The African Development Bank is organising the Africa Investment Forum (AIF)in Johannesburg in November, a platform that is designed to de-risk investments and facilitate bankable projects. African Banker spoke to Ebenezer Essoka (inset below), who has extensive experience in financial institutions across the world, on how the Bank will mobilise new capital into this asset class.
How does the African Development Bank aim to increase deal flow and to scale up investment in infrastructure?
I spent years in commercial banking turning deals down because I didn't think they were properly prepared. I spent time with my colleagues on project finance deals, looking at ways of derisking the real transformational transactions across the continent, at times with success, at times without. When we succeeded, we partnered with other financial institutions.
What excited me about the AIF initiative is that it defined a new way of doing things: identify projects across Africa that can be scaled and that can be properly structured for financial closure. The key words are financial closure. But before you get the financial closure, you need to source the projects.
What I know is that the Bank went to other MDBs and started a conversation around pooling their resources and sharing their pipelines on a digital platform and subsequently curating and establishing the viability of the projects. Upon defining the commercial viability of those respective projects, they would package them to be conversation-ready with the investors.
As we started sharing ideas it was decided to broaden the reach and also engage other DFIs and commercial banks. Given tighter international regulations such as Basel 3 and new accounting principles like IFRS9, commercial banks would increasingly need to partner on such investments due to the scarcity of capital. The Bank with the original partners including ACI, Africa50, AFC, DBSA, GBD, BFSCI, IFC, KFW, EIB, EBRD, the Islamic Development Bank and a number of other financial institutions (pension and sovereign wealth funds, insurance companies etc) across the world. It quickly became evident that there was consensus from all the stakeholders that we needed to leverage resources to deliver more.
How is the Bank curating the projects to make them investor ready?
I understand that the projects will fall into different buckets. In some cases additional work will be required on the feasibility studies because they were not conclusively done...