After our recent exclusive interview with H.E Ameenah Gurib-Fakim, RiA has been talking this time Mr Samaila Zubairu, CEO of African Finance Corporation about:
- AFC’s action to boost African Inter-Trade
- Infrastructure Investment Gap
- Local Capital Mobilisation
- Hope for Africa
Want to listen to the Live Interview? Click HERE
RiA (Q1):Okay, we’re here at Renewables in Africa. We have one of the towering figures of energy infrastructure across Africa and that is Mr. Samaila Zubairu who is the CEO of AFC. So, first of all, it is a pleasure of have you here Sir.
SZ (A1): Thank you very much. Glad to be hear with you!
RiA (Q2): Thank you. I know you’ve only been in your position for a few months, but you can already see the change happening and one of the items we talked about intensively is the Africa Inter-trade. We know as well that it is only 10% of inter-trade happening in Africa compared to more than 50% in Europe or Asia.
SZ (A2): Actually 70% in Europe and 60% in Asia.
RiA (Q3): Okay, that’s great! So, what I want to know is that in your new mandate, what is AFC doing to close this gap?
SZ (A3): So, for us, our mandate is specific. We are supposed to provide solutions to Africa’s infrastructure deficit and challenging business environment. Now, our view is that the way we can contribute to the integration of Africa’s uprising infrastructure. Infrastructure is what you need to move goods and people, to produce goods you would sell within the market. So, we are looking at initiatives for infrastructure that would integrate West Africa, East Africa, that would strengthen the links that exist in South Africa and North Africa. We would start closely in West Africa. We are looking at initiatives for transport across countries. We are also looking at initiatives for transport that would move from Nigeria to our neighboring countries. Our view is that by providing the right infrastructure that is efficient, we would contribute significantly the integration of Africa and subsequently the continental free trade.
RiA(Q4): Another point that is interesting is that about 10 years ago, we had about a $30 billion gap for the investment need in Africa. Have we made any progress in closing this gap or does it is stand as same?
SZ (A4): Actually, the gap has increased significantly. Right now, we need $170 billion of investments annually to address Africa’s infrastructure deficit. We need about $67 billion in water and sanitation, $50 billion in energy, 47 billion in transport and logistics and $7 billion in ICT. In general, this requirement is for maintaining what exists and the new growth that is required. Africa has invested about $67 billion annually over the last 7 years. So, we have a gap of about $93 billion and we are all working towards how to reduce that gap. At AFC, we are focused on how to mobilize capital, mobilize investors to work with us, to make the private sector investments that are required to reduce the gap. We do that by developing and financing projects, focusing on creating the bankable projects will be financed. On the back of those bankable projects, we would mobilize capital across the globe to work with us to develop the projects and finance them.
RiA (Q5): And it great that you are talking about the capital that needs to be mobilized. One of the key things that we know is important is how to mobilize the local capital. At the end of the day, this is our continent and we need our people to invest. How do we get more local capital investing into the sector especially renewable energy?
SZ (A5): Across Africa we have different stages of development of the local pensions and savings industry. We have a fairly developed market in South Africa, Botswana and Morocco, a growing market in Nigeria and in Ghana. So, the idea is how can we make that pool of capital comfortable to take on infrastructure risk and I think we do that by first having a dialogue with them, making sure they have the asset allocation to do infrastructure private equity, infrastructure debts and bonds. In countries like Nigeria, we already have $20 billion in pension savings with allocation for 5% in ordinary private equity, 5% in infrastructure equity and 15% for infrastructure bonds. So, it is how do you get such framework across several other African countries and how can we work with them to de-risk the projects for them to invest. We, in Nigeria, have created a company called InfraCredit whereby we are providing guarantees to investors that would invest in infrastructure. We have a program running and we are trying to see how we can replicate this program across Africa. We are also trying to see we can fund the construction so that we can reduce the risk and sell the yield to the pension fund and other investors when the projects are built and operational. I think a good way to start is to mobilize institutional savings.
RiA (Q6): Okay. Thank you so much for that. So, you are full of hope for Africa
SZ(A6): Very hopeful! I am confident that we would make the change. Nobody else is going to do that for us. We have to take our destiny in our hands. We have achieved a lot already. Our founders have created institutions like AFC, Africa Development Bank, Africa50, Afrexim Bank and several other powerful African institutions. We need to understand that nobody else is going to get this work done. We have to make the investments on the continent.
RiA (Q7): Thank you so much Mr. Samaila Zubairu. It was a pleasure!
SZ(A7): Thank you, Sir.
Listen to the interview HERE