have been impressive. Since 2002, $1.2bn in funding has been provided to 63 projects in 20 countries, in the process creating almost 9,000 permanent jobs.
“The fund is now funding 37 projects,” says Moola.
Projects span a broad spectrum including power, telecoms, transport, water and waste treatment as well as infrastructure component manufacturing.
Typical of developments funded by EAIF, says Moola, is KivuWatt, a project harnessing methane extracted from Lake Kivu in Rwanda to generate electricity. In operation since December and officially commissioned in May, the $200m project has received $25m in debt funding from EAIF.
The 26 MW KivuWatt project is the first of its kind in the world and has produced a number of positive spin-offs. Among them is the availability of electricity, which is providing a big boost to the processing and packaging efficiency of local tea growers.
Moola is confident the EAIF will continue to grow in scale.
“Each year we produce a business plan setting out what additional capital is needed from our funders,” she says.
“We must just show that we are allocating capital efficiently.”