The first-ever Africa Investment Forum was a resounding success with some fascinating math: 49 projects worth $38.7 billion over three days, all for the continent. 



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On a breezy Wednesday morning in November in Johannesburg, there is a feverish bustle at the Sandton Convention Centre, one of South Africa’s most prestigious destinations for conferences. Known for regularly hosting world-class exhibitions and events, today, it is playing host to one of the most important events of the year. 



The second floor of the convention center is pulsating with action and excitement as hundreds of businessmen and power women in sharp suits and African attire greet each other. At each corner of the grand room are huge posters with quotes that say, “People don’t eat potential! It’s time to turn potential into real deals,” and,



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">We believe that the growth of Africa’s economy represents opportunities for its neighbors </blockquote>



The word on everyone’s lips is transactions. The inaugural edition of the Africa Investment Forum (AIF), organized by the African Development Bank (AfDB), is officially opened by South African President Cyril Ramaphosa. 



The bigwigs of corporate Africa and political power brokers are all here, including Africa’s richest man, Aliko Dangote, along with Nigerian Vice President Yemi Osinbajo, Ghanaian President Nana Akufo-Addo and Ethiopia’s first female president Sahle-Work Zewde. 



The AfDB describes the forum as a collaborative platform for the economic and social development of the continent. The goal is to bring together project sponsors, borrowers, lenders and public and private sector investments to unlock billions of dollars that will accelerate investment. The rationale is simple. Six of the 10 fastest-growing economies are in Africa, yet Africa has a mammoth infrastructure funding gap of $130-$170 billion a year. 



The man called ‘Mr. Development’ in the October 2018 issue of FORBES AFRICA, AfDB President Akinwumi Adesina, believes there needs to be a convergence of stakeholders from all over Africa to broker deals that finally unlock the potential of Africa. 



As with any conference with a multitude of minds, opinions are divided for this one too. On the one hand are those who quietly wonder whether this is going to be yet another three days of rhetoric and ambiguous targets that bear no fruit? Then you have those believers who are convinced that Africa is ripe for an integrated marketplace that can actually deliver real growth. 



For these people, the AIF offers new hope. They believe that the continent’s largest and smallest economies are ready to come together and take charge of their own destiny. 



According to the World Bank, year-on-year economic growth in sub-Saharan Africa is slashed by two percentage points due to a lack of infrastructure. Analysts believe around $100 billion must be invested each year to eliminate the deficit and give African infrastructure a shot at competing with other developing regions. 



Traditionally, the World Bank, the AfDB and African governments have sought to address the infrastructure gap by investing in larger infrastructure projects valued at more than $1 billion. 



This means smaller-scale projects, in the $100 million to $200 million range, which are also necessary for the development goals of the continent, are neglected. 



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">History shows that trade has the potential to transform nations. </blockquote>





Adesina believes this.&nbsp;





“The AIF is probably the most important game-changing initiative for accelerated economic development in Africa. It is a unique platform for investment, finance, transparent transactions and a genuine African marketplace for closing deals to accelerate the economic development of Africa. The fact is that no individual benefactor, no matter how rich, or government or sovereign wealth fund, or even a multilateral development bank, for that matter, can provide the resources to meet Africa’s critical economic development needs,” he says in his opening address at the conference. 



According to Adesina, the solution is clear. Africa can and Africa must collectively work towards financing its development, requiring broad partnerships with the private sector and an appreciation of the realities of global investment partners. 



“This will be an African investment marketplace where the AfDB and its partners will screen and enhance bankable projects and attract co-investors and facilitate transactions to close Africa’s investment gaps. This platform will reduce intermediation costs and improve the quality of documentation and information and increase active and productive engagements between African governments and the private sector,” he says. 



It is that type of collaboration that brings Shamima Mallam-Hassam, Country Executive of Alter Domus, all the way from Mauritius to Johannesburg. 



“We are a leading fund and corporate services provider, headquartered in Luxemburg, with an office in Mauritius. The purpose of being at the Africa Investment Forum is to meet with people that have projects in Africa, that we can help in their structuring, and use Mauritius as a platform for their investment into Africa. So this is a very high-level forum, where a lot of insights have been shared about where Africa is going and how there can be more collaborations to make projects happen,” she says. 



<figure class="wp-block-image"><img loading="lazy" decoding="async" width="1024" height="683" src="https://www.forbesafrica.com/wp-content/uploads/2018/12/AIF-190_EthiopianPresident-1024x683.jpg" alt="" class="wp-image-38061" srcset="https://cms.forbesafrica.com/wp-content/uploads/2018/12/AIF-190_EthiopianPresident-1024x683.jpg 1024w, https://cms.forbesafrica.com/wp-content/uploads/2018/12/AIF-190_EthiopianPresident-300x200.jpg 300w, https://cms.forbesafrica.com/wp-content/uploads/2018/12/AIF-190_EthiopianPresident-600x400.jpg 600w, https://cms.forbesafrica.com/wp-content/uploads/2018/12/AIF-190_EthiopianPresident-768x512.jpg 768w, https://cms.forbesafrica.com/wp-content/uploads/2018/12/AIF-190_EthiopianPresident.jpg 2048w" sizes="(max-width: 1024px) 100vw, 1024px" /><figcaption>Ethiopia&#8217;s first female president Sahle- Zewde networking with delegates at the Africa Investment Forum. Picture: Gypseenia Lion</figcaption></figure>



Can developing nations thrive in a global economy without an international, collective mind-set? International organizations like the United Nations Conference on Trade and Development (UNCTAD) believe that for sustainable development to exist, more developed African economies need to break down barriers between them and less developed economies. To begin with, the continent needs to address rising unemployment. 



