Bridging Finance and Sustainability: How International Finance Can Support Sustainable Infrastructure in Africa with Dr Rufaro Nyakatawa

[00:00:00] You're listening to the Unlocking Africa Podcast.

[00:00:30] This is why we are increasingly seeing fund managers considering JZ for fund structure when targeting European investors. Stay tuned as we bring you inspiring people who are unlocking Africa's economic potential. You're listening to the Unlocking Africa Podcast with your host, Terser Adamu.

[00:00:54] Welcome to the Unlocking Africa Podcast, where we find inspirational people who are doing inspirational things to unlock Africa's economic potential. Today, we have Dr Rufaro Nyakatawa, who has 25 years experience working in financial services, specifically wealth management in large financial services companies across Africa, and is currently responsible for market development in Africa for Jersey Finance.

[00:01:24] Welcome, welcome, welcome to the podcast, Dr Rufaro. How are you? I am good. And how are you, Tessa? I'm very well, thank you. It's great to have you on the podcast. I know we've been having a few conversations over the weeks, so looking forward to our conversation. Before we start, as always, I was hoping you could give us a brief introduction into Dr Rufaro.

[00:01:48] Yeah, I think you have kind of captured a bit of it, but I was born in rural Zimbabwe and I found myself in South Africa after my university. And I spent lots of my time in the financial services industry, mostly in business strategy, consulting with management and lately very much in the impact finance space.

[00:02:15] So my experience has been mostly from South Africa, like I've said. I've said that I've been working in the country, so I've been working in the country, so I've spent some time on the continent. And now I work with Jersey Finance. But some of the stuff that I do and that I really love is impacting positively to others. So I am a mentor to a couple of especially young women on the continent.

[00:02:43] I'm on some advisory boards, but I'm also an executive director on a couple of boards as well, where for me, my focus is very much on responsible investing, inclusive financial systems. I feel those are quite important for the growth of the continent.

[00:03:03] And yeah, and I'm very much passionate about connecting the global capital, which Jersey Finance really offers me and to Africa in a way that really promotes the long term prosperity and creates intergenerational impacts, you know, across the continent. So as part of my contribution to the development of the continent, I also authored a book called Doing Business in Africa.

[00:03:29] And I'm also a contributing writer to the 11th edition of the Practical Guide to Offshore Investments in Africa. Thank you for that. So you've given us a brief introduction into your professional background, which is obviously led you to what you're doing at Jersey Finance.

[00:03:47] So for the listeners who are probably not familiar with Jersey Finance, could you give us a brief explanation into Jersey Finance and Jersey, the IFC in terms of what does it do in terms of its broader vision, particularly in relation to Africa? Yeah, thank you very much for that. Jersey Finance is the promotional body for Jersey as an international finance centre.

[00:04:12] With a 60-year-old track record, Jersey has established itself as a stable, transparent and well-regulated jurisdiction with the globally recognised strengths in private work, corporate structuring, investment funds and philanthropic vehicles. It has long served the needs of private clients, family offices and corporates with international ambitions.

[00:04:40] Jersey's relationship with Africa is both deep and enduring, rooted in the decades of collaboration and shared interests. The island is supported both inbound and outbound investment flows across the continent, offering structuring solutions that help African wealth grow securely and be preserved across generations.

[00:05:05] This is especially true for fund managers raising capital to invest in opportunities that improve lives and transform communities across Africa. Today, Jersey is increasingly seen as a jurisdiction of choice for asset protection, ESG-aligned investments and sustainable finance.

[00:05:27] Our vision is to be a trusted partner to African institutions, entrepreneurs and families, helping them unlock capital, manage risk and ensure that Africa's wealth is mobilised for the long-term impact and intergenerational prosperity. Recent research from the Centre for Economics and Business Research highlights Jersey's significant contribution to Africa's development.

[00:05:54] The study found that capital, intermediated through Jersey, supports over 6 billion of Africa's GDP each year and sustains more than 900,000 jobs across the continent. This underscores not only Jersey's global economic footprint, but also the tangible value its financial ecosystems brings to Africa's growth, resilience and sustainable development.

