African infrastructure and industrial development funding agency, the Africa Finance Corporation (AFC), has made a successful strategic return to the Islamic finance market, after a gap of eight years. The AFC has secured a three-year $400-million Shariah-compliant Commodity Murabaha facility. This reflected the AFC’s policy of diversifying its funding sources, to ensure ethical and sustainable funding for African infrastructural development.

“This transaction reaffirms AFC’s role as a bridge between global capital and Africa’s most urgent infrastructure needs,” highlighted AFC president and CEO Samaila Zubairu. “The overwhelming demand demonstrates strong confidence in our investment strategy and Africa’s increasing importance in the Islamic finance landscape. By expanding our international funding sources, we continue to create innovative financial solutions to drive impactful and sustainable developments across the continent.”

The AFC sought to secure a $300-million facility. Such was the strength of investor demand that it was upscaled to $400-million. The Joint Lead Arrangers and Bookrunners for the facility were Emirates NBD Capital, First Abu Dhabi Bank, and SMBC Bank International. The facility was structured in line with standards established by the Accounting and Auditing Organisation for Islamic Financial Institutions.

“Islamic finance plays a growing role in our funding strategy, helping us tap into a diverse pool of investors who share AFC’s commitment to sustainable and responsible investing,” stated AFC executive board member and financial services head Banji Fehintola. “The success of this Murabaha facility highlights the strong appetite for African infrastructure investments and underscores AFC’s ability to structure transactions that meet global investor expectations.”

Like other forms of Islamic finance, Murabaha structures stress asset-based financing, risk-sharing, and banned speculative practices. These principles align with the AFC’s long-term responsible and sustainable infrastructure development funding mission.

The AFC is already funding infrastructure development in North Africa. In partnership with Cairo-based Infinity Power, AFC has bought Lekela Power, making it Africa’s largest investor in clean energy. It is aiming at 3 GW of renewable-energy capacity by next year. A major renewable-energy project being funded by AFC is the Xlinks project in Morocco, which aims to supply renewable energy from the Sahara desert to the UK.

Set up in 2017, the AFC now had 45 member countries and has so far invested more than $15-billion in 36 African countries.