“We need to create 400 million jobs for 400 million Africans, who are already born, between now and 2030. These massive numbers need massive responses,” says Ibrahim Mayaki, CEO of the New Partnership for Africa’s Development (NEPAD) during a panel conversation at AIF. A total of 49 deals were made at the AIF, which were valued at $38.7 billion, according to the final numbers released. These deals represent a renaissance for the African continent. But the concern for some is whether the returns from these deals will remain on the continent. 



“The ownership of industrial assets must be African companies. A lot of developers make the mistake of allowing foreign ownership, which alters the trajectory of your destiny,” says Basil El-Baz, chairman and CEO of Egypt’s Carbon Holdings. 



The all-important issue of women’s empowerment in corporate Africa is also discussed. A panel in ‘Investing in women for accelerated growth’ reveals women entrepreneurs experience a significant funding gap of $42 billion annually, but are more likely to repay loans compared to male borrowers. David Makhura, the premier of the Gauteng province where the conference is held, attests: “African women need to be supported. They are the ones that sell to provide for their children and families.” 



The panel comprises prominent and successful women, including Ibukun Awosika, president of First Bank of Nigeria Limited, Hayat Sindi, senior advisor to the president of the Islamic Development Bank, and Daphne Mashile-Nkosi, chairperson of Kalagadi Manganese. 



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">We need to make women a critical component of our financial system <cite> Ibukun Awosika</cite></blockquote>



Underpinning the market place is ‘The AIF Platform’, that connects 200,000 American businesses and users from 100 countries, many of whom are potential investors and trade partners for Africa. 



The AIF Platform is announced in partnership with the Inter Development Bank (IDB) who launched a similar platform, Connect America, in 2014. “We have over 400 million smartphones in Africa. Within a few years, this number will exceed a billion. But none of these are made in Africa. We are the consumers but we’re not the value creators,” says Ashish Thakkar, founder of Mara Group, before the closing plenary. 



The AIF Platform was created to address exactly this. By connecting African-based companies like Mara to global trade partners, there can be economies of scale. 



If there is one thing to take away from the conference, it is this: there is a fight to back Africa as an investable destination so that capital can land in the continent and unlock its potential. As Adesina puts it: “This is Africa’s time to change the rhetoric. We need to make Africa independent; we can no longer build Africa relying on aid. The only way to achieve this is a complete rise in intra-Africa trade.”



<figure class="wp-block-image"><img loading="lazy" decoding="async" width="926" height="617" src="https://www.forbesafrica.com/wp-content/uploads/2018/12/Dangote.png" alt="" class="wp-image-38063" srcset="https://cms.forbesafrica.com/wp-content/uploads/2018/12/Dangote.png 926w, https://cms.forbesafrica.com/wp-content/uploads/2018/12/Dangote-300x200.png 300w, https://cms.forbesafrica.com/wp-content/uploads/2018/12/Dangote-600x400.png 600w, https://cms.forbesafrica.com/wp-content/uploads/2018/12/Dangote-768x512.png 768w" sizes="(max-width: 926px) 100vw, 926px" /><figcaption>Africa&#8217;s richest man, Aliko Dangote attended the inaugural Africa Investment Forum. Picture: Gypseenia Lion</figcaption></figure>



