“Our core themes remain centred on productivity, sustainability and inclusivity,” says Chris Chijiutomi, the Managing Director and Head of Africa for British International Investment (BII), the UK’s development finance institution. 

“We continue to put emphasis on sectors like infrastructure, climate, financial services, manufacturing, real estate, telecoms, technology and agriculture.”

BII’s vision for the continent combines patient capital deployment, vital infrastructure development, partnerships with key public and private players, targeted innovations and sustainable crowding in domestic investors. 

It is a broad mandate, which calls for broad horizons, and nuanced understanding of a continent facing headwinds like rising debt and inflation. Chijiutomi, appointed in February 2023, brings over 20 years of on-the-ground experience investing in African infrastructure and power. 

With 54 flavours of developmental state or liberal economy in Africa, Chijiutomi emphasises BII’s counter-cyclical, flexible approach. “There’s no one-size-fits-all solution,” he told The Africa Report. “We adapt to each country’s specific needs.”

This means patient, strategic investments in countries like Egypt, with a focus on renewables. In contrast, countries with strong projected growth like Côte d’Ivoire and Senegal get growth capital injections. Chijiutomi also highlights BII’s sizeable current exposure: $4.5bn across more than 700 investments, which he says will represent around 60% of capital commitments over the next four years. 

Strategic infrastructure development

Chijiutomi says infrastructure is the foundation for Africa’s growth. He outlines three focus areas based on his experience:

• Collaborating with multinationals to accelerate progress. “We’ve partnered with companies like Dubai Ports World. Leveraging our Africa experience, we aim to cooperate with more global players looking to invest.” In 2021, BII agreed to work with the Dubai-based ports operator to modernise three ports: Dakar, Sokhna and Berbera. Africa has a sixth of the world’s population, but accounts for just 4% of global containerised shipping volume, according to United Nations Conference on Trade and Development (UNCTAD).
• Aligning with government priorities, which enables greater private sector impact. “By engaging governments to understand their strategies, we identify opportunities to invest strategically.” In South Africa, for example, the focus is jumpstarting renewables to replace coal. But in Egypt, policymakers are also interested in green hydrogen, given the nation’s solar potential.
• Innovating to address unique challenges. BII started Gridworks in 2019, a power sector developer that helps tackle gaps in transmission and distribution. “We plan to bring similar innovative solutions to other sectors lacking private investment,” says Chijiutomi.

Besides power and logistics, BII is exploring grain storage and fertiliser investments to boost agriculture and food security – urgent concerns given global supply chain volatility.  

Africa’s renewable potential

Renewable energy is a top priority for BII, which has a 30% climate commitment. Chijiutomi says South Africa’s Just Energy Transition Investment Plan offers early opportunities. Despite the huge mountain to climb in terms of meeting Africa’s baseload requirements – something renewables are currently far from – Chijiutomi is optimistic.

The challenge remains people understanding that the Africa infrastructure business is a patient, long-term game.

He points to BII’s investment in the Kenhardt solar and storage plant, supporting wider African grid greening, run by Norwegian IPP Scatech. It will eventually deliver 540MW in solar power, with a 225MW/1,140MWh lithium-ion battery storage system.

The project will be Africa’s largest and South Africa’s first baseload renewable energy project, powered by renewable sources “with potentially round-the-clock storage”, says Chijiutomi, who wants to use BII’s climate investments as a pathfinder for others on the continent.

In April, Nick O’Donohoe, the head of BII, said they are supporting the 20MW solar project in Cuamba, which aims at providing clean energy to 18,000 households in Mozambique.

Chijiutomi says, “We will learn a lot from the Cuamba project; solar and battery onto the grid, albeit relatively small. But it is the first of a kind, that could be replicated.” Some of these new technologies are not at the affordability stage yet – just as the first solar panels were unaffordable decades ago – but for Chijiutomi, getting involved now “is exactly what a development financier is meant to be doing”.

Patient capital

The risk-taking at the early stages of the investment cycle is akin to the other great task of development finance institutions: creating bankable projects that other institutional pots of cash can comfortably invest in.

