AFC launches US$500m climate-resilient infrastructure fund

AFRICA – The Africa Finance Corporation (AFC) has announced the creation of an investment fund for climate-resilient infrastructure that will be managed by the new fund manager AFC Capital Partners.

The Climate Resilient Infrastructure Fund (CRIDF) aims to improve the quality of ports, roads, bridges, railways, telecommunications facilities, clean energy production and logistics in Africa.

The fund aims to provide an effective response to rising temperatures due to climate change.

The fund manager will be headed by Ayaan Zeinab Adams, a climate investment specialist who has worked with the United Nations (UN) Green Climate Fund (GCF) and the International Finance Corporation (IFC), the World Bank Group’s private sector financing arm.

For the new fund, AFC Capital Partners plans to raise US$500 million in the first few months to invest in climate-resilient infrastructure in Africa.

AFC Capital Partners forms a core part of the Corporation’s five-year strategy, as set out in 2018 to expand its suite of pragmatic and innovative funding solutions by mobilizing capital to drive the development of infrastructure that is resilient to the impact of climate change. 

“AFC Capital Partners will enhance our firepower in driving integrated infrastructure solutions that are core to Africa’s development in the post-Covid era,” said Samaila Zubairu, President and CEO of Africa Finance Corporation. 

Mobilizing US$2 billion in 3 years

Over the next three years, the CRIDF portfolio will be expanded to US$2 billion. 

“AFC Capital Partners’ mandate aligns with AFC’s by offering attractive investment opportunities to the global commercial and development finance investor community seeking long-term returns through structures that protect infrastructure built in Africa from climate risk,” AFC says.

According to the Lagos, Nigeria-based financial institution, the newly formed Mauritius-based fund will use traditional project finance and private equity structures, supported by a mix of concessional, grant and soft equity financing.

“The CRIDF will allow us to support climate adaptation and projects that reduce carbon emissions and catalyze our continent to rebuild better, more climate-resilient and sustainable infrastructure,” says Ayaan Zeinab Adams.

According to the UN Office for Disaster Risk Reduction, without urgent intervention, the cost of structural damage caused by natural disasters will rise from US$250-300 billion to US$415 billion by 2030.

Damage to railways, roads, bridges, seaports and power grids will add to an infrastructure deficit that currently stands at US$130-170 billion per year in Africa.

 “The good news is that much of this investment is compatible with competitive returns for investors through leveraging the expertise, relationships, and blended finance models that have been tried and assessed for many years by Africa Finance Corporation,” she added.

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