Japan Credit Rating Agency Assigns A+ Score to the Africa Finance Corporation

In an evaluation report recently made public, the Japan Credit Rating Agency (JCR) has assigned an A+ score to the Africa Finance Corporation (AFC). In its assessment, JCR noted that for 2024, total financing, including debt and equity, amounted to USD 7.9 billion and the percentage of non-performing loan was only 0.7%, well below the industry acceptable threshold of 3%.

From a shareholding perspective, JCR noted that Nigeria holds almost 80% and that only 15 African countries are shareholders of AFC. In fact, the Central Bank of Nigeria is the single largest shareholder with a 38% stake.

At the end of 2024, the AFC shareholding structure consisted of 45.3% from African Sovereigns, 39.2% from Financial Institutions, 9.1% from Pension Funds, Sovereign Wealth Funds and Asset Managers, 3.1% from Non-African Sovereigns, 2.4% from Multilaterals, and 0.8% from Others. Angola was the last Sovereign to become a shareholder, three years after joining as a member in 2022.

Nearly 70% of the financing from AFC goes to the private sector. The AFC adopts a rigorous project selection methodology which applies a differentiated rate based on the client risk profiling. Each loan is guaranteed by real collaterals, insurances, sureties and other forms of risk mitigation covers.

In 2024, the revenue of the AFC surpassed the billon-dollar mark for the first time. In recent years, the AFC has innovated with some funding initiatives that include the issuance of hybrid bonds worth USD 500 million and the closing of a Shariah-compliant Commodity Murabaha worth USD 400 million.

The report also reveals that the AFC financing went most toward infrastructure and trade financing ($406B or 58%), short-term loans to African banks ($1.9B or 24%), and equity participation ($1.4B or 18%).

The sectors financed are energy, transport & logistics, natural resources, ICT and heavy industries. According to the AFC Strategic Plan 2024-2028, the bank plans to increase the weightage of renewable energy and critical minerals as well as to promote the regional integration of regional supply chains.