OPEC Fund, Africa Finance Corporation sign $50m loan to finance infrastructure development

The OPEC Fund for International Development and Africa Finance Corporation (AFC) have signed a $50m loan agreement to finance the development of infrastructure to support economic growth and job creation across the continent.

AFC, a multilateral financial institution with 39 member countries, was established to provide financing and private sector-driven solutions for infrastructure in key sectors including power, transport, heavy industries, telecommunications, and natural resources.

The 10-year loan will be used to enhance connectivity, transport, logistics, and trade and to boost access to energy across the African continent.

The loan doubles the OPEC Fund’s commitment to AFC following an initial $50m 10-year loan provided in January 2021, and builds on collaboration initiated through a cooperation agreement in 2017.

To date, AFC has invested over $11bn in projects across 36 African countries.

OPEC Fund loan aligned with SDGs

The loan is aligned with the United Nations Sustainable Development Goal (SDG) 9 – Innovation and infrastructure, and SDG 17 – Partnerships.

“Africa continues to be a key region for the OPEC Fund, with more than 45 percent of our aggregate financing dedicated to the continent,” said OPEC Fund director-general Dr Abdulhamid Alkhalifa. “Sustainable infrastructure development is key to unlocking Africa’s vast potential and enabling it to fully utilize its resources. Working with local partners on the ground such as AFC helps to deepen our impact and support Africa’s development agenda.”

AFC president & CEO Samaila Zubairu said: “AFC has enjoyed a long-standing partnership with the OPEC Fund and we are delighted to collaborate again to support the work we do in developing critical infrastructure in Africa. Developed and developing countries alike are battling the chronic challenges brought on by a wave of global shocks, and these challenges will only be solved by working together through partnership and engagement between the world’s leading financial institutions.”

Africa’s economic growth has been slowed by global supply chain disruptions and rising costs in the aftermath of the Covid-19 pandemic, further widening the continent’s infrastructure funding gap.

The alliance between the OPEC Fund and AFC is targeted at increasing access to long-term sustainable finance for infrastructure projects.

In other developments, the OPEC Fund for International Development priced its inaugural benchmark bond issue in the capital markets on January 18.

The bond was priced using its Sustainable Development Goal (SDG) bond framework on which Credit Agricole CIB acted as the sole sustainability advisor.

Attracting strong demand from investors globally, the three-year fixed-rate sustainability bond raised $1bn, which will be used to finance or refinance key sustainable development projects that are aligned with the OPEC Fund’s multi-sectoral development mission and directly contribute to achieving the SDGs.