The AFC's role in Africa's economic march forward | Fieldfisher
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The AFC's role in Africa's economic march forward



Africa, United Kingdom

Nana Eshun, General Counsel at the Africa Finance Corporation, outlines the role of Africa's dedicated infrastructure-focused development finance institution in growing the continent's economy.

Listen to the podcast recording of this discussion: 


Addressing Africa's infrastructure deficit

Africa Finance Corporation (AFC is) a private sector-led multilateral financial institution, created by African sovereign states to provide pragmatic solutions to Africa’s infrastructure deficit and challenging operating environment.

We were established in 2007 with just two members – Nigeria and Guinea Bissau – and, as of May 2023, we have 40 member countries, with an investment footprint across 36 countries and around US$11.5 billion in assets.

Our product offerings including debt, equity, direct investment and financial advisory services across five focus infrastructure development sectors: power, natural resources, heavy industries, telecommunications and transport and logistics.

We are also focused on tackling key risks of doing business in Africa, including climate change, ESG, cybersecurity and political risk.

AFC's approach

As a development finance institution (DFI), AFC has a very specific focus in terms of mandate and objectives that distinguish us from other DFIs, such as the International Finance Corporation (IFC) and the Development Finance Corporation (DFC).

Our categorical objective is to address the infrastructure deficit in Africa by supporting and providing finance to infrastructure projects solely within the continent, whereas the IFC has a mandate to promote private sector investment in the less developed economies of member countries throughout the world.

Our view is that by supporting the development of Africa's infrastructure, other key developmental progress will follow.

While we don't explicitly share the IFC's broader mandate of supporting sectors such as agriculture, healthcare, education and governance, we will indirectly finance other areas – such as fertiliser production and healthcare, for example – as long as these projects are connected to infrastructure.

AFC's strong focus on key infrastructure does not preclude it from acting in other areas, but infrastructure is our strategic priority.

Mining infrastructure

Mining is a strategic sector that we have decided to pursue more closely, because Africa has a lot of natural mineral resources.

In the past, we have mined and exported these resources to countries such as China, which increases the carbon footprint of the mining industry and does not significantly benefit the source country in terms of the income earned from these materials.

By developing refining capacity, African countries can receive a much larger benefit from these mineral resources than if they just export them in their raw form.

So we are looking at financing mining projects and refining capacity together. We are also looking into developing enhancing our battery mineral capacity and downstream industry, as this is a key growth area.


If the political climate in a particular country is positive, then it makes our investments in those countries less risky. Political risk is a key factor that we assess when we are doing our due diligence in relation to projects.

When a country is more economically developed, that reduces the risk in terms of political stability, particularly where there is a democratic mandate to consider.

Political stability is also important because it is something external partners want to see.

AFC is seeking strategic partnerships and opportunities that will increase deal flow for the corporation.

For example, we are involved in the Power Africa Initiative, which is US government-led partnership that brings together resources from the private sector, international development organisations and national governments to increase energy access in sub-Saharan Africa.US-Africa. This partnership has resulted in investment in power projects across Africa.

AFC has also established partnerships with the IFC, the Dutch development bank FMO, the Development Bank of South Africa, the UN Climate Fund, the OPEC Fund for international Development, the Multilateral Investment Guarantee Agency (MIGA) and Islamic finance institutions – to name just a few of our key agreements.

A lot of these partners come to us because they know we are on the ground in Africa and because they are convinced by our track record of growth and implementing innovative solutions across the continent.

More and more, we are the partner of choice for sponsors and financiers who wish to invest in Africa and who are looking for partners they can trust to help them to do that.

Innovative solutions

Financing infrastructure projects across Africa is quite a complex and difficult environment.

So we always have to find innovative solutions and not just confine ourselves to traditional means of financing, otherwise I don't think anything would get done.

Globalisation has expanded businesses across borders and deals now involve multiple jurisdictions and diverse legal and cultural requirements.

We also have to manage complex international supply chains and the effects of international events on these supply chains, such as the increase in gas prices as a consequence of the Ukraine conflict.

Social and environmental considerations have also gained prominence in recent years. Our shareholders and partners now expect deals to align with sustainable and responsible business practices.

This adds to the complexity of what we do, but this approach is very necessary, not just for the partners and shareholders but also local communities.

Africa's 'single market'

A decisive step towards Africa's economic development was the creation of the African Continental Free Trade Area (AfCFTA).

This was established in 2018 by the African Continental Free Trade Agreement. It has 43 parties and a further 11 signatories, making it the largest free-trade area by number of member states after the World Trade Organization.

AfCFTA's aim is to improve intra-African trade as well as international trade relations, which together form a key part of AFC's mandate and the agreement itself helps facilitate the implementation of that mandate.

It helps us create a 'single market' market of goods and services in Africa – for example, by having key independent power projects that can supply power across the continent, not just to individual countries.

We need government involvement to help reduce trade barriers and enhance economic cooperation, and help establish cross-continent transport routes – you need infrastructure to facilitate the free movement of goods and services.

Nana Eshun was in conversation with Cecily Davis, Fieldfisher's Co-Head of Africa, as part of Fieldfisher Africa Week 2023.

Areas of Expertise


Related Work Areas

Mining and Metals