Emerging Africa Infrastructure Fund Commits $48 Million for West Africa’s First Social Asset-Backed Security

The Emerging Africa Infrastructure Fund (EAIF), a Private Infrastructure Development Group (PIDG) company, has pledged XOF 30 billion (approx. $48 million) to launch West Africa’s inaugural social asset-backed security. This bond, issued by special purpose vehicle Fonds Commun de Titrisation de Créances Electricité Pour Tous (FCTC EPT) in local currency, will support universal access to electricity in Côte d’Ivoire.

Key Points:

1. Program for Universal Access to Electricity:
   • The bond, backed by revenue from energy tariffs collected through the government-led Electricity for All (PEPT) program, aims to modernize Côte d’Ivoire’s power sector. It will significantly improve energy accessibility, particularly in rural areas, fostering economic productivity and aligning with the UN’s Sustainable Goal on Affordable and Clean Energy (SDG 7).
2. Co-Investment with IFC:
   • EAIF will join the International Finance Corporation (IFC) in deploying capital in two tranches, totaling up to XOF 60 billion. This commitment aims to encourage local investors to participate.
3. Local Partnerships for Distribution:
   • Africa Link Capital is the mandated lead arranger, with distribution managed by local brokers BoA Capital Securities and NSIA Finance. The bond has received certification as a social bond and a second-party opinion from ratings agency Moody’s.
4. Impact on Last Mile Connectivity:
   • The funds from the bond will be used by the implementing agent, Compagnie Ivoirienne d’Électricité (CIE), to significantly expand last mile connectivity. This initiative is set to connect up to 800,000 additional low-income households to the national grid over the next four years, in line with SDG 7. The project also involves installing prepaid meters to enhance revenue collection.
5. Empowering Local Capital Markets:
   • The issuance of this asset-backed security underscores EAIF’s role in developing local capital markets to finance crucial development priorities in Côte d’Ivoire. It builds on EAIF’s track record of anchoring social and green impact bonds.
6. Côte d’Ivoire as a Key Focus:
   • Côte d’Ivoire is EAIF’s largest country exposure, and all investments are strategically designed to bolster the growing power sector in the nation.
7. PEPT Program’s Impact:
   • Launched in 2014, the PEPT program has already made over 1.6 million connections. The revenue collected from energy tariffs will back the bond and support the expansion of the program, primarily in rural areas.
8. Enhancing Revenue Collection:
   • Allowing customers to top-up prepaid meters via mobile phones will strengthen revenue collection, a critical factor for the long-term sustainability of energy sectors in Africa.

Conclusion:
The commitment of XOF 30 billion by EAIF to launch West Africa’s first social asset-backed security is a significant step towards improving access to electricity and fostering economic development in Côte d’Ivoire. The bond’s focus on last mile connectivity and revenue collection will have a positive impact on underserved communities, demonstrating the potential of financial innovation for sustainable development in the region.

AGF