Development undoubtedly requires the financing of projects. In this vein, African States continue to pool their efforts through regional institutions, in order to guarantee funding. Like the African Guarantee and Economic Cooperation Fund (FAGACE), created about 40 years ago to serve as a guarantee fund for the member States, and which has substantially increased its capital for the financial year 2017-2020. It’s another way to contribute to the continent’s financial autonomy.
“For 40 years, FAGACE has been contributing to the socio-economic development of the fourteen member States through collateral interventions, direct financing, market bonds, credit extension and interest rate subsidies”, said Minafou Fanta COULIBALY-KONE, the new Managing Director of FAGACE. Initially set up by 9 African States in February 1977, the Fund aimed to facilitate access to the member States’ and public corporations’ project financing. Today, achievements attract other countries such as Benin, Burkina Faso, Cameroon, Central African Republic, Congo, the Ivory Coast, Guinea Bissau, Mali, Mauritania, Niger, Rwanda, Senegal, Chad and Togo, which are the main shareholders.
1500 billion of funds mobilized
With 304 projects managed by the 14 States or by their public corporations, FAGACE closed the financial year 2016 on a total of CFA 1,500 billion mobilized in the areas of telecommunications, agro-industry, energy and of course infrastructure. In addition to the overall funding volume, the resources implementation diversity mainly contributes to the Fund’s successful performance, according to the Managing Director: “With respect to the interventions, the cumulative gross commitments amounted to CFA 333 603 million, then CFA 8,987 million in interest rate subsidies, CFA 1,165 million in equity investments, CFA 976.8 million in extension of the credit period, CFA 7,300 million in direct financing and CFA 1701.75 million in market bond.” Thus, the institution is planning to perform better in 2017 to meet the need for innovation and achieve financial autonomy.
CFA 350 billion for self-financing
For the Togolese economist Jean Wilson, the logic of institutions such as FAGACE makes it possible to effectively move towards autonomy: “I think with this type of guarantee fund, the States have shown that Africa can also afford resources to finance development projects itself”.
Nevertheless, the challenges in securing the funding for all projects remain serious. That is what led the member States to agree on an increase in the authorized capital from CFA 100 billion to CFA 350 billion by 2016, to increase the fund’s capital; the gradual development of operational activities, the investment in key areas such as hotels, microfinance and port handling. “Through the capital increase, the institution strengthens its resources to undertake actions in order to support economic growth in the member States by investing in growth sectors,” said the Togolese economist.
2017-2020: recapitalization and re-orientation
Given the slowdown in economic growth in the continent and the decline in the price of raw materials, especially oil, the fund has just developed a new strategic plan covering the 2017-2020 period, summarized by the top management in a few areas, including innovation, governance, mutual trust and profitability. “In 2017, FAGACE has begun a transformation to better address financial market developments and meet the member States’ expectations: developing innovative offers, strengthening governance, management and operational efficiency, improving the quality of relations with the partners by restoring confidence, boosting technical partnerships with other development institutions, guaranteeing the financial profitability and sustainability of the economic model, which are the main levers of action to achieve this goal.”
However, at a time when African States are looking forward to emerge from a development tied to seriously-conditional funding, it is clearly said by the institution that capital could further increase in the coming years, which will undoubtedly be one more step towards financial autonomy for the continent, or at least for the Fund’s member States.