The cabinet approved Egypt’s joining the African Finance Corporation (AFC) earlier this month, making it the 32nd member of an organisation that focuses on infrastructure projects across the African continent.
The membership becomes official when parliament approves it after it convenes next week. The AFC principally funds and develops projects in the power, transportation and logistics, heavy industries, natural resources, and telecommunications sectors.
The multilateral lender’s mission is to address Africa’s pressing infrastructure investment, capacity, and economic development needs, while delivering competitive financial returns and positive social and environmental impacts, AFC CEO Samaila Zubairu told Al-Ahram Weekly.
Egypt will enjoy all the benefits of being a member of the AFC, including increased investment allocation, preferred access to the AFC’s structuring and lending solutions, reduced debt costs, and access to advisory and project-development services.
These advantages help AFC member states address critical infrastructure gaps across the corporation’s core sectors. The AFC has already injected $100 million worth of investments into the Egyptian Petroleum Corporation and the privately owned Carbon Holdings.
The AFC has extended finances in the neighbourhood of $8 billion to its members since it was formed 12 years ago, and now it is planning $1 billion of investments in Egypt starting with the transport and logistics sectors.
It is considering supporting a state-of-the-art terminal to receive petroleum products, financing for a grain and dry product storage and trading business and associated infrastructure, and financing for rail projects.
It is expected to cover the power sector as well through investing in expansion plans for renewables like solar and wind energy. It is a strong lender with assets in Egypt and across Africa, and it works in the acquisition and refurbishment of renewable assets alongside local partners, Zubairu said.
AFC’s plans for Egypt will also involve the heavy industries through financing a pipeline of investments in renewables, vaccine manufacturing, and storage, transport and logistics equipment manufacturing and exports to Africa, he added.
It will cover the technology sector by supporting the rollout of an e-customs system in Egypt and expansion to other African markets.
Egypt was one of the few emerging-market countries that experienced a positive growth rate in 2020 despite the severe impacts of the Covid-19 pandemic on economies worldwide. This was mainly due to the government’s swift and prudent policy response, coupled with broad support from development finance institutions.
On the continental level, Zubairu said that the implementation of the African Continental Free Trade Agreement (AfCFTA) will require a significant scaling up of physical infrastructure within individual countries and regions, in order to support an increase in intra-African trade. It will also require an increase in local manufacturing to meet the local-content requirements of the agreement.
“The AFC’s mandate responds to the above challenges by developing and financing infrastructure, natural resources, and industrial assets to catalyse sustainable and inclusive growth across Africa and enhance productivity,” he said.
On the AFC’s efforts to establish cooperation with other international financial institutions to help develop the continent’s countries, Zubairu said the AFC had established partnerships regionally with other institutions such as the African Development Bank, the African Export-Import Bank, the PTA Bank, the Islamic Development Bank, the Banque Ouest Africaine de Development, and the Nigerian Sovereign Investment Authority.
Internationally, it was working with the China Africa Fund, the Infrastructure Development Finance Company of India, the Dutch development bank FMO and the US government through USAID and OPIC, the Overseas Private Investment Corporation, he added.
*A version of this article appears in print in the 30 September, 2021 edition of Al-Ahram Weekly.