The Board of Directors of the African Development Bank (AfDB) approved on February 15, 2012 a USD 200 million line of credit (LOC) in favour of the Africa Finance Corporation (AFC), a multinational financial institution based in Lagos, Nigeria, with the mandate to catalyse investments and create partnerships to help bridge Africa's infrastructure gap.
Although only in operation since 2008, the AFC has already emerged as an important financier of infrastructure projects in Africa. Given this strong start, the AFC is expected to play a major role in the long term to catalyse many infrastructure and industrial projects.
Beyond the projects that the LOC will directly finance, the AfDB's support to AFC is expected to generate much broader development outcomes in the long term as the AFC is becoming a key partner in attracting new financing to Africa, in sourcing and co-investing with the AfDB in important infrastructure and industrial projects which contribute directly to sectors critical to regional economic integration and development and economic growth. These sectors include roads, ports, power, fertilizers and cement.
The AFC was established in 2007 as an international financial institution with a pan-African operational mandate. Its purpose is to support and promote infrastructure and industry development in African countries through investment financing and to take advantage of the business opportunities created by the funding gap for infrastructure.
All AFC-financed projects undergo environmental and social appraisal. The AFC favours green growth in the selection of its power projects.
Most regional member countries' governments are prioritising infrastructure development as an essential component to boost economic growth and development, reduce poverty and achieve their Millenium Development Goals. Through the NEPAD and African Union initiatives, deeper regional integration has been identified as a core element to create physical links within the continent, coordinate shared resources and harmonize policies. This project is aligned to RMC's priorities and also promotes regional economic integration in sub-Saharan Africa. Adequate infrastructure is crucial in supporting intra-regional and global trade as well as market integration.