The Export-Import Bank of India has extended a US$100mn line of credit to the Africa Finance Corporation (AFC) to support infrastructure projects, primarily in West Africa.
It is the first time India Exim has extended a credit line to AFC, an infrastructure-focused multilateral development bank majority-owned by private African financial institutions.
Proceeds from the 10-year, floating rate loan “will support AFC’s continued mission to bridge Africa’s infrastructure gap and drive the sustainable economic growth urgently required on the continent”, India Exim says in a statement.
“The entire proceeds from the credit line will be used to develop critical infrastructure required for the revival of African economies in the wake of the Covid-19 pandemic and includes sourcing of goods and services from India,” India Exim’s chief financial officer Tarun Sharma tells GTR. “Such long tenored loans are normally not available in the market.”
Sanjeev Gupta, AFC’s executive director and head of financial services, tells GTR the funding has been applied to including Benin, Côte d’Ivoire, Gabon and Togo. The company has not been named.
The projects carried out by the company will use Indian entities for engineering, procurement and construction contracts, Gupta says.
deputy managing director Harsha Bangari says: “As part of our mandate, India Exim bank continues to foster a network of alliances and institutional linkages with multilateral agencies like Africa Finance Corporation, who have a strong credit profile and are at the forefront of changing the development landscape in Africa.”
“We look forward to broadening the relationship between our institutions for the economic benefit of Africa.”
India Exim has previously extended similar credit lines to multilateral lenders in Africa such as the African Export-Import Bank and the Trade and Development Bank.
According to Sharma, as of June this year it had 205 current lines of credit extended across 40 countries in Africa, collectively worth over US$12bn and representing 39% of its total credit line commitments.
India Exim says it has also “sanctioned” US$2bn in buyers’ credits under its National Export Insurance Account for more than 20 projects in Africa, as of June.
The bank’s traditional focus has been on infrastructure, agriculture, communications and information technology.
AFC, founded in 2017, has recently spread its footprint to North Africa, with Morocco joining as a member state in June, and Egypt this month.
In addition to private investors, the Nigerian central bank has a 42.3% stake in the institution. The corporation announced on September 6 that the governments of Guinea and Togo have become minor shareholders.