‘Mobilising pension funds will change the infrastructure game,’ says Africa50’s CEO Alain Ebobissé

By Aurélie Benoit
Posted on Tuesday, 11 October 2022 11:18

Cameroon’s Alain Ebobissé has been the managing director of Africa 50 since 2016. © DR

Africa50’s CEO Alain Ebobissé shares his ambitious roadmap for the development institution, which includes structuring a new vehicle, mobilising local sovereign wealth funds and unlocking complex projects.

Alain Ebobissé’s watchword is accelerate. He believes that the best way to tackle the major deficits that the continent is experiencing is to quickly renew the infrastructure sector.

To do this, the Cameroonian – a pan-Africanist and long-time infrastructure sector expert, who spent part of his career with the World Bank Group – is looking for new allies. He is primarily targeting pension funds and African sovereign wealth funds, which he believes should play an increasing role in financing local structuring projects. Drawing inspiration from Asian and Middle Eastern examples, he is also counting on more open involvement from the private sector.

At the head of the investment platform since 2016 – he was reappointed in 2021 for another five years – Ebobisse has helped develop some of the continent’s most emblematic projects, such as the Malicounda power plant in Senegal, Scatec’s solar projects in Egypt and the Nachtigal hydroelectric plant in Cameroon. Owned by 29 African countries, the African Development Bank (AfDB) and two central banks, the BCEAO and Bank Al-Maghrib, Africa50 is currently raising its latest fund, which is targeting up to $500m, an unprecedented objective dictated by the sector’s crying needs.

Jeune Afrique: In terms of infrastructure financing in Africa, a figure between 60 and $108bn of annual deficit has been mentioned… How should we respond to such a delay?

Alain Ebobissé: These figures are even higher if we consider the shortcomings that Covid has revealed in the health sector. But this situation should be seen as both a challenge and an opportunity. Today, most of our leaders are convinced that the private sector must play a central role in bridging the gap. This is a complete paradigm shift from a time when most infrastructure was still financed by governments, who felt they were best suited to fill the gap. Things have changed and a new dynamic is taking hold.

What role can Africa50 play in this new momentum?

Since our operational launch almost 6 years ago, we have proven our capacity to act by leading 16 investment projects, with a total project cost of over $5bn. This is all the more true given that we first had to structure the institution: recruit staff, establish rules of governance, set up the board of directors, etc. Today we are ready to act as a lever of speed and we need to accelerate. The board members and shareholders are shuddering as many of them tell us that they have new projects. And I think that they can be implemented more quickly by means of more flexible institutions, with a governance framework that allows for quicker decision-making and less dependence on individuals.

What does this mean?

We need to build strong institutions that ensure continuity of action in the event of a change in leadership. The other issue is the time of execution. Too often we wait until projects are perfect before launching them, but this is not tenable in an environment that is by nature imperfect. Look at the gas-fired power plants that are being built very quickly all over the world, but not in Africa. This infrastructure has been replicated many times over, so it shouldn’t be that complicated.

Speaking of acceleration, Africa50 has taken on the road-rail bridge project between the two Congo, a project that had been stalled for almost 30 years. An inter-state agreement was signed between the two countries in November 2019, setting out the principles of cooperation for the bridge’s development, construction, operation and maintenance.  How did Africa50 manage to get both sides to agree?

We have strong shareholder confidence in our approach to projects. While many agencies focus on process, we cultivate a vision that is almost exclusively results-oriented. I ask my teams to cultivate a different vision and our colleagues generally come from the private sector. But we don’t operate in a vacuum, and the combination of government trust and the desire to move quickly makes us strong.

Where does this approach come from?

I used to work at the International Finance Corporation [IFC, a subsidiary of the World Bank], where knowledge is central. This agency is the leading financier of infrastructure in emerging countries, but the procedures can sometimes be cumbersome. I proposed creating IFC Infraventures to avoid this pitfall, and we obtained a delegation of authority and an envelope containing several million US dollars for which we could decide without having to go back to the board of directors after the investment committee gave their approval. This was a real-time saver.

When I came to Africa50, I thought it would be even easier because we were starting from scratch. We also chose to focus on less complex, medium-sized infrastructure projects that are strategic and attractive to the private sector. These types of projects can be implemented quickly, their financial closure can be achieved, which ensures their success and sets an example for attracting even more private investment.

You have been advocating the option of asset recycling on the continent for many years… Could you explain this concept and its benefits?

The idea is to take existing infrastructure and optimise it. This has a significant advantage for governments, which were the first to finance infrastructure on a continental scale, even though it meant penalising their accounts. But the proceeds from the concession can be reinvested in a new asset, which accelerates the whole sector’s development. Part of our new vehicle will be devoted to supporting projects that are already generating cash flow.

In July, you signed a memorandum of understanding to develop green and climate-resilient infrastructure projects in Africa with the AfDB and the African Sovereign Investors Forum (ASIF). What were the reasons for this rapprochement?

Regarding infrastructure financing, the game changer will come from mobilising African pension funds and sovereign wealth funds. On the continent’s scale, this represents more than $2,000bn and, today, only a tiny part of this budgetary envelope is allocated to infrastructure. These 10 African sovereign wealth funds gave the signal in June that they were willing to pool their resources, which shows that there is momentum to mobilise these funds.

Why have they waited so long to seek this financial windfall?

These entities traditionally prefer to invest in safe products such as Treasury bills. Well-managed infrastructure becomes an interesting asset, as it generates stable and guaranteed income over the long term. Of course, we have to be careful and build a diversified portfolio, but if 5 to 10% of these funds were directed towards infrastructure, it would already be a big change. Especially since we should not underestimate the confidence that these funds can inspire, like the leaders who set an example. Through our latest vehicle – Africa50 Infrastructure Acceleration Fund – which will welcome African and international pension funds, we hope to convince other African institutions.

After your first two vehicles, is this third fund’s objective to attract African institutional investors? 

Our third pillar is to mobilise African and global savings. To do this, we need attractive products, like what we have done by securing AfDB loans as part of the Room2Run transaction.

Isn’t the final objective of $500m a bit ambitious given the current macroeconomic situation (Covid, conflict in Ukraine, etc.)?

On the contrary! Some investors are urging us to do more, especially those from the Gulf and the US who can grant budgetary envelopes that are much larger than those of African investors. This is a reasonable objective.

Faced with the prospect of a global recession, is it possible that Africa will be used as an adjustment variable for international investors?

This is why initiatives like ASIF are essential. We need to be less dependent on foreign countries, otherwise, we are condemned to capital flight with each new crisis. The recession will have an impact on Africa, but we are providing financial stability by mobilising our pension funds. We will be affected by the recession for sure. Africa must continue to take the lead in its business. This is what has happened and is happening in emerging regions.

When Africa50 was launched, the stated goal was to reach $3bn in capital. Where are we today?

We currently have $882m in capital and want to raise even more money. However, we have changed our strategy and want to do this through separate investment vehicles. We are counting on our current capital as leverage to raise even more money. We are already working on structuring future vehicles as we want to move forward quickly. Again, the continent’s infrastructure needs are too great.

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