AFC, IFC give $354m infrastructure facility to Africa

The largest provider of infrastructure solutions on the continent, Africa Finance Corporation (AFC), has announced the successful conclusion of a $160 million Kimchi Term Loan with Mizuho Bank and Shinhan Bank.

While the latter served as the primary head arrangers, the former served as book-runners. The effective closing of this facility, according to a statement issued by the continental development finance agency, followed the debut of the $140 million Kimchi loan facility in 2019, which marked AFC’s entry into the Korean debt market.

The facility, according to AFC’s senior director and treasurer Banji Fehintola, validated AFC’s robust market access in the Korean markets.

He said: “We are pleased to have successfully executed on our second Kimchi loan facility, expanding our footprint in Korea and Asian capital markets at large. Today’s announcement serves as a validation of AFC’s strong market access, the strength of our credit profile and our well-established investor engagement programme.

“We continue to seek strong partnerships with credible institutions across the globe to provide capital for the urgently needed infrastructure required to sustainably transform African economies and change the lives of its people for good.”

Taipei Fubon Commercial Bank Ltd, Hua Nan Commercial Bank Ltd, Taiwan Cooperative Bank, The Export-Import Bank of the Republic of China, Industrial Bank of Korea, and Kexim Bank Limited are additional financial institutions that are taking part in the new Kimchi facility.

In a related development, the Democratic Republic of the Congo (DRC), Kenya, Madagascar, Niger, Republic of Congo, and Zambia are the six African nations where the International Finance Institution (IFC) has provided loans to Airtel Africa subsidiaries totaling $194 million. The loans are intended to connect millions of new internet subscribers in these nations.

“IFC will provide six of Airtel Africa’s subsidiaries with a mix of local currency and USD loans totaling $194 million. The new financing facility is in line with Airtel’s Africa strategy to increase debt within its operating companies,” IFC said in a statement.

IFC noted that the financing facility has an eight-year term and would be used in the aforementioned nations, where the local banking sector and financial options are still mainly underdeveloped.

Through IFC’s Managed Co-Lending Portfolio Program (MCPP), institutional investors have provided co-financing for the loan. The Local Currency Facility of the International Development Association’s (IDA) Private Sector Window provides funding for the IFC loan in Zambia.

Segun Ogunsanya, Airtel Africa’s CEO, lauding the close of the new facility, said: “I am very excited to announce the signing of this new facility with IFC. Not only does this facility align with our focus on improving our balance sheet through localising debt within our operating companies, but it also supports our commitment and our ability to meet very strict ESG criteria in demonstration of the continued execution of our sustainability journey. I look forward to working closely with IFC in the coming years and to exploring further opportunities to cooperate together to support the economies and communities where we operate.”

IFC is a member of the World Bank Group and has operations in over 100 nations. It uses its resources, knowledge, and clout to open up markets and possibilities in developing nations.