African infrastructure and industrial development finance institution, Africa Finance Corporation (AFC), has been given a long-term issuer credit rating of A+ by the Japan Credit Rating Agency (JCR). The JCR also rated the AFC’s outlook as stable.

“Amidst a challenging global macroeconomic backdrop, this endorsement by JCR affirms AFC’s financial strength and credibility, enhancing our ability to mobilise competitively priced capital for transformative infrastructure projects across Africa,” affirmed AFC executive board member and financial services head Banji Fehintola. “It reinforces our position as a reliable institutional partner for Japan and a key driver of Africa-Japan cooperation.”

AFC has successfully partnered with leading Japanese banks, in multiple financing transactions. These partner funders are Mizuho Bank, MUFG Bank, and Sumitomo Mitsui Banking Corporation (SMBC). AFC has participated in bilateral, syndicated and Samurai facilities with them. These initiatives have extended beyond AFC’s own capital-raising initiatives to embrace wider support for African issuers. A significant example is Egypt’s first Samurai Bond, in which SMBC was the guarantor and AFC the re-guarantor; together, they facilitated a private placement totalling ¥75-billion (about $500-million).

“The [A+] credit rating reflects AFC’s leading role in infrastructure development in Africa, the strong support from its member states and shareholders, the benefits of Preferred Creditor Status, its conservative financial policy, and its strong capital base,” stated the JCR in its report. “AFC employs diverse funding channels, including Eurobond issuance in international capital markets; borrowing from MDBs [multinational development banks] such as the African Development Bank, [France’s] PROPARCO, [Germany and the Netherlands’] DEG/FMO, [Germany’s] KFW group, Export-Import Bank of China, Korea Development Bank, etc.; and financing from African, Chinese, European, Indian, Japanese and Middle Eastern private financial institutions.”

The AFC had a capital adequacy ratio of 33.6% and improved its cost-to-income ratio to 17.3% at the 2024 financial year-end. Last year saw the AFC increase its revenues by 22.8% to exceed, for the first time, $1-billion. And the value of its total assets increased by 16.7% to reach $14.41-billion. Under normal conditions, it had a liquidity coverage ratio of 194% and, under stressed conditions, of 191%.

“In the challenging business environment, with increasing geopolitical instability in some African countries, AFC’s role in advancing infrastructure development in Africa as an MDB established by African countries is becoming more important, and support from member states and shareholders is expected to strengthen,” pointed out JCR analysts. “AFC conducts appropriate risk management in the challenging business environment in Africa, ensuring strong profitability and building a sound financial structure. AFC has established risk management policies for various risks associated with its operations, including credit risk, market risk, liquidity risk, operational risk, assets and liabilities management risk, and environmental/social policy risks.”