The African Development Bank has sold $20 million in infrastructure bonds to Japan’s Fukoku Mutual Life Insurance Company and will use net profits from the bonds to finance lending to infrastructure projects in Africa.
According to the African Development Bank (AfDB), bridging the infrastructure gap could increase GDP growth by an estimated 2 percentage points a year.
Since inception and more recently through its Private Sector Operations department, the AfDB has been and is still making significant contributions to infrastructure development in Africa.
Infrastructure development is one of the five operational priorities under the ten-year strategy (2013-2022). As such, the AfDB intends to significantly scale up infrastructure financing on the continent—not just through its own lending – but by leveraging its financial resources.
Issuance of the infrastructure bonds is one of the alternative financing solutions which can support investments in various infrastructure projects, while securing capital to match long-term needs.
Fukoku Life believes the infrastructure bonds could offer attractive return on their policy holders’ funds while, achieving a positive social impact in Africa. The bonds, which mature in 2025, were offered to Fukoku Life through a private placement format, with J.P. Morgan being the sole arranger of the bonds.