[00:06:21] So you touched on the sustainable finance elements. So I guess if we stick on the theme of sustainable sustainability, when we look at areas such as sustainable infrastructure, especially in energy, transport and water, why do you feel that these sectors or areas are vital for Africa's long-term development? Infrastructure is the bedrock for economic transformation. Without reliable energy.

[00:06:52] Without reliable energy. The goods cannot be produced. Without efficient transport. Markets stay fragmented. It reminds me of when I was in Zambia the other time. In March, I went to visit a friend of mine in Ndola, which is north of Zambia.

[00:07:06] And just for him to go to Blantyre, which is the capital of Malawi, we were saying he has to go to Lusaka, the capital, which is fly down south and then fly back up because the roads, they just take forever for him to get there. So efficient transport is quite important because otherwise there's fragmentation.

[00:07:28] And we also hear stories of in Africa, if someone wants to go to, at times, even neighboring countries, in some cases, they almost have to fly to Europe first before they can even go to, you know, to those other African countries. That's because there might not be direct flights. So in summary, if you also look at even water, without water communities and agriculture really fell. So sustainable infrastructure is crucial for Africa's development.

[00:07:56] We have seen how it has transformed other developing markets. If you look at China in the past 20 or so years, Africa faces the unique challenge of industrializing and lifting its population out of poverty without extensive use of fossil fuels. That powered other nations' growth.

[00:08:15] With over 600 million Africans lacking access to electricity, there's an urgent need for energy solutions that are both sustainable and scalable. Investing in renewable energy, efficient transport systems, and water management infrastructure not only addresses immediate needs, but also positions Africa to leapfrog into a green economy.

[00:08:41] At the moment, according to a report from Africa Development Bank, Africa has a $130 billion infrastructure investment gap annually. Yet every dollar spent on sustainable infrastructure creates long-term dividends in terms of jobs, resilience, and social equity.

[00:09:03] According to the world bank, access to reliable energy alone would increase film productivity by up to 30% in sub-Saharan Africa. So you've shared some great insight there. So from your perspective or from the work that you have been doing, what would you say are some of the most pressing challenges African nations face, especially when attempting to adopt sustainable infrastructure models?

[00:09:30] Yeah, one significant challenge, there are many, but for me, I think one of the significant challenges is the expectation for Africa to develop sustainably without the extensive use of fossil fuels, a path which is unprecedented in history. This expectation comes despite the continent's limited access to capital, technology, and infrastructure.

[00:09:55] Additionally, there is a lack of adequate financing, with many projects deemed too dirty to fund due to their reliance on fossil fuels, yet the continent is too poor to leap directly into green alternatives without substantial support.

[00:10:12] So while financial gaps often grab headlines, the reality is that many sustainable infrastructure projects in Africa never even reach the stage where they are finance ready. According to the Infrastructure Consortium for Africa, less than 10% of African infrastructure projects ever reach financial close.

[00:10:35] This is due to inadequate project preparation, which is critical, but under-resourced, especially when it comes to the infrastructure lifecycle. The key issues around this area, it really talks to lack of technical expertise to conduct pre-feasibility and feasibility studies, insufficient pipeline visibility. Investors cannot see what's coming next.

[00:11:03] We coordination between ministries, municipalities, and development agencies. And also the third one, even where infrastructure projects are viable and necessary, there is also unclear or inconsistent policy frameworks, which often detail investments.

[00:11:24] In 2022, African development study are over 65% of African project developers cited policy and regulatory risk as the top deterrent to private investment key.

[00:11:38] And the key issues there, they talk to frequent regulatory reversals or changes in tariffs or tax regimes, contradictions between national plans and municipal implementation, slow permitting and opaque procurement processes. And these are just the top three, in my view, that really are most pressing challenges at this point in time.

[00:12:04] You highlighted something quite key there in terms of the financing challenges. So how do issues like financing constraints and policy gaps hinder progress on the continent? Yeah, financing is normally the big one. So the financial constraints are compounded by global investment trends that often sideline African projects due to perceived risks.

[00:12:29] Policy gaps, including inconsistent regulations and lack of clear frameworks, detain investors. Because institutional capacity is another head-off. Many governments lack the technical expertise, like I highlighted earlier, and administrative structures to plan, execute, and maintain sustainable infrastructure projects effectively.

