Ecobank mobile app demos at the Nigerian launch. (Image source: Ecobank)
In an exclusive interview with managing director and regional executive for the groups CESA region Samuel Adjei, African Review learned in its December issue how the launch of a new cache of digital mechanisms underpins a wider plan to spark greater financial synergies across East Africa
The growth of Islamic financing in Africas infrastructure. (Image source: Katrina.Tuliao/Commons)
As featured in the latest issue of African Review, Islamic finance remains a niche in Africa but it is growing, driven in part by the continents urgent need for new and innovative ways to fund infrastructure development
Morgan Lewis looks at the financing of infrastructure projects in Africa. (Image source: NJR ZA/Commons)
Bruce Johnston and Helena Guidolin at Morgan Lewis write for African Review, looking at financing infrastructure projects in Africa, focusing both on the energy and local financial sectors and how they are funded
Extracts from this piece first appeared on our sister publications magazine, Oil Review Africa. The full article with exclusive, unseen content will appear in Oil Review Africas digital copy in January.
Financing infrastructure projects in Africa will undeniably help to unlock the economic potential of the continent. Finance for investment in African infrastructure is hindered however, by various factors relating to the complexity, size and viability of infrastructure projects generally.
In energy-related infrastructure projects, there are continuing challenges in project planning and preparation that need to be surmounted to ensure a bankable proposal that is attractive to investors.
Local financial markets are less developed, which means more cross-border lending in US dollars. National oil companies sometimes lack the expertise and financial resources to develop some projects. Undoubtedly, there is a need to accompany physical infrastructure development with other required elements such as upskilling of labour, regulatory adaptation, and streamlining of administrative requirements. Projects can take longer to develop, which may lead to early decisions that impede a later financing.
Determining viable processes by which funds for project development can be raised is pivotal and requires a clear understanding of the options available for financing, taking into consideration the specific nature of differing projects. In time, however, the methods and sources of financing oil and gas projects worldwide will be used in Africa.
The basic premise of this article is that commercial decisions made early in an oil or gas project in Africa often preclude certain types of financing at later stages. This is often because decisions about financing are not made at the start of the oil or gas project.
Equity
The exploration phase in an oil and gas project is the most risky. The risk/reward ratio therefore needs to be as high as possible. Equity is the most appropriate tool for financing the exploration phase.
Equity is also more expensive than debt and operates to dilute the ownership of the sponsors.
The traditional model is distorted because big international oil companies can raise equity from the stock markets more cheaply than an oil project can raise debt. International oil companies therefore have a strong preference to finance oil and gas projects in Africa using equity rather than debt.
Despite this, taxation systems in many countries operate so that interest is tax deductible but dividends are not. This often means that there is debt financing of oil or gas projects in Africa which, in economic terms, is really an equity financing.
The full version of this article will appear in the next issue of Oil Review Africa in January. The latest issue can be found here.
The AfDB has committed a second tranche of US$500mn to support energy projects in Egypt (Source: Shutterstock Paul Vinten)
The African Development Bank (AfDB) yesterday signed a US$500mn loan agreement to support Egypts Economic Governance and Energy Support Programme Phase II
China Africa Development Fund invest US$4bn in African infrastructure projects. (Image source: CAD Fund/Commons)
The China-Africa Development (CAD) Fund invested a total of US$4bn in Africa as of the end of November 2016, Chinese authorities said last week
The Bell team in Richards Bay consists of more than 800 machinists, welders, and assemblers. (Image source: Bell)
GFE Power Product’s extensive range covers generators from 10 kVA up to 3,000 kVA. (Image source: GFE Power Products)
The funding is the largest-ever equity raise in the minigrid industry according to Husk. (Image source: Adobe Stock)
The initiative will help African contractors participate in annual infrastructure investments. (Image source: Afreximbank)
ITS has evolved into a sophisticated systems approach, providing numerous opportunities to revolutionise road networks. (Image source: Adobe Stock)
Inside Condra’s Johannesburg factory: an overhead crane positions an electric motor during assembly of hoist and crab. (Image source: Condra)
Invest International’s Lara Muller; Ivory Coast Minister of Finance and Economy, Adam Coulibaly; and Ambassador Designate to Ivory Coast, Jeroen Kelderhuis. (Image source: Invest International)
The Yellow Metal Machine Rental team with some Wacker Neuson equipment. (Image source: Wacker Neuson)
The parties will also promote the mutual exchange of information and expertise in the field of export credit policies and practices. (Image source: TBD Group)
Although displaying resilience, the report warns that African banks remain exposed to physical climate risks due to both sovereign and industry lending. (Image source: Adobe Stock)
WAA and VCMI will seek to establish regulatory frameworks to enable access to high integrity and fair voluntary carbon markets for WAA member countries. (Image source: Adobe Stock)
IVECO is renewing its entire product range, all at once. (Image source: IVECO)
Both the IMF and EIU expect SSA to rank as the world’s second fastest growing economy in 2024. (Image source: Adobe Stock)
The MoU was signed alongside the Africa Health Business Symposium. (Image source: Africa CDC)
There has been a focus on the sugar industry. (Image source: Adobe Stock)
The AfDB board complemented Transnet for progress made in rolling out its compliance and governance improvement programme. (Image source: AfDB)
The new data centre is ‘EcoStruxure-ready’, with components of the installed EcoStruxure for Data Centers platform solution. (Image source: Schneider Electric)
d.light has a proven track record in the use of securitised finance to support its solar-powered household products in sub-Saharan Africa. (Image source: d.light)
Ghana’s President, Nana Addo Dankwa Akufo-Addo, speaking at the launch. (Image source: Office of the President, Republic of Ghana)
Dietmar Siersdorfer speaking at Africa Energy Forum in Barcelona. (Image source: Siemens Energy)
The generator set fitted with a Perkins 1103 is providing vital backup power at the St Patrick School in Uganda. (Image source: Perkins)
5G technology deployment will take place later this year. (Image source: Adobe Stock)
Spiro will draw from its experience in Kenya, Benin, Togo, Rwanda and Nigeria as it launched in Uganda. (Image source: Spiro)
According to IRENA, concrete policy actions and massive mobilisation of finance at full speed is required in order to meet the 2030 target. (Image source: Adobe Stock)
The distributor will hold specialised training and empowerment sessions to enable its channel network to effectively deliver Vertiv’s portfolio, as well as managing inventory to serve the market. (Image source: Vertiv)
The HQ is expected to be completed and handed over by February 2025. (Image source: ECOWAS)
Africa’s share of global manufacturing only sits at around 2% today. (Image source: Adobe Stock)
There are numerous but not insurmountable challenges facing Africa's aviation sector, according to IATA. (Image source: Adobe Stock)
Africa Energy Forum 2024 was held in the Fira de Montjuïc in Barcelona. (Image source: ACP)
The quality design and manufacture of SEW-EURODRIVE South Africa’s panels and enclosures can be suited to any customer requirement wall mounts. (Image source: SEW-EURODRIVE)
