May 13, 2013 / 3:06 PM / in 5 years

IFC boosts lending to Africa as private sector interest rises

* World Bank investment arm to lend up to $5 bln in Africa

* Working on power projects in Ivory Coast, Senegal

* IFC confident Simandou iron ore project will progress

By Daniel Flynn

DAKAR, May 12 (Reuters) - The World Bank’s investment arm will increase lending to sub-Saharan Africa by up to a quarter this year as private sector companies flock to the fast-growing region, its vice-president said.

Jean-Philippe Prosper said the International Finance Corporation (IFC) would make new investments of between $4.5 and $5 billion for the fiscal year ending in June, up from $4 billion the previous year.

The least developed continent is experiencing an economic growth surge, outpacing global averages. The World Bank sees Sub-Saharan Africa’s GDP accelerating to more than 5 percent over three years, driven by investment and commodity prices.

Prosper said projects to upgrade infrastructure for the region’s 1 billion people were attracting yield-hungry investors, while governments were keen to share the costs to free budget resources for poverty relief.

“In the past, nobody wanted to talk about Africa ... Now more people are coming,” Prosper told Reuters. “We would not be able do this level of financing without private sector projects. We did not invent these projects ourselves.”

Roughly half the IFC’s annual lending in the region goes to financial markets and institutions to help improve the flow of credit to small businesses, which employ most of Africa’s workers.

Another third goes to infrastructure projects - mostly transport and electricity - and natural resources investments.

The IFC holds a 5 percent stake in the giant Simandou south iron ore project in Guinea, managed by Rio Tinto, which was due to start production in 2015 but has been hit by lower iron prices and political and regulatory concerns.

Prosper, who met Guinean officials last week, voiced confidence the $15-$20 billion project would go ahead. There have been doubts the government can finance its 51 percent stake in a 700 km (430 mile) railway and offshore loading berth.

“Our discussions were extremely positive. There was interest from government officials to go ahead with the project,” he said. “Simandou is a good test. If it works, you will be amazed by the level of investment which will follow in Guinea.”


Post-conflict recovery in Ivory Coast, the economic powerhouse of francophone West Africa, was helping to revive investor appetite for the region, Prosper said. The economy of the world’s largest cocoa producer grew 9.8 percent last year as it recovered from a civil war after disputed 2010 elections.

The IFC provided $135 million for the 139 megawatt expansion of the Azito power station, near commercial capital Abidjan, and organised the remaining $277 million of funding for the project.

In Senegal, it is now assessing an investment in the 70 megawatt Tobene power plant, with a cost of $150 million. “Power is the main constraint to investment in Africa,” said Prosper.

To help deepen financial markets, the IFC has made shelf listings for local currency bonds in a number of countries including Tanzania, Kenya, Zambia and Rwanda. It recently issued a five-year naira bond in Nigeria, worth some $50 million.

“Zambia and Rwanda are probably quite close to the point where we might do something. But we don’t want to issue bonds just to issue bonds. We want to make sure we are going to do something with them,” Prosper said. (Reporting by Daniel Flynn; Editing by Catherine Evans)

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