Standard & Poor’s (S&P;) Global Ratings announced on Wednesday that it has assigned Africa Finance Corporation (AFC) an ‘A’ long-term and an ‘A-1’ short- term credit rating, with a promising outlook.
The positive outlook signifies expectations that AFC will successfully implement its strategy to diversify its shareholding structure and enhance its capital base while maintaining strong liquidity and capital levels.
However, S&P; cautioned that it might change the outlook to stable if AFC does not make substantial progress in diversifying its shareholder structure.
The agency also mentioned that any significant decline in capital or liquidity could adversely affect AFC’s financial risk profile and result in a negative adjustment in its ratings.
Conversely, S&P; indicated that the ratings could be upgraded if AFC significantly broadens its sovereign shareholder base so that investments reflect more than minimal stakes, thereby alleviating the concentrated nature of its shareholder structure.
Additionally, a positive rating action could be considered if there is a significant improvement in capitalization levels, especially through effective equity raising efforts.
S&P; further evaluated AFC’s ratings as reflective of its strong enterprise risk profile and robust financial risk profile.
The corporate entity is tasked with addressing investment gaps across Africa and plays a crucial role in financing critical infrastructure while encouraging private sector lending.
The ratings firm highlighted that AFC's ongoing capital increases demonstrate strong support from shareholders, despite the concentration of ownership, where the Central Bank of Nigeria and various Nigerian financial institutions account for approximately 75% of the total shareholding.
Despite having relatively modest capital levels compared to peers, AFC showcases a solid track record in asset quality and provides excellent liquidity coverage.
Established by treaty in 2007, AFC aims to bridge structural investment gaps and stimulate private sector lending throughout Africa.
As a public-private partnership, AFC is pivotal in funding projects in infrastructure, industrial growth, and natural resource sectors across the continent.
Beyond financing, the corporation also offers services such as transaction advisory, deal structuring, project development, and principal investment across the entire lifecycle of infrastructure projects.
Since its inception, AFC has disbursed a total of $18.5 billion across 36 African nations as of the close of 2025, highlighting its importance and scale in promoting development initiatives in Africa.
The investment pipeline of AFC is focused on projects that alleviate critical infrastructure challenges while aligning with national development goals. It specializes in sectors such as power, logistics and transport, natural resources (including mining, oil, and gas), heavy industry, telecommunications, and technology.
While the number of entities in the shareholder base is diversified, the concentration remains significant, with the Central Bank of Nigeria owning a considerable 39% stake, marking one of the highest concentrations among rated multilateral institutions.
Additionally, other Nigerian financial institutions own about 40% of the total shares, raising agency-risk concerns when compared to similarly rated organizations.
Many other sovereign stakeholders possess minimal stakes, typically below 0.5%, which could imply a limited level of commitment to AFC.
Overall, AFC’s shareholders rank lower on the World Bank’s governance effectiveness metrics compared to global counterparts, with Nigeria (39%), Egypt (7%), Turkey (3%), and the Public Investment Corporation of South Africa (3%) being the main regional and non-regional sovereign stakeholders.
Encouragingly, no principal shareholder has ever exited the institution, as noted in the statement.
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