As African talents continue to introduce projects that carry potential solutions needed for the continent’s socio-economic transformation, experts find that most innovators fail to speak to investors’ interests.
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On the sidelines of the African Development Bank (AfDB) Annual Meeting 2024, in Nairobi, Kenya, experts in the money market, investors, and the private sector, convened in a session of Africa Investment Forum’s Investment Roundtable Bankability Series that delved into project development and bankability challenges.
The AIF is a multi-stakeholder platform focused on continental dealmaking and project facilitation between project sponsors, policymakers and investors. They discussed issues related to timing, deal quality, and risk-return assessments, with a view to present innovative ways to attract investment and deliver impact.
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Bankable projects constitute good repositories for major capital investments from private sources, investments that can transform economies and create jobs and opportunities for SMEs.
Joao Duarte Cunha, the AfDB Division Manager of Renewable Energy Funds, said that while balancing profit and impact, the fundamentals for any project to succeed is being bankable and development finance institutions come in to bridge the gap of investors’ profit returns and the desired impact.
However, he noted that while they welcome innovative ideas, the first important question to ask is whether the developers can execute the project and deliver as expected.
"Some [developers] may not have the requisite experience, track record or simply not have the funding. But even if you provide level funding like $1 million, it is not enough to build something from scratch. It will probably help with studies, but that’s just a beginning of a long journey. We need to understand that you have what it takes until your project becomes a reality.”
Cunha added that some resilient entrepreneurs are ready to listen and be guided to take direction from early-stage investors, which is a quality that facilitates partnering with institutions that help them to develop their business and provide additional capital.
"You absolutely need to demonstrate that you can deliver. Otherwise, I think we would all be wasting our time.”
Chinelo Anohu, a senior director at AIF, reiterated that the successes that the organisation records are of those entrepreneurs who are willing to drop their idea of what they think they want to do and focus very clearly on how to get to where they need to be.
"The job we do is to help you have what it takes because we are interested in that project. But that’s after we have determined the impact that it will have in the long run when it’s built. The basic thing for success on the AIF platform is the willingness of the project sponsor to accept the structuring that is required to meet their request,” she said.
Chris Kandie, the Executive Director at Cygnum Capital, an emerging markets-focused investment bank, said that a lot of funding goes within project preparation towards legal due diligence and transaction advisory work to support the last mile of projects.
Launched in 2018 as AfDB’s flagship investment program, the AIF has mobilised nearly $180 billion in investment interest.
The 2024 market-days, the annual three-day event which physically convenes investors, project sponsors, professional service providers, and key government officials at a bespoke platform for transactional conversations, are scheduled for December 4 to 6 in Rabat, Morocco.
In the 2023 market days, AIF generated $34.82 billion in investment interest for infrastructure, agriculture, health, and creative industry projects.