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AFC sets eyes on Zimbabwe investment

AFRICAN Finance Corporation (AFC) says it can invest in excess of US$500 million in Zimbabwe’s infrastructure development projects but the outlay will entirely depend on the investment opportunities available.

Staff Writer.

This comes as the corporation has begun working closely with the Infrastructure Development Bank of Zimbabwe (IDBZ) to identify opportunities.

Last month, Zimbabwe became the 19th member state of the AFC to sign an instrument of adherence to the AFC, which is expected to enable Zimbabwe to access global capital markets.

AFC primarily derives its funding from global capital markets.

In 2017, for example, the AFC issued a US$500 million eurobond from investors located across a number of markets such as the United Kingdom and the United States.

Augustine Chipungu, a senior associate at Buchanan consultancy firm, told businessdigest that due to political sanctions from these countries it was not possible to invest this money in Zimbabwe.

“However, due to wider political changes within Zimbabwe, AFC, amongst other investors, will now be able to allocate this funding to develop the country’s infrastructure.

There is no set budget for Zimbabwe; It depends entirely on how many opportunities are available and ready for investment. IDBZ and AFC are now working with IDBZ to identify what these opportunities are.

“It could be US$50 million. It could be US$500 million, it all depends on how many opportunities there are that require investment, and are ready to be invested in,” he said.

He added that the AFC only invests in projects which pay for themselves, not those that require a sovereign guarantee, or taxpayers’ funding.

Rather, he said, the projects must be paid for by users that will benefit from them. Therefore, there will be no requirement for the Zimbabwean public purse to take on debt.

The AFC invests in five sectors of infrastructure including power, natural resources (mining, oil and gas), telecommunications, transport and logistics, and heavy industries.

Chipungu said the funding could either be through a trade finance facility to the Reserve Bank of Zimbabwe, or corporate finance to the private sector.

“It varies from transaction to transaction. Ultimately, AFC seeks to be as flexible as possible to suit the needs of individual countries,” he said.

AFC, an investment grade multilateral finance institution, was established in 2007 with an equity capital base of US$1 billion, to be the catalyst for private sector-led infrastructure investment across Africa.

With a current balance sheet size of approximately US$4,2 billion, the AFC is the second highest investment grade rated multilateral financial institution in Africa with an A3/P2 (stable outlook) rating from Moody’s Investors Service.

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