AFC’s Samaila Zubairu – driven by a desire to get things done

I have always been driven by a desire to improve things. I have always been driven by my capacity and will to make things happen,” says Samaila Zubairu.

Improving the status quo and making things happen is an apt job description for Zubairu, President and CEO of the Africa Finance Corporation (AFC). It is one of a band of African multilateral financial institutions taking on the continent’s economic transformation with increasing confidence, skill and ability.

In the time that Zubairu has been at the helm of AFC (he was appointed in 2018), it has grown its balance sheet to over $12bn, surpassing his stated target at the time he took over and putting it in a position to play a serious role in the quest to build Africa better.

He has had an extended apprenticeship in the white heat of high finance and mega projects. He recalls that as a young graduate in an accounting / consulting firm, one of the major duties was to audit a fairly remotely located asset owned by the Nigerian National Petroleum Corporation and operated by Elf Aquitaine, one of the biggest oil companies at the time in his native Nigeria.

“We went on the speedboat to this island, way out where the oil was. I noticed something strange. The only electricity was in the compound, while all around it, the villagers would gather to look at the people in the compound.

“So I asked them, ‘Why can’t you extend the power to the community and build some facilities where they can also meet?’ How this can be right, I wondered.”

The event left a very profound impression on him and he eventually put it in his report on the visit, describing it as a security risk for there to be so much poverty in an area that was generating so much wealth.

“It was just odd and I didn’t understand how any human being could be comfortable with such a situation.”

Even now, recalling the event 34 years later, you can feel the sense of disquiet it generated in him. Perhaps it is this memory and the sense of injustice it aroused in him that is the source of his energy and almost missionary zeal. It has made him one of the most powerful achievers in the world of African finance today.

Behind the capable management of balance sheets, it is evident that he is driven by a passion to see change in the continent that is fired as much by empathy for the ordinary people as it is by corporate goals.

Underlining his career both before and at AFC, is a fierce determination to demonstrate that Africa is not a charity case but a viable business proposition – including in the company’s major sector focus, the infrastructure space. To prove the point, AFC has distributed over $600m in dividends to its shareholders over the last 15 years.

Earning his spurs

Having earned his BSc in accounting from Ahmadu Bello University and with a professional accounting qualification under his belt, he had additional work stints at Denham Management Company, FSB (now Fidelity Bank) and Liberty Merchant Bank.

While at Liberty Bank, he was given the responsibility of setting up the investment banking division; it would handle securities trading, capital markets and private banking, he says.

Among its clients was a trading company owned by Aliko Dangote. Although it was already a formidable presence in Nigeria and the sub-region, the company had bigger ambitions – it wanted to become a manufacturer rather than just a trader of cement.

It had set its eyes on Benue Cement Company, which the Nigerian government was seeking to divest as part of a broad privatisation strategy. Zubairu, called in to advise on the transaction, threw himself into the task in typical fashion.

“As they were planning to move away from trading to manufacturing, as part of the strategy sessions, we made our input on how that transition should be approached. They wanted to acquire cement plants and I wrote a paper on how to make the acquisition,” Zubairu says.

The paper led to an invitation to meet Dangote in person. Zubairu laid out a business strategy for the man who would later become Africa’s premier industrialist and wealthiest man.

Dangote was competing with Blue Circle and Lafarge, foreign entities that were effectively the same firm but had submitted separate bids for the Benue Cement Company. They were also giants in the sector, which made the clash seem like a David and Goliath confrontation.

This called for thinking well out of the usual business box. “We need to point out that they are one entity, and we need to get political will behind us,” Zubairu advised Dangote. “We need to make it known that they have already bought some assets and they cannot be allowed to buy all the assets, which would mean that there would be no competition in the space.

“We also have to stress the importance of local content because there has to be indigenous participation in any privatisation exercise. We also have to show that we have a plan to boost production so we can substitute imports with local production.”

A newspaper report from April 2000, in which then President Olusegun Obasanjo assured players that the process would be fair and that the privatisation effort would not result in the concentration of economic power in a few hands, indicates that the message had significant resonance.

In the end, however, despite scrupulous attention to detail and a bid that was the most competitive in price, Dangote was not allowed to acquire Benue Cement. “We won but they said we couldn’t take over because we were a trading company,” Zubairu recalls with some wistfulness.

