Japan Credit Rating Agency, Ltd (JCR) has assigned the Africa Finance Corporation (AFC) a long-term Issuer credit rating of A+ with a stable outlook.
- •In 2024, AFC posted a 22.8% increase in revenue to surpass US$1 billion for the first time, as well as a 16.7% rise in total assets to US$14.41 billion.
- •The AFC has a liquidity coverage ratio of 194% under normal conditions and 191% on a stressed basis.
- •The rating will improve the AFC’s growing footprint in Asian capital markets.
“AFC lends to African countries, whose overall creditworthiness is relatively low. About 70% of lending is to the private sector, which does not benefit from PCS as sovereign lending does. However, risks are mitigated through collateralization, insurance and AFC’s strong relationships with African sovereigns, which can be leveraged upon to source foreign exchange requirements for the private sector investments during periods of scarcity,” the JCR said in a statement announcing the rating.
“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,” said Banji Fehintola, Executive Board Member & Head, Financial Services at AFC.
The JCR highlighted the high concentration of Nigerian ownership, which is almost at 80%, and the fact that only 15 African countries are shareholders, despite 44 being members. The Central Bank of Nigeria (CBN) is the single largest shareholder with a 38% stake.
As of the end of 2024, the AFC’s shareholder composition was 45.3% African Sovereigns, 39.2% Financial Institutions, 9.1% Pension Funds, Sovereign Wealth Funds and Asset Managers, 3.1% Non-regional Sovereigns, 2.4% Multilateral and 0.8% from others. In late June, Angola became the latest sovereign shareholder in the AFC, three years after joining as a member in 2022. Read More.
“AFC has a dedicated team to enhance relations with domestic and international investors and encourages investment from credible international investors capable of contributing to future capital increases,” JCR analysts said, “Expanding such participation would strengthen AFC’s capital base over the medium term. As of the end of February 2025, contributions to callable capital amounted to just USD 47 million from six countries, equivalent to only about 1% of total equity, indicating a highly limited level of commitment.”
Some of AFC’s landmark funding initiatives include the successful issuance of its US$500 million perpetual hybrid bond, the closing of a US$400 million Shariah-compliant Commodity Murabaha, and leading Nigeria’s inaugural domestic dollar bond issuance, which raised over US$900 million, with an oversubscription rate of 180%.
