Good afternoon. My name is Ziyanda Mpakama. I am an Associate Vice President for the Africa Finance Corporation based out of Lagos, mainly responsible for our business development efforts in both fundraising and pipeline development. I have been in development finance for 17 years .
I started my career at the Public Investment Corporation, which some might know as one of the largest asset managers on the continent, managing in particular the Government Employees Pension Fund out of South Africa and other government funds .
I joined straight out of university, and I was there for 7 years. During my time at the PIC, it was the advent of the Renewable Energy Independent Power Producer Programme in South Africa. We were heavily involved in the initial years in terms of bringing a lot of the projects into fruition and online. So I was part of the team within the PIC that grew the renewable energy assets. After the PIC, I went to work for independent power producers.
I worked for an Italian-based independent power producer, and from there, I worked with a German-based independent power producer that had also come into South Africa to look at the opportunities that were within the renewable energy space within South Africa. I did a bit of independent work after that, still within the energy space.
After some time, I joined SIWI, which is the Stockholm International Water Institute, a water policy institute on water governance. I was responsible for working with different African governments looking at how they can make their water infrastructure projects more financially viable and bring in the kind of investments needed by the water sector to revolutionise it like the energy space had done.
In essence, what happened within the renewable energy space and the use of PPPs was inspiring for water. And that’s what we were trying to do in terms of looking at everything from their regulations to their tariff structures to crowd in private sector investments into the water space. I worked throughout the continent with different government departments, utilities and water service providers throughout the spectrum of water. I was there for about 4 years.
I then went to the IDC where I was their water specialist responsible for bringing water investments into the IDC. Prior to that, the IDC did not have water infrastructure as a strategic sector in its investment focus; however, there was a growing need that water be seen as a commercial good instead of just a social good. Water also needed investments, whether it’s through blended finance or any other, the kind of innovative financial structuring that would bring private sector money into the space.
I then joined the AFC to be part of the team for AFC Capital Partners, which is a subsidiary of AFC, and is 100% owned by the AFC as its asset management business. I’ve been here for the last 2 years.
In terms of the AFC and climate finance, the whole purpose of having AFC Capital Partners, which we call ACP, as the asset management arm of AFC was to drive the AFC’s climate finance strategy and agenda.
To very briefly contextualise what the AFC is: The AFC is a multilateral DFI. We are pan-African. We fund projects throughout the continent. Our mandate is specifically infrastructure. So unlike other DFIs that are our peers, we invest in infrastructure sectors only, which is power and energy, transport and logistics, integrated industrial parks, digital technology and heavy industries.
We also do mineral resources, oil and gas. We are invested in over 38 countries on the continent. The AFC has been around since 2007, and we have about 43 member countries. So, within this mandate and to date, we have deployed over $12 billion in investments.
In charging and leading in constructing the continent’s assets in terms of infrastructure that are so critically needed, there was obviously a need to also look at the climate story and look at how we would respond to some of these climate challenges that are experienced on the continent.
And so, the AFC came up with the brainchild of the Infrastructure Climate Resilient Fund (ICRF), which is managed by AFC Capital Partners, the asset manager. And this fund is using climate finance from the GCF (Green Climate Fund) to implement, build and fund climate resilient infrastructure in a way that the infrastructure will have longer lasting resilience in terms of weathering some of the severe events that we see due to climate actions.
We can participate throughout the various financial instruments. We can participate in senior debt, quasi equity, pure equity and shareholder loans. The way we structure the transaction really depends on the cash flows and how best to optimally structure that project.
As AFC or AFC Capital Partners invests in a project, we can use all the different financial instruments and various structures that will allow us to reap the returns that we’re looking for.
On the other hand, we are also capitalised by investors such as the Green Climate Fund as a concessional investor. The ICRF is structured using green finance that takes a subordinate position compared to other investors, such as pension funds, DFIs, sovereign wealth funds, insurance companies and other institutional investors, and it acts as a first loss.