Despite this setback, Zubairu had impressed sufficiently with his advice and leadership to be invited to join the Dangote Group, first as treasurer and later as chief financial officer.

In this capacity, he helped the company hone its industrial strategy, laying the groundwork for the continental behemoth that it would eventually become. It was a period that saw the unbundling of Dangote Industries into listed subsidiaries on the Nigerian bourse and Zubairu was involved in the largest project finance facility for an African company to date.

Change of course

Having done that, Zubairu felt the need to change course. He founded Africapital Management Limited, through which he sought to bring the financial nous that had been deployed to Dangote’s benefit to a wider clientele.

“I’d managed to help one client transform from a trader to an industrial conglomerate and I thought I can probably do it again, so let me go out and find the opportunities to do so,” he recalls.

Africapital Management focused on advising companies engaged in energy and industrialisation projects. Successful projects from that era include consulting on the largest industrial park in Africa, various power plants, processing plants, roads, dams and airstrips.

Through a joint venture with Old Mutual’s African Infrastructure Investment Managers, Africapital Management helped create the Nigerian Infrastructure Investment Fund, a private equity vehicle focused on infrastructure in the subregion, and also led the $300m acquisition of Eko Electricity Distribution Plc.

“In the middle of all that, I was asked by my friend and former colleague, who was by then the Minister of Finance to apply to lead the Nigeria Sovereign Investment Authority and I said no, I’m not interested,” Zubairu says, recalling how the next leg of his journey began.

At his friend’s insistence, however, he handed in his resume, only for the incumbent to be retained. It was then suggested that Zubairu apply for the position of CEO of AFC, a company he knew well at the time, not least because he was a tenant in their building, he says with a laugh.

After a “complex process”, he was offered the position. I ask Zubairu why he took the job. “It was the opportunity to create improvement at scale,” he replies after the slightest of pauses. “I felt that improving the lot of a few rich men or big companies, which is what I had been doing, was not as impactful as improving the lot of a country or continent.

“I was at a point in my life where I felt that AFC was a great platform with which I could help accelerate development impact, and do it in a way that could be transformative and lead the way for others to follow.”

An Africa-wide assignment

Established in 2007 by treaty, the role of the AFC, as determined by member states, is to be a vehicle to catalyse and aggregate investment into infrastructure on the continent through innovative approaches.

Africa’s infrastructure gap remains one of the continent’s biggest challenges and a barrier to its economic transformation. The African Development Bank estimates that the continent needs to spend at least $130bn a year to bring its infrastructure to an optimal state, including providing climate-resilient facilities.

Despite this, investment in African infrastructure is well behind other regions in the world, owing to several factors, not least the hesitation to invest in a region perceived to be risky, combined with a lack of project preparation on the part of managers on the continent.

When Zubairu joined the AFC in 2018 as CEO (becoming the third person to sit in the big chair), AFC was already confronting these challenges.

He brought a renewed sense of urgency to the task, vindicating the expectations of the board that appointed him, including its chairman, Dr. Okwu J. Nnanna, who welcomed him into the role by describing him as “an individual with the exceptional qualities across deal origination, execution, and capital raising that will continue to facilitate AFC’s ability to deliver transformational change through infrastructure investment as it moves into a new era.”

AFC’s balance sheet is now in excess of $12bn and it is being sought after by partners to help play a lead role in Africa’s energy transition and decarbonisation efforts. Today, not a conference goes by where he’s not invited to speak and he has the ears of Presidents and CEOs across the region and beyond.

Solutions-driven mindset

As an Eisenhower Fellow, Zubairu has a wider perspective on the role that his institution and others like it have to play in Africa’s long transformational journey.

The Eisenhower Fellowships programme is an international leadership development programme founded in 1953 in honour of US President Dwight D. Eisenhower. Fellows are selected based on their demonstrated leadership potential and commitment to making a positive impact.

He calls for a pragmatic approach to both the energy transition and also to development.

“You know,” he says in his characteristically thoughtful manner, “Africa is a continent that needs credible leaders and sponsors. So you need institutions that are able to play the role of midwife, to create the opportunity for others to follow. I felt that we could build an institution that could do things on a grander scale and lead for others to follow.”

