Business Day newspaper (SA) - 22 May 2017
Many a noble sentiment was expressed at an event in Abuja last week to celebrate the 10th anniversary of Nigeria’s home-grown infrastructure fund, the African Finance Corporation.
Key among them was the need for African self-sufficiency in unpredictable times and for visionary leadership to unlock the potential of institutions that will help to build confidence in and support for African initiatives.
The corporation has an interesting background, one often little known in the south of the continent, where we are focused on our own large development finance organisations.
The corporation was the initiative of former Nigerian central bank governor Charles Soludo, who drove the 2005 consolidation of the country’s banking sector by raising capital requirements significantly, forcing more than 60 of the then 89 banks to close or merge with others.
This built a stronger banking sector that later enabled banks to support the African Finance Corporation.
That year, Nigeria lost its bid for the presidency of the African Development Bank to Rwanda’s Donald Kaberuka. As the largest shareholder in the bank, Nigeria did not take the loss lightly.
Shortly afterwards, Soludo proposed to then president Olusegun Obasanjo that Nigeria establish its own development and infrastructure fund.
The former leader agreed to it in, as Soludo put it, "a 22-minute conversation".
The presidential jet was dispatched for road shows in Africa and global capitals to raise money. The central bank provided the $1bn in start-up capital.
The institution was launched in 2007. Its first equity investment took place in 2008 – in the MainOne undersea fibre-optic cable system linking West Africa to other regions.
The enterprise was not without its detractors, who said Nigeria was misusing central bank funds to drive Nigeria’s "soft power" in Africa after the African Development Bank disappointment.
A 2008 WikiLeaks report said there were concerns about transparency and the involvement of just a chosen few from among the country’s political and economic elite.
The media asked whether the African Finance Corporation was a development bank or simply a front for special interests.
Obasanjo’s successor, Umaru Yar’Adua, investigated the central bank’s role.
Last week, Soludo revisited the early days in a keynote address to 500-odd delegates in Abuja. He acknowledged many questions had been asked about the African Finance Corporation.
"People were suspicious of its motivation," he said.
“ The enterprise was not without its detractors, who said Nigeria was misusing central bank funds”
But, 10 years later, it seems to have shaken off the clouds. It now has capital of more than $4bn, an A3 credit rating, 14 country stakeholders and investments across 30 African countries including SA and others in southern Africa, dipping a toe into territory dominated by the Development Bank of Southern Africa.
Last week, some speakers said the story of the corporation is not just about infrastructure. It is the story of doing business in Africa – one of determination against the odds, of proactive leadership and the ability of Africans to deliver their own development.
For all the hype around the event, there is still a long road ahead, not just for the corporation but for infrastructure delivery in Africa. It is taking too long for projects to come to fruition and political risk remains high. Bankable projects are in short supply and delivery capacity is weak. Local currency financing is still mostly an elusive concept.
All players need to talk more, find common ground and look for new models that will work better and deliver infrastructure faster as the calls for Africa to become more self-sufficient in this uncertain global environment get louder.
• Games is CEO of African business consultancy DLG Advisory. This article first appeared in Business Day. See the link to the original: https://www.businesslive.co.za/bd/opinion/columnists/2017-05-22-dianna-games-africa-seeking-to-grow-self-sufficiency-in-troubled-times/?platform=hootsuite