(Bloomberg) —
AFC Capital Partners secured $300 million in anchor funding led by the United Nations-backed Green Climate Fund, and plans to close the initial phase of an infrastructure-resilience fund by early 2024.
The organization, part of the Lagos, Nigeria-based Africa Finance Corp., is in further talks with other investors and expects the fundraising to later rise to between $450 million and $500 million, said Ayaan Zeinab Adam, AFC Capital’s chief executive officer, in an interview on Tuesday at the Bloomberg New Economy Gateway Africa conference in Marrakesh, Morrocco.
“Africa has a huge infrastructure deficit,” she said. “And in addition to that, we are also having to climate proof that infrastructure.”
The continent has in recent years been rocked by cyclones on the southeast coast, the worst drought in four decades in the Horn of Africa and devastating floods in southern, east and western regions. This is raising an urgent need for stronger roads and bridges, more resilient ports and irrigation on a continent that has done little to contribute to the emissions that are causing global warming.
“Emissions have no borders,” Adam said.
The Green Climate Fund, based in Incheon, South Korea, is providing $240 million in funding while Africa Finance Corp. will invest $60 million, she said. Once the initial target has been met, fundraising will continue until a target of between $750 million and $1 billion is reached.
A second fund of roughly the same amount is expected to follow, according to Adam.
“We have a lot of capacity building work to do in the 20 or 25 countries that we will focus on initially,” Adam said. “Then hopefully we’ll have another similar fund to focus on the other 25 countries.”
The main barrier to investment is convincing both governments and investors to spend money to ensure that new infrastructure can withstand adverse weather events, according to the CEO. “There’s still a lot of education in the Africa context needed for policymakers and asset owners,” she said.
Once the money has been raised, deployment will be rapid because of the scope of the need, Adam said.
As a continent “we are not receiving sufficient money to shore up infrastructure to cope with floods and cyclones, she said. “On adaptation it’s zero.”
Africa Finance Corp was founded in 2007 to try and catalyze private-sector investment in Africa. The Green Climate Fund was set up to assist developing countries to fight climate change.
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