Leaders of development finance institutions (DFIs), insurance companies and export credit agencies (ECAs) have urged greater mobilization of the private sector to finance infrastructure in Africa in close collaboration with the public sector.
The call came at the Africa Investment Forum 2024 during a high-level roundtable moderated by Simon Bessant, Texel Group's Global Head of Insurance, on the theme : « Scaling up infrastructure financing through partnerships between DFIs, insurers, and export credit agencies (ECAs). »
In his opening remarks, Berne Union President Yuichiro Akita praised the AIF for generating $180 billion in investment interest for Africa since its inception in 2018, before addressing current geopolitical risks and uncertainties in international trade.
"The role of insurers has become more critical than ever in mitigating investment risks in key sectors such as energy, social infrastructure and innovation in Africa," emphasized Akita. "Given the heavy investments that are required to achieve our development goals, it is crucial to strongly mobilize private capital."
To attract private capital, collaboration between governments, banks and insurers is essential, added Manuel Moses, CEO of African Trade & Investment Development Insurance (ATIDI).
"Our Regional Liquidity Support Facility insures investors against government default on infrastructure projects. It has been deployed in Burundi and Malawi to finance solar energy projects, among others, and we want to expand it across the continent," he explained. ATIDI currently covers 24 countries in Africa.
Admassu Tadesse, Group President of Trade and Development Bank (TDB), emphasized the evolution of ECA financing and the increasing adoption of untied business models, which have proven successful in frontier markets. « TDB has seen significant success in using insurance industry support, with nearly one-third of their trade finance portfolio backed by credit insurance, » he added.
Michal Ron, Chief International Officer of SACE, revealed a sevenfold increase in African exposure from €2.2 billion in 2014 to €15 billion in 2024, largely attributed to their innovative "Push Strategy" for untied financing. SACE expects to close €1 billion in new commitments across four African countries by year-end, including green financing initiatives.
"We have a long-standing partnership with ATIDI. We are convinced of the importance of partnerships in Africa," said Ron, after signing a cooperation agreement between SACE and the African Development Bank Group as part of the Mattei Plan.
Heike Harmgart, EBRD's Managing Director for Sub-Saharan Africa, used a medical metaphor to highlight successful green financing initiatives, including municipal bonds and sustainability-linked instruments.
"It is important that insurers find innovative and flexible ways to provide insurance products so that we can have a healthy 'patient' - the investor," emphasized Heike Harmgart. "Everyone needs to sleep better when it comes to investing, and for that you need good insurers."
Echoing this metaphor, the Executive Vice President of the African Export-Import Bank (Afreximbank), Haytham El Maayergi advised potential investors "to consult the doctor as early as possible". He highlighted the critical need for early engagement with consultants, DFIs, ECAs and insurers in the project lifecycle.
"By addressing potential risks and structuring solutions upstream, project developers can save time, reduce costs and pave the way for seamless implementation," he stressed.
On a positive note, Lila Granda, Head of Political Risk and Credit at Vantage, highlighted the "pull effect" of working with financing players in Africa, outlining that: "Vantage Risk has had good results using various insurers on infrastructure projects to benefit from their market experience, their formal relationships with governments and their commitment to projects, even in difficult times."
With increasing involvement of institutional investors and the development of local capital markets, panelists agreed that innovative financing structures and public-private partnerships would be key drivers for infrastructure development across the continent.