[00:12:51] For example, in Nigeria, there was a $200 million transit expansion project in Lagos, which faced delays of over three years due to incomplete environmental and social impact assessments. This finally actually reduced its attractiveness to private investors. So in summary, capacity development must accompany capital or else funds will not translate into functioning infrastructure. Fantastic.

[00:13:21] I know we've spoken quite a bit about the challenges. So if we move from the challenges and look at some of, say, the successes, are there any successful or promising examples of green or maybe climate resilient infrastructure projects in Africa that you've seen and you're quite excited about that you'd like to share? Yes, yeah.

[00:13:43] So though it appears very gloomy, there are countries and regions where things are starting to work and you're starting to see some green shoots. There is the Benban Solar Park in Egypt, which is a notable example. It's one of the world's largest solar installations showcasing the potential of renewable energy in Africa.

[00:14:05] And similarly, Rwanda's Green City Kegali project, which also aims to create a sustainable urban environment with green buildings, efficient waste management and renewable energy sources. It is very climate resistant and also affordable. And in South Africa, there is a rear via bus rapid transit system, even though it has taken a while to build in different areas.

[00:14:36] But if you look at where it is now, it's really going to be quite significant, especially to those that live in the low income residential areas. It is a low carbon public transport system in Johannesburg, which is also a PPP initiative estimated to reduce travel time by 38%. So, yeah, so there are examples in Africa that can be copied.

[00:15:02] But one is to always look at the low nuances, regulatory landscape and be able to apply the learnings. So what would you say we can learn from these examples and potentially how can they be replicated across other regions on the continent?

[00:15:20] Yeah, for me, I think as someone who is on the continent, you know, these projects really highlight the importance of strong political will, public-private partnerships and community engagement. They actually demonstrate that with the right mix of policy support, financing and stakeholder engagement, sustainable infrastructure is achievable.

[00:15:43] Scaling such projects require adapting models to local context, ensuring affordability and building local capacity. Again, looking at these examples, government leadership and regulatory clarity were pivotal, right? Blended finance was key, using concessional funds to de-risk private capital.

[00:16:06] And also community engagement was prioritized, ensuring local buy-in and sustainability, because in the end, it's all about really getting the social license to operate. So replication across Africa will require similar conditions, aligned incentives, scalable designs and capacity at the local level. I guess in line with this, the replication requires increased mobilization of capital and innovation.

[00:16:35] So what changes would need to happen so that Africa can better attract investors and drive innovation in sustainable infrastructure? Yeah, I always say in Africa, we have challenges or problems, but the way problems are, that's where the opportunities are. So Africa needs to develop robust policy frameworks that provide clarity and stability for investors.

[00:17:03] Enhancing transparency, reducing bureaucratic hurdles and offering incentives can make investment climate more attractive. So if I were to summarize the key points, very much the regulatory reforms. Investors want certainty. Long-term infrastructure plans backed by a league of frameworks can help. Number two, project pipeline development. Africa needs bankable projects.

[00:17:31] Africa Development Banks' Africa Investment Forum is one such mechanism that is addressing this. Number three, de-risking instruments. Tools like political risk, insurance, guarantees and local currency financing must be more widely applied. So additionally, leveraging blended finance models and combining public and private funds can mitigate risks and encourage innovation on the continent.

[00:18:00] And if we look at it from the other side, how can private sector stakeholders, including financiers and developers, work more effectively to support these initiatives? It really starts with the governments. The governments, they need to show the willingness to collaborate. They need to create a platform and landscape which is very attractive to potential investors.

[00:18:25] So private sector stakeholders should engage in early-stage project development, offering technical expertise and innovative solutions. Collaborating with governments to align projects with national development goals ensures relevance and sustainability. Moreover, investing in capacity-building initiatives can empower local communities, create a skilled workforce,

[00:18:51] to support infrastructure projects, even maintaining those projects into the future. So fund managers should look at long-term ESG returns, not just short-term IRR. FinTech and data tools can improve project monitoring, transparency and cost efficiency. For example, in South Africa, the use of AI-powered sensors in water infrastructure has improved leak detection and cut water loss by about 30%.

