Emerging Africa Infrastructure Fund dedicates XOF $48 million for Asset-Backed Security in West Africa.

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The Emerging Africa Infrastructure Fund (EAIF), a part of the Private Infrastructure Development Group (PIDG), has pledged up to XOF 30 billion (equivalent to $48 million) to introduce West Africa’s very first social asset-backed security.

This XOF 30 billion bond will be issued by a special-purpose entity called Fonds Commun de Titrisation de Créances Electricité Pour Tous (FCTC EPT) in the local currency. The objective of this initiative is to work towards achieving universal access to electricity in Côte d’Ivoire.

The initial phase of this security is supported by revenue generated from energy tariffs collected through the government-led Electricity for All (PEPT) program. This funding will facilitate the modernization of Côte d’Ivoire’s power sector, with the aim of enhancing energy access and boosting economic productivity, particularly in rural areas. This bond aligns with PIDG’s aspiration to meet the United Nations Sustainable Development Goal 7 (SDG 7) related to Affordable and Clean Energy.

EAIF will serve as a co-investor and will contribute capital in two installments, partnering with the International Finance Corporation (IFC). The total commitments amount to XOF 60 billion, which is expected to encourage local investors to participate in the project.

Africa Link Capital is acting as the lead arranger for this initiative, with distribution being managed by local brokers BoA Capital Securities and NSIA Finance.

This instrument has been certified as a social bond, having received a positive evaluation from the ratings agency Moody’s.

As part of the PEPT program aimed at achieving 100% electrification across the country, the implementing agent, Compagnie Ivoirienne d’Électricité (CIE), will utilize the proceeds from the bond to significantly expand last-mile connectivity. This will support the connection of up to 800,000 additional low-income households to the national grid over the next four years, aligning with SDG 7. The transaction also aims to ensure the long-term sustainability of the Ivorian energy sector by installing prepaid meters to improve revenue collection.

This issuance reinforces the role of local capital markets in financing critical development priorities in Côte d’Ivoire and builds on EAIF’s track record of supporting social and green impact bonds. It also expands EAIF’s local currency commitments in West Africa, following previous involvement in bonds related to a telecoms giant and a seaport relocation project.

The asset-backed security marks a first for EAIF and underscores the fund’s importance in developing the country’s energy sector. Côte d’Ivoire is the largest exposure for EAIF, with all investments aimed at strengthening the growing power sector.

The PEPT program, initiated in 2014, has already facilitated over 1.6 million connections. Revenue from energy tariffs collected during this period will back the bond and support the expansion of the program, particularly in rural areas with lower electricity access. Focusing on low-income households will empower marginalized communities and promote economic equality in the country.

Enabling customers to top up prepaid meters via mobile phones will enhance revenue collection, a crucial factor in improving the sustainability of energy sectors throughout the continent. The modernization of Côte d’Ivoire’s energy sector represents an innovative approach to infrastructure financing, making it a pioneering transaction in the region.

Folatomi Fayemi, an Investment Specialist at Ninety One, the fund manager of the Emerging Africa Infrastructure Fund, expressed their satisfaction with the role they are playing in improving the lives of underserved communities in Côte d’Ivoire. They also see this initiative as a way to showcase the potential for financial innovation in the market and hope to accelerate the involvement of domestic capital markets in Africa’s sustainable development.

Source: Africa Global Funds