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Akinwumi-Adesina

Deals, Dollars and Developments On The African Continent

Press Release
➢ WITH “ROOM2RUN,” AfDB LAUNCHES SECURITIZATION MARKET FOR MULTILATERAL 
DEVELOPMENT BANK SECTOR 
➢ TRANSACTION IS IN DIRECT RESPONSE TO G20 ACTION PLAN FOR MDB BALANCE SHEET OPTIMIZATION 
➢ AfDB COMMITS TO REINVEST FREED UP CAPITAL INTO NEW AFRICAN INFRASTRUCTURE 
LENDING, MAKING ROOM2RUN ONE OF THE LARGEST IMPACT INVESTMENTS EVER 
➢ TRANSACTION IS SUPPORTED BY NEW EUROPEAN UNION GUARANTEE TOOL (EUROPEAN FUND FOR SUSTAINABLE DEVELOPMENT)
OTTAWA, Canada, 18 September 2018 — The African Development Bank (AfDB), the European Commission, Mariner Investment Group, LLC (Mariner), Africa50, and Mizuho International plc today announce the pricing of Room2Run, a US $1 billion synthetic securitization corresponding to a portfolio of seasoned pan-African credit risk. Room2Run is the first-ever portfolio synthetic securitization between a Multi-Lateral Development Bank (MDB) and private sector investors, pioneering the use of securitization and credit risk transfer technology to a new and previously unexplored segment of the financial markets.
Structured as a synthetic securitization by Mizuho International, Room2Run transfers the mezzanine credit risk on a portfolio of approximately 50 loans from among the African Development Bank’s nonsovereign lending book, including power, transportation, financial sector, and manufacturing assets. The portfolio spans the African continent, with exposure to borrowers in North Africa, West Africa, Central Africa, East Africa, and Southern Africa. Mariner, the global alternative asset manager and a majority owned subsidiary of ORIX USA, is the lead investor in the transaction through its International Infrastructure Finance Company II fund (“IIFC II”). Africa50, the pan-African infrastructure investment platform, is investing alongside Mariner in the private sector tranche. Additional credit protection is being provided by the European Commission’s European Fund for Sustainable Development in the form of a senior mezzanine guarantee.
“Room2Run gives us fresh resources to invest in the projects Africans need most,” said Akinwumi Adesina, President of the African Development Bank Group. “Africa has the most promise, the greatest natural resources, and the world’s youngest population. But we also have the world’s most persistent infrastructure deficits. The African Development Bank has the strategy to address these infrastructure finance gaps—and Room2Run gives us the capacity to make it happen.”
Structured as an impact investment, Room2Run is designed to enable the African Development Bank to increase lending in support of its mission to spur sustainable economic development and social progress. In connection with Room2Run, AfDB has committed to redeploy the freed-up capital into renewable energy projects in Sub-Saharan Africa, including projects in low income and fragile countries.
“On the Impact scale, Room2Run is off the charts,” said Dr. Andrew Hohns, Lead Portfolio Manager and head of the Mariner Infrastructure Investment Management team. “Room2Run answers the call of the G20 for private sector participants to step in and facilitate development finance, providing a template for attracting significant private sector capital into urgently needed projects in developing economies.”
Raza Hasnani, Head of Infrastructure Investment at Africa50 commented, “Room2Run provides an innovative and commercially viable solution to the African Development Bank’s risk management and lending objectives, while paving the way for commercial investors to support and benefit from the growth of infrastructure on the continent. Africa50 is very pleased to participate in this landmark transaction, which is in line with our mandate to drive increased investment in infrastructure in Africa, and to create pathways for long-term institutional capital to flow into this space.”
Room2Run enjoys the support and participation of the European Commission with an investment from the European Fund for Sustainable Development, in the form of a senior mezzanine guarantee. “Only a few days after announcing our renewed Alliance with Africa for sustainable investments and jobs, I am very happy to announce that we are, together with the African Development Bank, launching Room2Run,” commented Neven Mimica, the European Commissioner for International Cooperation and Development. “This initiative is a perfect example of what we are doing to support investments in African low income and fragile countries through the External Investment Plan. Through Room2Run we provide 
an additional protection to investments in the field of renewable energy. Through our Guarantee, investments under Room2Run will translate into extending supply to many people currently without electricity whilst creating much-needed new jobs.”
Room2Run also directly responds to calls by the G20 that MDBs use their existing resources to full capacity, as articulated in the 2015 G20 MDB Action Plan to Optimize Balance Sheets, as well as calls for greater MDB efforts to crowd-in private investment. The G20 has called on MDBs to share risk in their non-sovereign operations with private investors, including through structured finance, mezzanine financing, credit guarantee programs, and hedging structures.
The Government of Canada has been a global leader in advocating for MDBs to use their existing resources more efficiently and to mobilize private capital for global development. The goal of the G20 MDB Action Plan to Optimize Balance Sheets is to catalyze significant new development financing from the MDBs throughout the real economy in key development regions. “Attracting more private capital into global development efforts is critical to building economies that work for more and more people around the world,” said Bill Morneau, Canada’s Minister of Finance, “that’s why Canada and our G20 partners have been calling on multilateral development banks to use their existing resources as efficiently as possible, and to look for new ways to attract more private capital. We are pleased to see the African Development Bank come forward with a transaction that directly responds to both of these objectives. Room2Run is an innovative solution to a long-standing challenge.”
Juan Carlos Martorell, Co-Head of Structured Solutions at Mizuho International, adds, “Compared to other synthetic securitizations, a major achievement of Room2Run has been to ensure that ratings agencies, and in particular S&amp;P, reflect the merits of the risk transfer into their rating assessments for multilateral development banks. AfDB’s leadership through this transaction has now set the stage for broader adoption of the instrument throughout the MDB community.”

Tag: Africa Investment Forum

FORBES AFRICA SOCIAL MEDIA

Deals, Dollars and Developments On The African Continent

With “Room2Run,” AfDB Launches Securitisation Market For Multilateral Development Bank Sector