IFC will invest US$150mn in South Africa’s Absa Bank to provide funding for infrastructure projects in Sub-Saharan Africa that face a financing shortfall following the recent turmoil in global financial markets.
The World Bank Group member’s financing will consist of a US$30mn loan and a US$120mn standby credit facility. Absa will use the funds to finance infrastructure projects that will have a strong impact in promoting economic development in some of the poorest countries across Sub-Saharan Africa.
“IFC’s investment will enable Absa to continue lending to commercially viable infrastructure projects across Africa that have stalled amid the sharp decline in hard currency financing following the global financial crisis,” says Maria Ramos, chief executive officer of the Absa Bank Group. “Together with IFC, Absa’s financing will help prevent cancellation or delay of infrastructure projects and contribute to reducing poverty in many African countries.”
The financing is part of IFC’s multifaceted response to alleviating the impact of the global financial crisis on private sector development. IFC is providing similar financing to other financial institutions to help ensure that viable, privately funded infrastructure projects across Africa have access to funding to weather the financial crisis.
“Good infrastructure, including roads, ports, and transmission lines, is central to enabling trade, promoting competitiveness, and fostering a vibrant private sector,” says Thierry Tanoh, IFC vice-president for Sub-Saharan Africa. “IFC is committed to working with partners such as Absa to develop infrastructure across Africa and help alleviate the impact of the global financial crisis on Africa’s poorest people and regions.”
IFC also is raising funds for a complementary infrastructure crisis facility, which will provide loans, equity, and advisory services to stabilise existing, viable infrastructure projects facing temporary liquidity problems due to limited private participation. IFC expects to raise more than US$10bn for the facility to help bridge the gap in available financing for viable, privately funded or public-private-partnership infrastructure projects in emerging markets, including Africa.
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