De-Risking Growth: Financing Africa’s Infrastructure
An Interview with Mr. Yoav Brick, Structured Finance, Mitrelli
As Africa continues to attract global investment, the challenge of balancing opportunity with risk remains critical. De-risking strategies and blended financing models are emerging as powerful tools to unlock funding for sustainable development while mitigating exposure for investors.
One of Mitrelli’s key strengths and sources of added value is our dedicated internal structured finance team, which delivers innovative and tailored financing solutions across all Mitrelli projects.
Question: Why is it important for private companies like Mitrelli to invest their own capital in African infrastructure projects, and how does this help attract additional financing?
Answer: We have observed that when an EPC contractor invests private capital into a project, it serves as a powerful catalyst, encouraging lenders to participate. By committing its own resources and sharing the project’s risk, the EPC contractor instills greater confidence in lenders. Currently, we are collaborating with a Development Finance Institution (DFI) to design a financing model that divides risk between Mitrelli and the DFI for the benefit of our projects.
Question: Many African projects struggle to access support from Export Credit Agencies (ECAs). How does Mitrelli overcome these limitations to secure funding?
Answer: ECA capacity is limited in some African markets due to country risk constraints. To navigate this issue, we often bring together multiple ECAs to jointly participate, so that each agency assumes a portion of the overall risk. Recently, we achieved financial close on a project involving three ECAs working in partnership. While this approach adds complexity to the transaction and may create procurement and sourcing challenges, it enables us to secure the necessary funding for our projects, that would not be available through a single agency.
Question: Blended finance between DFIs and ECAs is often cited as a key enabler for African development. What does it mean in practice, and why is it particularly important for large projects in Africa?
Answer: Blended finance merges concessional funding from DFIs with commercial resources facilitated by ECAs. This arrangement is instrumental in making large-scale projects bankable by mitigating risk and strengthening credit profiles, which is especially important for Africa’s development. It allows large scale infrastructure projects to move forward by making them financially viable while keeping financing terms manageable for governments.
Question: African governments are often hesitant to take on additional debt. What are concessional loans, and why do they matter for Africa?
Answer: Concessional loans are financing solutions offered at below-market interest rates with favorable terms, typically provided by development institutions to support critical projects. These loans help African nations manage high borrowing costs and limited credit access, paving the way for infrastructure and social development investments. By improving credit conditions and attracting further co-financing, concessional loans play a vital role in advancing sustainable growth. We are committed to delivering financing proposals that emphasize concessional terms to maximize impact.