Africa Investment Forum Market Days 2024 – Global Risk Leaders Gather to Unlock Africa’s Investment Potential

The African Development Bank Group hosted a high-profile meeting of global insurers, export credit agencies (ECAs), and institutional investors to explore innovative risk-sharing solutions on the sidelines of the Africa Investment Forum Market Days 2024.

The Insurer and ECA Day, held on the continent for the first time, on December 3, reinforces the Bank’s commitment to bringing large scale finance into Africa. It featured comprehensive sessions on the African Development Bank’s vision and strategy, Africa’s economic outlook, as well as in-depth discussions on sovereign and non-sovereign operations, risk management, and portfolio performance. Participants included representatives of the Berne Union, Axa, Marsh, Allianz, Chubb, Trade and Development Bank, LGIM, Sinosure, JBIC and ICIEC, among others.

Led by senior African Development Bank Group executives, including Senior Vice President Marie-Laure Akin-Olugbade and Vice President and Chief Financial Officer Hassatou N’sele, the program provided participants with detailed insights into the African Development Bank’s operations and opportunities for collaboration.

Opening the event, N’Sele highlighted the urgent need to close Africa’s infrastructure investment gap. She noted that private investors currently account for just 10% of infrastructure financing on the continent – less than half the level in Asia. With Africa needing $1.3 trillion annually to achieve its SDG targets by 2030, she emphasised the African Development Bank’s commitment to expanding its financial capacity by $73 billion over the next 10 years. This will be achieved through various innovative structuring approaches including better leveraging the insurer and ECA communities, she said.

The session featured dynamic discussions about emerging trends in development finance, including the growing role of untied loans and evolving export credit agency (ECA) products. Participants noted a 30% increase in untied cover volumes over the past year, reflecting greater flexibility in how ECAs are supporting trade and development finance. N’Sele noted that, given global institutional investors like sovereign wealth funds and insurance companies manage assets exceeding $100 trillion, attracting even a small fraction of those funds into African infrastructure investment would go far toward closing the financing gap.

Participants also learned about the Bank Group’s plans for its concessional arm, the African Development Fund (ADF). These include working toward achieving an independent formal AAA rating by 2025-2026. Insurers welcomed the development, which, if achieved, would enhance the ADFs ability to serve as a Guarantor of Record in mobilizing insurers into sovereign loan transactions and shore up limited lending capacity to the over 30 regional member countries serviced by the African Development Fund.

The event provided attendees an opportunity to exchange best practice on how multilateral development banks and credit protection sellers can work together using tranched and first loss structures. There were deep dive sessions into the African Development Bank’s Room 2 Run Sovereign transaction which took place in October 2022, and which allowed a club of insurers to take a first loss position on a portfolio of sovereign loan exposures of up to $400 million given the African Development Bank’s Preferred Creditor Status. The sessions also elaborated on single country exposure risk transfers with the market in transaction in Benin, Egypt, Cote d’Ivoire and most recently Togo.

In a presentation, Berne Union Executive Secretary Paul Heaney emphasised that long-term investment into Africa by credit insurance providers is increasing and diversifying. He noted that Angola, Egypt, Cote d’Ivoire, Ethiopia and Mozambique had the most exposure. He stressed that African risk is not as high as frequently presumed, although strong sovereign support is vital to success.

The event also highlighted how partnerships between the Bank, insurers, and export credit agencies can broaden access to affordable financing amid global market volatility. Looking ahead, the African Development Bank aims to crowd in more insurer and ECA capacity as part of its mobilisation action plan.

Senior Vice President Akin-Olugbade highlighted the importance of having ECAs and insurers participate in the Africa Investment Forum Market Days, many of them for the first time. The event is exactly what the Africa Investment Forum Market Days are all about.

This year’s theme, Leveraging Innovative Partnerships for Scale was chosen to focus on and recognize the often-silent partners – insurance companies – as key investors facilitating promising projects to achieve deal closure.

ADVERTISEMENT