DEG, a subsidiary of Germany’s state-owned KfW Group, has provided financing, advice and support to enterprises in developing and emerging-market countries since its inception in 1962. The transaction builds on a partnership with Africa Finance Corporation that began in 2012 and has resulted in several loans from DEG, including a recent $170 million 12-year loan in 2021.

Petra Kotte, Head of Banking and German Business, highlighted the strategic partnership with Africa Finance Corporation:

“DEG is very happy to have arranged this facility with our long-standing partner Proparco and thus cementing our excellent relationship with Africa’s leading infrastructure financier AFC. The facility contributes to closing Africa’s infrastructure gap, positively impacting on the livelihood of surrounding communities, and supporting AFC in their endeavour to reduce the continent’s footprint as part of their dedicated climate resilience strategy.”

Proparco, the private sector financing arm of Agence Française de Développement Group (AFD Group), has been promoting sustainable economic, social and environmental development by providing funding and support to businesses and financial institutions in Africa, Asia, Latin America and the Middle East for over 45 years. 

Its action focuses on key development sectors including infrastructure, mainly for renewable energies, as well as agribusiness, financial institutions, health and education. Proparco provided Africa Finance Corporation in 2021 with a $50m senior credit line in the $170 million syndicated loan led by DEG.

Emmanuelle RIEDEL DROUIN, Global Head – Lending Operations, said: “Proparco is very happy to be participating in this transaction arranged by DEG for the benefit of AFC, a key player in financing much-needed infrastructure in Africa, which remains one of the continent’s main challenges, notably in terms of access to clean energy and transport. AFC is also a member of the International Development Finance Club, chaired by AFD since 2017, and we commend its strong commitment to supporting climate resilient infrastructure and to accelerating the just transition in Africa, as evidenced during the COP27.”

The new credit facility supports the development and implementation of infrastructure projects that enhance the continent’s economic, environmental, or social impact under AFC’s Establishment Agreement and Charter.

“Our strategic partnership with DEG and Proparco mobilises urgently needed capital to rebuild Africa with more resilient and sustainable infrastructure across critical sectors,” said Banji Fehintola, Senior Director, Head of Treasury & Financial Institutions at AFC.

“As part of AFC’s strategy to catalyse infrastructure financing and impact development in Africa, the Corporation draws capital from a diverse range of international investors and lenders. We appreciate the confidence that DEG and Proparco continue to demonstrate in us as a strategic partner and infrastructure solutions provider.”

The transaction marks AFC’s second foray into the Japanese capital markets, following an inaugural Samurai loan facility in 2019, when the Corporation raised US$233 million and JPY1 billion.

The 3-year tenor facility is an important step as AFC builds a coalition of investors to diversify its funding sources, including more institutional capital from Asia and existing partners in Europe and North America. Japanese investors showed strong interest in the issuance with Mizuho Bank Ltd, MUFG Bank Ltd. (“MUFG”), Sumitomo Mitsui Banking Corporation (“SMBC”) acting as Mandated Lead Arrangers and Bookrunners. 

Other participating financial institutions include Bank of Yokohama, Norinchukin Bank, Shiga Bank and Gunma Bank. Proceeds from this facility will be used for general corporate purposes. 

Africa Finance Corporation has a strong record in the Asian capital markets, issuing a US$300 million loan facility through the Export-Import Bank of China in 2018 and a US$140 million Kimchi term loan facility in 2019. 

Asia is key to Africa’s next phase of growth and Japan, in particular, is an important player as the country has shifted the focus of its engagement with Africa in recent years from giving aid to increasing investment.  

The government of Japan, shifting its focus from aid to investment, recently pledged $30 billion over the next three years for the resilient and sustainable development of the African continent. The announcement was made during the recently concluded eighth Tokyo International Conference on African Development (TICAD), signalling a boom in Africa-Asia economic relations.

Banji Fehintola, Senior Director and Treasurer of AFC, said: “Asia is a very important region for us and the participation of Asian investors in our bond issuances has grown significantly over time. The success of this loan offering is testament to AFC’s ability to diversify its funding sources in mobilising global capital to build critical infrastructure in Africa and transform lives.”