Africa Finance Corporation (AFC), a prominent entity in infrastructure financing across the African continent, has successfully raised $400 million through a Shariah-compliant Commodity Murabaha facility. This significant development marks AFC’s strategic re-entry into the Islamic finance market after an eight-year absence, underscoring its commitment to diversifying funding sources and enhancing access to ethical and sustainable financing solutions tailored to Africa’s infrastructure needs.
Initially set at $300 million, the facility was expanded to $400 million due to an overwhelming response from investors, resulting in a remarkable 47% oversubscription. This strong demand reflects the growing interest in financing mechanisms that align with Islamic principles.
The transaction saw participation from eleven Islamic financial institutions, including new partnerships with notable banks such as Abu Dhabi Islamic Bank PJSC, Ajman Bank PJSC, Al Rajhi Bank, Emirates Islamic Bank, Sharjah Islamic Bank PJSC, and Warba Bank K.S.C.P. This diverse participation highlights the collaborative efforts within the Islamic finance sector to support infrastructure development in Africa.
Samaila Zubairu, President and CEO of AFC, emphasized the importance of this transaction, stating, “This transaction reaffirms AFC’s role as a bridge between global capital and Africa’s most urgent infrastructure needs. The overwhelming demand demonstrates strong confidence in our investment strategy and Africa’s increasing importance in the Islamic finance landscape.” His remarks reflect the growing recognition of Africa as a viable destination for ethical investment.
The structuring of this facility was supported by Emirates NBD Capital Limited, First Abu Dhabi Bank PJSC, and SMBC Bank International Plc, who served as Joint Lead Arrangers and Bookrunners. Their involvement strengthens AFC’s relationships with major global financial institutions, enhancing its credibility and reach in the international finance community.
This latest transaction builds on AFC’s established track record in Islamic finance, following its pioneering $230 million Sukuk issuance in 2017, which was the first of its kind by an African supranational entity. AFC continues to innovate in its funding strategies, having raised $500 million earlier this year through its inaugural perpetual hybrid bond. The corporation has also achieved high credit ratings from S&P Global (China) Ratings and China Chengxin International Credit Rating Co. Ltd (CCXI), positioning itself favorably for a potential panda bond issuance in the future.
The new Commodity Murabaha facility is structured in accordance with the standards set by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), ensuring full compliance with Islamic finance principles. These principles emphasize asset-backed financing, risk-sharing, and the avoidance of speculative practices, aligning with AFC’s broader mission of promoting responsible investment and sustainable development across Africa.
Banji Fehintola, Executive Board Member and Head of Financial Services at AFC, highlighted the growing significance of Islamic finance in the corporation’s overall strategy. He stated, “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. 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.”
The three-year Murabaha financing will be directed toward critical infrastructure initiatives aimed at accelerating industrialization, fostering economic growth, and promoting sustainable development throughout Africa. Among AFC’s transformative projects is the ambitious Xlinks initiative in Morocco, which aims to deliver renewable energy from the Sahara Desert to the United Kingdom. Additionally, AFC’s acquisition of Lekela Power, in partnership with Cairo-based Infinity Power, has positioned the corporation as a leading investor in renewable energy across Africa, with a target of achieving 3GW of clean energy capacity by 2026.
Since its establishment in 2007, AFC has played a vital role in addressing the continent’s infrastructure challenges. The corporation specializes in providing financial and technical advisory services, project structuring, and risk capital to drive high-impact infrastructure development. With investments exceeding $15 billion across 36 African countries and 45 member states, AFC continues to be a key player in unlocking Africa’s economic potential through strategic infrastructure investments.
