Addressing Africa’s infrastructure needs is the core aim of development finance institution Africa Finance Corporation (AFC), which emphasises the need for shared infrastructure development.

One of the corporation’s main points of interest in terms of infrastructure development is the natural resources sector.

The AFC tells Mining Weekly that this sector requires a fair amount of infrastructure development, hence, the inclusion of a mining product offering among its services.

Over the past three years, the AFC received the mandate from its board of directors to include mining as one of its core natural resource offerings. The company is also considering various bulk commodities projects, such as those involving copper, coal and iron-ore, which are very capital intensive and require a fair amount of upfront infrastructure investment, notes AFC natural resources director Osam Iyahen.

“The AFC has a very strong appetite for investing in infrastructure that is part of the mining sector, which, in Africa, is the key enabler for the success of many projects,” he says.

As a result, the corporation was keen to participate in this year’s Investing in African Mining Indaba, held in Cape Town last month, where it shared its views on infrastructure and mining constraints in terms of financing, as well as the future of mining investment and infrastructure development.

Africa’s largest infrastructure deficits are power and roads. Based on research from the World Bank Group, the 48 sub-Saharan African countries – with a combined population of 800-million, generate about the same amount of power as Spain, which has a population of 45-million. Only one-third of Africans living in rural areas are within 2 km of an all-season road, as opposed to two-thirds of the population in other developing regions.

The AFC believes that shared infrastructure will be key to a country’s economic development. Some countries in Africa require new road networks or railway developments to support various mining practices. For example, the sub-Saharan Regional Pipeline Corporation is investing about R4-billion to transform a 350-km-long narrow and unpaved carriageway into a modern road that crosses Mozambique’s Tete province and ends at the Zambezi river, where Mozambique, Zambia and Zimbabwe have a common border.

Iyahen says developing infrastructure that will serve multiple industries will reduce the upfront costs of infrastructure, facilitating the development of downstream mining operations that were previously seen as unviable. This, he notes, was a major point made during the Mining Indaba’s Driving Investment in African Infrastructure panel discussion.

Another much-discussed issue was the need for social infrastructure, which is not traditionally associated with “big ticket” physical infrastructure.

Iyahen explains that, in Africa, social infrastructure is as important as physical infrastructure, as adequate schools and social services are required around mine sites. Without a stable mining community, there is a greater likelihood of discontent, and operations will probably not run smoothly. AFC is trying to encourage project developers to keep this in mind when developing mining projects.

Meanwhile, the company is also considering ways of re-empowering post- conflict States, such as Sierra Leone and Liberia, where infrastructure development is critical for economic growth. The corporation aims to play a catalytic role to develop transport and logistics infrastructure, as well as provide a full sweep of solutions that will eventually lead to economic growth and employment in such countries. Iyahen notes that cultivating a country’s social and physical infrastructure results in development and the creation of long-term value.

The corporation says it took full advantage of its presence at the Indaba by engaging in one-on-one meetings, while also cohosting a cocktail event, where Nigerian Minister of Solid Minerals Kayode Fayemi outlined his vision for the mining sector and obtained feedback from investors, sponsors and advisers. As the AFC’s headquarters are in Nigeria, the corporation believes that its duty is to help the country’s government to pave the way for the development of its mining sector, which is important, especially when tackling low commodity prices.

“This year, we decided to have an increased presence at the Mining Indaba to highlight that the AFC is open for business, not only in Nigeria but also across Africa,” says Iyahen.

He notes that the corporation has a contrarian view of the world, as it believes that now is the right time to acquire assets, while many role-players are exiting from the commodity space.

AFC intends to be in this business for the long haul. “We are Africa-based, with African money, which makes us part of a unique institution.”

The corporation notes that it is looking for development opportunities and that it can add value amid the commodity crisis by acquiring significant stakes in economically and commercially promising projects, which can also provide the social impact required to spur the growth needed in many African economies.