This kind of blending of concessional funding and commercial capital has allowed us to be able to attract the kind of investors and the quality of investors that we have in the fund. We are still in the process of fundraising, but are more than halfway.
We’re raising a $750 million fund. The green finance, acting as a first loss, provides protection to the commercial investors. It also enhances the returns for the commercial investors. That’s one of the structures that we’ve used as a tiered structure where we have different classes of shares where one is subordinate to the other.
I think what we’re doing with the ICRF as the AFC is something really worthy of all the accolades, because we know that as Africa, we’re still very behind when it comes to infrastructure. We’re still very behind in terms of what we need to do to even get to the level that we need to be at.
And coming in and saying, as behind as we are, we want to focus and make sure that we protect the livelihoods of the people of the continent, we protect their communities, we protect their economies and build resilience around it. So that the road that you’re putting in today has not turned to dust in 15 years’ time, because it could not withstand some of these extreme weather elements, and that the infrastructure you put in today can have the longevity that it needs, not only just for financial protection, but environmental and livelihood protection as well.
So I’m quite excited by what the ICRF is doing. The kind of added benefit that we are bringing to the projects and making sure that the projects are located in places that can be protected from some of the things that they would be exposed to.
I think when it comes to climate finance, as a continent, we’re still trailing behind in access because it is a very complicated process. It took us something like 2 years to actually get on the other side using different expertise, having a group of consultants and experts who were able to assist in putting all of this together to meet the different kinds of requirements.
Of course, Africa can benefit from climate finance and should be benefiting a lot more than it is, but some of these issues around access are a big deal, because you’ll find that some of the governments or whoever sponsors projects might not be familiar in terms of how to package these as climate projects.
Then they end up losing out, or it’s just an onerous kind of exercise, and we end up losing out on climate funds that should be coming to the continent. So, we can definitely use a lot more climate finance than we’ve had access to.
We can never have enough events like Africa’s Green Economy Summit because we need to get to a place where being green, looking at how you run your business in a sustainable manner, is second nature. It is a business imperative. You track it the way you track your financial performances. You track it the way you track your sales numbers and your costs.
It needs to become high priority, instead of something that is done as “I have to do it because, my shareholders are looking for it, or my investors are asking for it.” So I think the more we engage, the more mainstream the topics that we talk about become. And the more businesses, governments and NGOs become involved the better.
Also in terms of how we protect our planet when it comes to sustainability: how do we become more sustainable? How do we do things in a different way, such that our economy is able to grow, but to grow with the right kind of fundamentals pushing it?
The bringing together of not only like-minded people, but also people that might have different views and opinions, but to have those discussions in terms of why is this important? How is it important? How can it better my own business? Who do I need to connect with to assist me? If I’m struggling, maybe I don’t really understand how it comes together within my business model.
Then, there can be someone at this kind of event and space that I might be able to connect with that can assist me. So whether you are starting off within sustainability and you’re changing your business model. Or maybe you’re a veteran at it and you’ve been doing it for some time, and your tools are top notch, and you’ve seen the benefit in the investments that you’ve made in prioritising sustainability within your business.
So, yes, I think there’s impact with AGES and some of the events that take place, bringing people face-to-face with people that can help them in their journey.
Just to wrap it up, I always say that for us as a continent, of course, our contribution to the problem is really minute, but unfortunately, we are the most impacted. So, although we did not cause the problems around climate change, we have to drive the solution. Because if we don’t drive the solution, then it’s detrimental to ourselves.
So we need to lead that charge in terms of the solutions. We need to protect ourselves, our communities and our livelihoods for ourselves and for our kids, so that people don’t lose things that they’ve spent their whole lives building.
If there’s one thing that always kind of gets me out of bed is to know that, it’s our core responsibility to lead the charge around climate change and making sure that we are protected as a continent.
Read more about our amazing Advisory Board members here: AGES Advisory Board
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