Africa Finance Corporation (AFC), a leading infrastructure investment institution on the continent, has raised $400m through a Sharia-compliant financing facility. The funds will be deployed to support clean energy and other infrastructural projects across Africa, marking the AFC’s return to the Islamic finance market after an eight-year hiatus.
The Murabaha facility, initially targeted at $300m, was significantly oversubscribed, attracting $400m from eleven Islamic financial institutions. New partnerships were forged with Abu Dhabi Islamic Bank, Al Rajhi Bank, and Emirates Islamic Bank, alongside existing relationships with other institutions.
“This transaction underscores AFC’s role in connecting global capital with Africa’s critical infrastructure needs,” said Samaila Zubairu, President and Chief Executive of AFC. “The strong investor interest reflects confidence in our strategy and the growing prominence of Africa within the Islamic finance sector. Diversifying our funding sources allows us to develop innovative financial solutions that drive sustainable development.”
Emirates NBD Capital, First Abu Dhabi Bank, and SMBC Bank International acted as joint lead arrangers and bookrunners for the deal. The structure adheres to standards set by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), ensuring compliance with Islamic finance principles.
The AFC has a history of utilizing Islamic finance, including a $230m Sukuk issued in 2017 — the first such issuance by an African supranational entity. This latest transaction follows a $500m perpetual hybrid bond issued in January, demonstrating the AFC’s ongoing efforts to diversify its funding base and access international capital markets. The corporation recently received high credit ratings from S&P Global (China) Ratings and China Chengxin International, paving the way for a potential panda bond issuance.
Islamic finance, with its emphasis on asset-backed financing and risk-sharing, aligns with the AFC’s focus on responsible and sustainable investment. The Murabaha structure, in particular, avoids speculative practices, making it a suitable instrument for financing tangible infrastructure projects.
“Islamic finance is increasingly important to our funding strategy, allowing us to tap into a wider range of investors who share our commitment to sustainability,” commented Banji Fehintola, Executive Board Member and Head of Financial Services at AFC. “The success of this Murabaha facility highlights the strong demand for African infrastructure investments and the AFC’s ability to structure transactions that meet global investor expectations.”
The three-year financing will support the AFC’s broader mission to accelerate industrialization, infrastructure development, and economic growth across the continent. The AFC’s portfolio includes projects in the Middle East and North Africa, such as the Xlinks project in Morocco, which aims to transmit renewable energy from the Sahara to the UK. Through its acquisition of Lekela Power, and in partnership with Cairo-based Infinity Power, the AFC has become a major player in African clean energy, targeting 3GW of renewable capacity by 2026.