Global Courant
Africa has some of the world’s most important untapped resources, such as solar, hydraulic and geothermal energy. While some of these resources are scattered across the continent, most are found in massive deposits around the northern, southern, and eastern regions. According to comments made by Makhtar Diop, Managing Director, IFC, in the recently concluded Africa CEO Forum, talks have started in places like Morocco, Egypt, Tanzania, Namibia, etc. of the continent and the global market. This highlights the crucial role of public-private partnerships (PPP) – between development institutions, the private sector and African governments – in facilitating economic growth.
Global events over the past decade have highlighted the importance of the role of the private sector in many developed economies. But despite the huge potential embedded in the African continent, the number of PPPs in Africa is small compared to other continents. So there is a need to strengthen and promote more of these partnerships for economic growth. According to Sergio Pimenta, Vice President for Africa, IFC, the private-public sector development that Africa is pursuing will not happen in a vacuum, but in the context of the kind of government policies that allow the private sector to enter.
The multifaceted aspect of the $500 million IFC-BUA cement deal
On Tuesday, June 6, on the sidelines of the Africa CEO Forum in Abidjan, Cote D’Ivore, BUA Group, a leading Nigerian cement manufacturer received $500 million in funding from the International Finance Corporation (IFC) and other lenders to accelerate production. boost in the West African country. Reuters reported that that the financing would help the company co-finance and develop two new energy-efficient cement production lines at its plant in Sokoto State, northwestern Nigeria.
Now BUA Group has its factory in two states in Nigeria, Edo State (southern) and Sokoto State (northern). By geography, Sokoto shares a border with the Republic of Niger and has a very high temperature because it is located in the arid Sahel. It has an annual average temperature of 28.3 °C (82.9 °F), making it an excellent hub for clean energy generation. Therefore, the latest partnership would explore multiple economic opportunities such as clean energy generation and market expansion. “The power plants will partly run on alternative fuels from waste and solar energy. Each of them will produce approximately three million tons of cement annually, serving markets in Nigeria, Niger and Burkina Faso,” said IFC and BUA.
The latest funding includes $160.5 million from IFC, $245 million in syndicated loans from African Development Bank, Africa Finance Corporation and the German Investment Company, and $94.5 million from institutional investors.
Expert Opinion by Amajuoyi, Ikechukwu Kingsley, CEO Kernelinc Resources Ltd
Today’s investors are looking for the green component of a business model. The latest IFC-BUA deal will be powered by solar energy and upcycled waste from their operations, what I call a circular economic plan. This also speaks to a strategic ESG plan aimed at sustainable and responsible production.
Localizing the project in Sokoto could be for the above reason or strategic positioning to capture other African markets such as Niger and Burkina Faso, promoting AfCFTA appeal as a pan-African brand. It may also be due to the abundance of sun to power the plants. Either way, it’s a strategic decision.
I would recommend that PPP initiatives incorporate bottom-up involvement into their policies. For example, in the palm oil industry, a global market worth more than US$90 billion, Nigeria contributes only 5% and is a net importer of this commodity. While small farmers account for more than 80% of local palm oil production, CBN interventions only reach the large companies that meet the criteria to access funding. Establishing policies and guidelines that remove or reduce bureaucracy for this category of businesses unlocks diverse opportunities for job creation, poverty alleviation and hunger reduction alongside other SDGs.
