Africa Finance Corporation makes a total asset growth of 25 percent despite the 2015 economic headwinds
Recently, the Africa Finance Corporation (AFC) announced its 2015 fiscal year results, showing that it delivered strong operating results in 2015 despite a difficult operating environment.
“We are pleased to report that despite the economic headwinds we have seen our total assets grow by 25 percent,” said Andrew Alli, President and CEO of the Africa Finance Corporation.
The year 2015 was characterised by several economic issues such as a decline in the price of oil, minerals and soft commodities. Oil prices plummeted by about 50 percent during the year owing to a supply glut which put oil prices under pressure. In addition to this, prices of raw materials such as minerals and soft commodities fell due to a decrease in demand from China. Africa has been affected negatively by these situations, along with a rise in interest rates in the United States of America, which has led to the devaluation of several African currencies, tighter credit markets and a drop in international investment in Africa.
According to the AFC, it achieved a 25 percent growth in its balance sheet with total assets in excess of US$3.2 billion, net interest income increased by 39 percent to US$108.4 million with net interest margins growing to 4.4 percent. It recorded a 7 percent improvement from the previous year, as the corporation continues to lower its borrowing costs. However, fees, commissions and other income declined by 85 percent largely due to one-off revenues of US$46 million, recorded in 2014.
Although no risk asset was impaired during the year under review, the corporation’s first portfolio impairment charge of US$26.7 million was recorded, in light of increased default risks, particularly in its oil and gas risk asset portfolio. Overall, the company remains strongly capitalised, with a capital adequacy of 50 percent. AFC is also very liquid, with approximately US$1 billion liquidity as at December 2015, positioning the corporation to take advantage of investment opportunities in 2016.
The AFC recorded total comprehensive income of US$70.3 million for the year, representing a decline of 38 percent compared to 2014. However, total comprehensive income, after the adjustments for the exceptional fees accrued in 2014 represents a growth of 3 percent, even after taking into consideration the corporation’s first portfolio impairment charge.
Support for the AFC and its mandate as an investor in crucial infrastructure across Africa has also been met with the launch of its US$750 million Eurobond, which was six times oversubscribed.
Here is what you didn’t know about AFC
- Africa Finance Corporation (AFC) is an investment grade multilateral financial institution established in 2007.
- The AFC’s mission is to address Africa’s pressing infrastructure needs and build the foundations for robust economic development across the continent, while seeking a competitive return on investment for its shareholders.
- It provides financial services in power, natural resources, heavy industry, transport and telecommunications sectors to 22 African countries including Liberia, Nigeria, Sierra-Leone, The Gambia, Gabon, Cape Verde, Chad, Ghana, Guinea-Bissau, Guinea. Earlier in the month of October 2015, Cote d’Ivoire became the 11th AFC member. The corporation has invested US$3.2 billion in projects across 22 African countries
- In January 2015, the AFC implemented a new organisational structure to increase the corporation’s client responsiveness by creating sector clusters, that would each be responsible for delivering all of AFC’s products to clients within those sectors,simplifying the corporation’s structure and increasing responsiveness.
- In February 2016, it completed the purchase of InfraCo Africa’s stake in the Cabeólica Wind Farm. Cabeólica is the first privately-financed sustainable wind farm on a commercial scale in sub-Saharan Africa.