His approach is to focus on solutions. “When you look at the space in which we are – infrastructure and industrialisation – you’re looking at a multi-layer, multi-billion opportunity. So we needed to focus on execution and have a solutions-driven mindset.”

Those solutions include millions of kilometres of roads, hundreds of bridges and thousands of megawatts of power that need to be built and deployed around the continent if Africa is to progress on its development quest.

This is the widely-referenced ‘infrastructure gap’ hampering the continent’s growth and AFC is right in the vanguard battling to close the gap. It has managed to increase its shareholding, and obtain a rating of A3 from Moody’s (the third highest in Africa).

The environment, Zubairu believes, is ripe for growth. “You know, in banking and industry in Africa, most things are new so once you start, you would always be profitable. We are yet to reach the stage where competition reduces profitability.”

This state of affairs, he says, has enabled AFC to grow at the pace it has without straying outside of the stringent prudential guidelines that have been laid down for management. He was lucky, he adds, to have a team that shared his vision and mindset and on whom he could count to pursue the dream.

“Fortunately for me, I found my band who were also willing to make a difference and an impact. There are many reasons why things don’t happen. We decided to be the ones to find the reasons to get it done.”

Unique equity bridge

To achieve its goals, AFC partners with governments and investors to transform ideas into bankable projects. The key point is to promote projects that make an impact, are viable and return profits to investors.

The Red Sea Power wind farm in Djibouti that was launched in September, Zubairu says, is a classic example of all these factors coming together. The project will bring 60MW of wind power to the country, which has been reliant on its neighbour Ethiopia for a large part of its electricity.

Zubairu points out that it was not exactly a model environment for investment. “At the time, they had just gone through their row with DP World over nationalising their port, which is the biggest user of energy in the country, so it might not have been perceived by some as investor-friendly. But this is a small ambitious country that has to rely on diesel power so it clearly made sense for us to help them.”

This meant working with the government to develop the business, getting a power purchase agreement in place with the local utility and getting the World Bank’s Multilateral Investment Guarantee Agency to further de-risk the investment.

On the financial side there was even more innovation. “To accelerate financial close, we introduced an equity bridge, construction finance solution.

“Typically, projects in Africa can take a long time to reach construction stage because the lenders take their time; they want to see this report and that report, they want this and that. So all of that can take time.”

Using the equity bridge enabled construction to proceed, even in the face of Covid. “What is unique about this project is that this was the first time that financial close was achieved through an equity bridge as opposed to project debt and now we have lenders lining up to take out equity,” Zubairu says with justifiable pride.

Djibouti aims to be the first African nation to have 100% of its energy needs provided for by renewable resources. The port, he says, one of the most important in the continent, will also be fully decarbonised in terms of its energy usage.

Where purely commercial firms hesitate or even reject these opportunities, African MFIs like AFC have the mandate and the confidence to step in and deliver projects that are needed in a way that is viable and profitable. Which is what AFC was able to do in Djibouti.

Similarly, AFC backed the $335m Cabinda Oil Refinery in Angola, partnering with Gemcorp and Africa Export-Import Bank, that other giant in African development finance.

Angola is one of Africa’s major oil producers and yet imports refined products. The refinery will enable Angola to reduce imports, saving both hard currency and the environment by reducing the emissions that come from shipping in products rather than producing them locally.

The key takeaway from that transaction, Zubairu reflects, is that “import substitution is an effective way to reduce greenhouse emissions associated with shipping and create more jobs in the local economy. It also provides an opportunity for scaling up so that subsequently, they will be able to supply neighbours in the region.”

Other significant projects in process include development of a 10GW wind farm in Egypt, building on AFC’s joint acquisition last year of Lekela, Africa’s biggest renewable energy provider. AFC’s creation of special economic zones through its Arise platform includes the first certified carbon neutral industrial zone in Africa. There are many more projects, Zubairu intimates, that he cannot discuss just yet.

These projects, though varying in nature, demonstrate the ambitions that AFC has for Africa. It is a vision in which the energy transition facilitates a new industrial push on the continent, leading to much more local production and value addition to give rise to increased intra-African trade, providing a boon to the nascent African Continental Free Trade Area, which the AFC is fully in support of.