The African Development Bank (AfDB) is lobbying global investors to seek investment opportunities in Africa with promises that it will “derisk” investments.
Speaking at the Africa Investment Forum (AIF) in Abidjan, Ivory Coast, last week AfDB president Akinwumi Adesina said the risk of investing in African countries is exaggerated. It is based on perception, not reality. He asked global and continental investors to have more confidence in the continent.
The AIF is the continent’s investment marketplace that helps connect investors to bankable projects across the continent.
“Moody’s Analytics [analysis] of defaults on infrastructure investments over 14 years show that Africa has the lowest default rate on infrastructure projects in the world — 5.5%, compared to 12.9% in Latin America, 8.8% in Asia, 8.6% in Eastern Europe, 7.6% and 5.9% in Western Europe,” Adesina said. “We can’t derisk perceived risk, we can only derisk real risk.”
He asked the global community to have more confidence in Africa.
“We are here to send a strong message to you the investors ... we will derisk investments, we will syndicate financing about investments, we will support your investments all through, from the board rooms to cutting the tapes to launch your projects,” Adesina said. “We have at the forum [AIF] multilateral and bilateral financial institutions, development finance institutions and commercial banks across Africa and outside Africa.”
By 2050, the African continent will have more than a quarter of the world’s population. The continent has the world’s largest sources of renewable energy and 65% of the uncultivated arable land left to feed the world.
The recently launched African Continental Free Trade Area is also said to be the world’s largest free-trade zone connecting economies worth $3.3-trillion. There have been challenges though. The Covid-19 pandemic led to a sharp fall in foreign direct investment (FDI) in Africa, from $47bn in 2019 to $40bn in 2020. The continent recovered slightly in 2021 and saw FDI rise to $83bn.
Curate projects
Adesina said that in the four years since the forum started in 2018 it helped to mobilise $110bn in investment interests to Africa.
“This week, we will curate several investment-ready projects for you as investors. These range from renewable energy hydropower, gas infrastructure, railways, roads and water transport,” Adesina said. “They also include agriculture, health, mining, fertiliser manufacturing, port infrastructure, and urban green transport — as well as sports, urban housing, and private equity feeder funds.
“Africa is beyond aid and is now an Africa driven by investments,” he said.
Adesina said the future of electric cars in the world depends on Africa, as the continent has the world’s largest sources of cobalt, with huge sources of lithium in Zimbabwe, Namibia, Ghana, Mali, and the Democratic Republic of Congo.
There is also $600m securitised finance to support the cocoa board of Ghana, which has helped the country grow its cocoa production by 1-million tonnes with infrastructure for warehousing and cocoa processing, he said.
He also mentioned the landmark $24bn Liquefied Natural Gas Project of Mozambique which he said was structured and closed at the AIF.
“It is the largest ever foreign direct investment in Africa. It will turn Mozambique into the third-largest exporter of natural gas in the world and add $66bn to its economy,” said Adesina.
He said that at the virtual AIF held in March, the AfDB secured $15.6bn in investment interest for the construction of the Lagos-Abidjan Highway.
“The highway carries 75% of trade in the West Africa region, and will help unleash greater growth, trade, and investment across the region,” Adesina said. “This week, presidents Alassane Ouattara, Nana Akufo-Addo and Patrice Talon [of Ivory Coast, Ghana and Benin respectively] will discuss the location of the secretariat for the project, as we get it off the ground.”
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