“There just aren’t enough projects that are investable,” says Chijiutomi. “Because they have not had people spending time to structure it, develop it and bring it to market. And when they do come to the market they find that there’s a lot of capital chasing these projects to finance them.”

BII is trying to fill this gap with equity platforms like Globeleq and Gridworks. They have partnerships with Scatec in hydroelectricity, a joint venture with the Aga Khan group independent power producer, and investments in a South African developer called H1 Capital. “So equity wise we continue to look to back developers in the space,” says Chijiutomi.

They also put money into intermediate financiers like AIIM, Meridiam, and Remgro, all infrastructure developers.

“The challenge remains people understanding that the Africa infrastructure business is a patient, long-term game,” says Chijiutomi. “So if you’re looking for a quick capital turnaround, then infrastructure in Africa is not for you. But if you’re looking for impactful long-term, sustainable projects, then there are opportunities in Africa.”

African capital

Chijiutomi also stresses the need to attract greater African capital into infrastructure through vehicles like pension funds. This can provide the patient and long-term financing many projects require.

He shares lessons from engaging Nigerian pension funds with ARM-Harith, a West Africa infrastructure fund he worked in previously: “I was lucky, we were able to get three pension funds into the fund – the first of its kind. It was a challenge, but they were willing to take the risk because we were able to articulate the liability.” 

“The more positive examples we showcase, the greater the pension fund uptake will be over time. It’s difficult, but we must keep pushing.”

Chijiutomi says BII is actively educating local pension schemes on the benefits of diversifying into infrastructure. Regulatory changes can also drive allocation to sectors like renewables. BII aims to catalyse this not just through capital but know-how transfer.

“I think in Nigeria, there have also been positive steps where local pension funds have invested in a Nigerian Infrastructure Fund, which is focused on refinancing existing operating infrastructure assets,” he says.

Beyond pension funds, “we want to mobilise more commercial funding alongside our own capital to prove the investment thesis and potential returns”, Chijiutomi says.

Private sector investment

While private equity has brought some private capital into the continent – and equity investment is sorely needed, given the cost of debt – the potential for exits is yet to be proven. So how can Africa’s mid-sized companies get the growth capital they need?

“The greenfield build story in Africa is much longer than in more advanced markets,” says Chijiutomi. “So there is a longer time period required to build the assets into steady operations and then find an exit – only recently have some of the historic investments been seeing some level of exits.”

BII is attempting to bridge that gap, again by leaning into its institutional power of mobilisation.

They partner with South Africa’s Public Investment Company (which deploys South Africa’s own pension funds) to offer African corporates growth funding, via Africa CapitalWorks, which targets mid-market companies in Sub-Saharan Africa.

Growing African firms

It has managed to help grow various African firms such as Cipla Quality Chemicals and Rhodes Food Group – allowing these companies to become better structured, and attractive for private equity groups.

Chijiutomi gives an example from India showing how BII attracted additional investors to one of its energy companies. BII funded an Indian power company called Ayana, which later got investment from two big sources: India’s government infrastructure fund and the global energy company BP. 

Chijiutomi explains: “We brought in new investors and their money into Ayana, proving our idea could work.” He says BII wants to do the same in Africa – bring outside commercial investors into BII’s existing African energy companies. 

This would show these businesses have strong prospects down the road if the original investors want to sell their stakes. It proves there is an “exit thesis” where BII and others can eventually get their money back through a future sale.

Addis calling

Beyond mobilisation, BII is also a direct investor in some heavyweight African blue chips. In 2021 it made a $100m investment in ETG, an African agribusiness. 

In 2022 it invested in pan-African telecoms infrastructure giant Liquid Telecom. It is a key player in the liberalisation of Ethiopia’s telecoms sector, as part of the consortium that won the concession for the new telecoms licence in 2021.

“It is going to be a huge development opportunity. The capital that’s going to be spent and infrastructure built in that market – the full gambit from data to telephony,” he says. “Look at countries like Nigeria and Kenya where the advent of telecoms has propelled the economy.”