Attempts for concerted collaboration among African institutions in establishing a regional investment banking institution to bridge the massive funding gap for the development of Africa’s key economic sectors and infrastructural outlay are gaining momentum.

The birth of Africa Finance Corporation (AFC), a private sector-led regional investment bank, will help reverse the dependence of real domestic capacity on foreign financing by empowering key African institutions to build large ticket private sector businesses into global players in key sectors. In realisation of the reality, the President of the Federal Republic of Nigeria, constituted a technical committee under the auspices of the Central Bank of Nigeria (CBN) to fast track the process, by developing a concept paper and take all necessary steps to actualise the cooperation.

In an attempt to achieve the target, the CBN, in collaboration with the Central Bank of The Gambia (CBG), on Thursday, convened AFC Investors Forum at the Kairaba Beach Hotel, to expose the private sector finance institutions and other stakeholders to the realities surrounding AFC.

Delivering a statement at the forum, Famara Jatta, Governor of CBG, said the forum demonstrated “our commitment” to building strong and sustainable financial institutions in Africa and to grow the continent out of poverty.

Governor Jatta said Africa is the only continent that has grown poorer in the past 25 years, adding that its share of world trade also halve in a generation and had received less than 1.0 per cent of foreign direct investment in 2005. He then added: “Africa also lagged behind other regions in terms of economic growth and competitiveness.”

He described these facts as “few of a number of worrying indices”. He stressed that Africa’s challenge is to achieve higher and sustainable growth, reduce poverty and attain the Millennium Development Goals. According to him, this will only be feasible, if “we implement prudent micro-economic policies and structural reforms, diversify the export base to cushion the impact of exogenous shocks and mitigate volatility in output growth and more fundamentally build strong financial institutions”.

The CBG boss also said that Africa has the world’s least developed financial sector, noting that “institutional coverage is limited and even the banking industry, the dominant sub-sector, is limited and has a comparative advantage in providing short-term credit”.

Confirming that the government of The Gambia and the CBG welcome the establishment of AFC, Mr. Jatta said the corporation comes at a time of optimism about growth prospects and development in Africa. “Growth averaged a robust 5.0 per cent per annum, inflationary pressures decelerated and external and fiscal positions of many African countries strengthened,” he added.

In his lengthy presentation, Prof Chukwuma Soludo, Governor of CBN, who was accompanied to Banjul by a high-powered delegation, said the focus of AFC includes a private sector-led project and the development of infrastructure across Africa.

Prof Soludo said the regional cooperation would offer a full range of financial products, including loans, guarantees, risk management products, equity participation in private-sector led projects and venture capital. He then added: “AFC would also offer investment banking services, such as corporate finance, mergers and acquisitions, capital market activities equity research, asset management, and project and structured finance. In addition, AFC would also provide technical assistance and advisory services in support of private sector development in Africa.”

He disclosed that AFC has an authorised share capital of two billion ordinary shares of US$1 each. According to him, a broad ownership of AFC is expected from across Africa and beyond, with a minimum of 51 per cent shareholding from the private sector.

He said the corporation will be owned by financial institutions in Africa, multilateral and development financial institutions, pension funds and other institutional investors, high net worth private investors and central banks in the African continent.

Prof Soludo said the institution is expected to commence business with a prepaid share capital of US$1 billion, noting that CBN is committed to investing more than US$490 million, subject to total public sector investment not exceeding 49 per cent.

He informed the forum that AFC will constitute its board of governors in April, which would effect the appointment of a CEO, before the management would be put in place. “We are hoping that it will officially begin operation next month,” he assured.

He disclosed that a US based company has committed US$250 million, adding that other companies have also expressed interest in the corporation.