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Ghana infrastructure fund secures $85m from France

By David Whitehouse
Posted on Friday, 4 September 2020 17:17

Kotoka International Airport in Accra. GIIF will decide later this year on possible debt relief for the airport. REUTERS/Francis Kokoroko

The Ghana Infrastructure Investment Fund (GIIF) hopes to secure further financing this year after getting a credit line worth $85mn from the French development agency, GIIF CEO Solomon Asamoah tells The Africa Report.


The fund is in talks with two further development finance institutions (DFIs) from which it hopes to raise about a further $170mn. The due diligence processes of the DFIs has been delayed by COVID-19, says Asamoah.

GIIF was set up in 2014 with a mandate from Ghana’s government to invest in infrastructure projects. The 10-year credit line from the Agence Française de Développement (AFD), obtained in August and priced at LIBOR plus 3.5%, is the first time that investment has been secured other than from Ghana’s government.

READ MORE Coronavirus: DFIs are key to Africa’s economic recovery

“We understand what they need to see,” says Asamoah. “There’s no point trying to raise money too early. We had to build a track record and spend the initial money from the government wisely.”

All three DFIs were able to start due diligence before COVID-19, adds Asamoah. All of them were able to choose which projects they wanted to visit, and one took the option of going without anyone from the GIIF.

READ MORE How to manage corruption risk in African infrastructure projects

The AFD has made it clear that it wants investments that will lead to climate and sustainability improvements, he says.

  • The fund has a “long pipeline of potential projects” such that it will probably be able to lend the AFD’s money within a year.
  • Renewable energy, eco-tourism, education, affordable housing and waste-water management are the sectors in which the GIIF plans to lend.

According to McKinsey, closing the infrastructure gap in Africa would mean raising infrastructure investment as a share of GDP from 3.5% to 4.5%, or doubling the absolute level of investment between 2015 and 2025.

  • By contrast, McKinsey says, China spends about 7.7% of GDP on infrastructure, and India 5.2%.
  • Asamoah argues that the GIIF is a new kind of institution that can help to close the gap. “The government is putting its money where its mouth is” to encourage external investment, he says.

The minister’s village

GIIF’s board is drawn from the private sector and does not have a government representative. The finance minister sits on the fund’s advisory committee, but the government’s involvement is based on sectors rather than individual investment decisions, says Asamoah.

  • “We look at investments the way the private sector does,” adds Asamoah. “We’re not building a road to the minister’s village.” He says he has never been put under pressure by the government to favour a project.

Existing investments by the fund include businesses that have been hit hard by COVID-19, such as Ghana Airports Company, the Airport City Pullman Hotel and the Maaha Beach resort.

  • The Pullman Hotel construction has been delayed and completion will now take at least until the end of 2021.
  • The Maaha Beach resort has been given a break on interest payments that will last for between six months and a year, says Asamoah.
  • A possible repayments holiday for the airport company will be considered. “I will make the decision around the end of the year,” notes Asamoah. “It depends on how fast the ramp-up of airport business is.”

Bottom line

Government-backed funds such as the GIIF are showing how Africa can start to make inroads into its infrastructure financing gap.

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