The African Development Bank(AfDB) has often been criticised for the time it takes to approve projects, but it responded at the Africa Investment Forum (AIF) in Johannesburg in November by bringing to the table a pipeline of 61 projects with a value of $40bn. According to the organisers, of the 61 projects put forward, there was investment interest in 45, representing a total deal value of a little under $32bn, in sectors including energy, transport, logistics, and agriculture. The AIF sent a clear message that demand for bankable projects exists alongside the available capital to finance them. The pipeline was aggregated by the AfDB in collaboration with African development finance institutions, including the Trade and Development Bank, Afreximbank and the Africa Finance Corporation.
In the past, a common complaint has been a dearth of bankable projects and the extended timeframes to deal closure. While the Chinese are able to fast-track projects and add 120 GW of installed power capacity a year, Africa has too few projects it can showcase to reduce its energy gap. A handful of successful flagships projects still command attention, even if they took many years to see the light of day.
The AIF aimed to show that the continent can accelerate dealmaking at scale by linking funding to an existing pipeline of projects. Alain Ebobisse, CEO of Africa 50, said that the forum showed that if you bring well-structured projects to the table, an appetite for dealmaking will follow. Financial institutions are often guarded about projects and their pipeline of deals, even if they collaborate on loan syndications and project finance. However, at the forum, they threw their collective weight behind new projects. The president of Afreximbank, Benedict Oramah, revealed that they had 60 meetings and developed a project pipeline of $15bn.
Yet Admassu Tadesse, the president of Trade and Development Bank, whose own bank's balance sheet has increased 50% in the past two years to nearly $6bn, said that new sources of finance must be found if the momentum of the AIF is to be maintained.
It is estimated that global funds under management represent $133 trillion, with pension and sovereign wealth funds representing $56 trillion. The AfDB's High Fives initiative requires $170bn p.a.--less than 0.3% of those accessible assets under management. African pension and sovereign funds alone represent some $1.1 trillion, according to NEPAD, which is...