The Africa Finance Corporation (AFC) has received US$50 million from the Islamic Development Bank (IDB) to finance several projects in Africa.
According to an August 24 release by the Africa Press Organisation (APO), the projects will be structured in a way that is compliant with Islamic Finance, focusing particularly on infrastructure and agriculture to promote the economic and social development of the respective communities.
The 15-year line financing is AFC’s first Islamic finance borrowing, ‘the result of several years of increasing cooperation and collaboration between the two institutions’.
AFC initiated discussions in 2009 and a Memorandum of Understanding was later signed with the Islamic Corporation for the Development of the Private Sector (ICD), the private sector arm of the IDB Group.
AFC’s involvement in projects such as the Bakwena Toll Road, a transport infrastructure development which has connected South Africa’s industrial heartland to the nearest deep water port in Mozambique, were instrumental to the success of the corporation’s application.
Andrew Alli, President and Chief Executive Officer of AFC, said the IDB financing is in part, a response to the significant growth of the Muslim population in Africa.
“The Islamic finance sector is responding to high demand and rapidly expanding, with a large number of Islamic finance institutions establishing operations here as a result of Africa’s significant Muslim population. There is enormous growth potential within this industry,” Mr Alli is quoted as saying.
He added: “We intend to fully utilize the loan and capital to fund and develop projects within IDB member countries, several of which are also member states of AFC. It is with loans such as these that AFC can continue to improve the quality of the continent’s infrastructure and with it help to boost Africa’s economic growth.”
The AFC was started in 2007, with a capital of US$1billion for infrastructure investment, a base that has since risen to US$2.9 billion.