MIGA and Africa Finance Corporation (AFC) Solidify Ties to Grow Africa’s Pie of Investable Projects
WASHINGTON DC, October 26, 2021 — The Multilateral Investment Guarantee Agency (MIGA), the political risk insurance arm of the World Bank Group, and Africa Finance Corporation (AFC), a multilateral financial institution created by sovereign African states, have agreed to cooperate more closely to leverage each other’s instruments and structure comprehensive solutions to de-risk and support infrastructure projects in Africa’s emerging economies.
Management of the two institutions exchanged letters today that commit to periodic consultations and systematic engagement to help develop a pipeline of projects that will not happen unless the institutions come together to apply their respective financial products. The objective of the collaboration is to grow the pie of investable projects, while deepening ties between the two institutions and attracting further private sector investors.
This commitment acknowledges the effort necessary to identify opportunities and grow the pie – the meetings, discussions, consultations to structure solutions, and more, that often go on for long periods of time prior to bearing results. This exchange of letters signals the value that AFC and MIGA management place on the painstaking discipline and behaviors required to develop new projects, structures or products that eventually can be scaled and replicated.
Executive Director and Head of AFC’s Financial Services division, Sanjeev Gupta said, “This partnership demonstrates our efforts to establish cooperation with other international financial institutions to help foster sustainability, inclusive growth and enhanced productivity on the continent of Africa. AFC is delighted to collaborate with MIGA in the delivery of this mandate as this presents us with more opportunities to bolster investment in our member countries.”
“We envisage crafting guiding principles to facilitate our cooperation and identify projects that will happen only when MDBs come together,” said Ethiopis Tafara, Vice President and Chief Risk, Legal & Sustainability Officer and Partnerships, MIGA. “We will coordinate with each other in the infrastructure sector and leverage our complementary instruments to develop projects that require each of us to assume a distinct and unique role that allows for the project to be 'de-risked' and go forward. These combined efforts are what we need to do more projects together and enhance foreign direct investment, support a sustained recovery from the pandemic, and build back better.”
MIGA was created in 1988 as a member of the World Bank Group to promote foreign direct investment in emerging economies by helping mitigate the risks of restrictions on currency conversion and transfer, breach of contract by governments, expropriation, and war & civil disturbance; and offering credit enhancement to private investors and lenders.
Since its creation, MIGA has issued nearly US$65 billion in guarantees across 119 developing countries.
AFC was established in 2007 to catalyse private sector-led infrastructure investment across Africa. It is the second highest investment grade rated multilateral financial institution in Africa. AFC’s approach combines specialist industry expertise with a focus on financial and technical advisory, project structuring, project development and risk capital to address Africa’s infrastructure development needs and drive sustainable economic growth. AFC invests in high-quality infrastructure assets that provide essential services in the core infrastructure sectors of power, natural resources, heavy industry, transport, and telecommunications. The Corporation has invested over US$8.7 billion in projects in 35 countries across Africa since inception.
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