[00:19:20] So it's really all these different approaches that are quite important to ensure that the initiatives get support from the private sector. As you mentioned, it starts with governments who are key enablers.

[00:19:36] So from your perspective, what free actions or enablers would you say are most critical to ensuring that sustainable infrastructure becomes a real engine for prosperity across Africa? Yeah, so the first one is really policy reform. Institutions matter. Establishing clear, consistent and supportive policies that encourage investment in sustainable infrastructure.

[00:20:04] Transparent procurement and anti-corruption reforms unlock trust. The second one is capacity building. Investing in education and training to develop a skilled workforce capable of implementing and maintaining infrastructure projects. Because you'll find that in many African countries, one of the biggest challenges is, you know,

[00:20:27] you can have a very beautiful project, but if there isn't the IP to be able to maintain it, it fails after a few years. So we need to train engineers, you know, sustainability officers, legal experts. Infrastructure is really people powered. It needs the right people to know what needs to be done. And the last one for me is blended finance ecosystems.

[00:20:53] Creating financial instruments and mechanisms that attract diverse funding sources, including green bonds, public-private partnerships, concessional capital with private investment. Examples include like Africa 50 Fund, which really was very much a blended finance initiative. And I think we need more and more of those.

[00:21:19] In addition to this, how important would you say regional collaboration or integration is in unlocking these opportunities? Oh, that is quite important. It is essential to unlocking sustainable infrastructure across Africa. Trade depends on seamless transport corridors. And climate resilience requires cross-border coordination.

[00:21:43] During a recent visit to Zambia, just trying to go from Dola to Blanta, which is a very small distance between those two. One is to spend so much until we finally get to the destination. If you look at the Lobito corridor, which links Angola's port to Zambia and DRC, it is unlocking critical mineral trade routes. And similarly, the Kazungula bridge between Botswana and Zambia.

[00:22:13] This one, I think it was also opened, I think, in the last five years. It really connects four countries, which is Botswana, Namibia, Zambia and Zimbabwe. And it has really become an economic hub. I did pass by that region sometime last year. Just that development, it has managed to boost regional trade and also mobility as well.

[00:22:36] If you look at the Africa Continental Free Trade Area, I can imagine once it is 100% functional, we believe that Africa will be able to trade even better with each other. And again, it depends on integrated infrastructure. And the more we get connected, the more there is going to be economic growth on the continent.

[00:23:01] Another part for me, which I've also seen, is the environmental cooperation is also equally quite vital. If you look at, let's say, the Zambezi River, which provides power between Zambia and Zimbabwe, they've actually come up with the Zambezi River Authority, which is jointly managed by the two countries to ensure sustainable water use across the borders, because they know that it's really central to power as well.

[00:23:31] So regional integration transforms infrastructure from isolated assets into engines of growth. With collaboration, Africa can unlock its full potential, sustainability exclusively and at scale, actually. Thank you for sharing that. So if we look closer to home, what role do you see international financial centres like Jersey play

[00:23:55] in supporting Africa's sustainability ambitions, particularly around infrastructure? Yeah, so if you look at international finance centres like Jersey, they provide platforms for mobilising and managing capital efficiently. They offer expertise in structuring financial products that can attract global investors to African infrastructure projects. By ensuring transparency, compliance and risk management,

[00:24:25] IFCs build investor confidence and facilitate the flow of funds into sustainable initiatives. This is why we are increasingly seeing fund managers considering Jersey for fund structuring when targeting European investors. So with the work that you're doing, are there any examples or insights that you can share

[00:24:48] in terms of how Jersey has helped African nations mobilise international capital for sustainable development? Yeah, you know, since I joined Jersey about four years ago, I've really seen the growth of Jersey being central to really participating in the economic development of the continent.

[00:25:11] Jersey has been instrumental in structuring investment vehicles that channel capital into African renewable energy projects, such as solar and wind farms. These structures often involve collaboration between development finance institutions, private investors and local stakeholders, ensuring that the projects are well funded, they are compliant and aligned with sustainable goals.

[00:25:37] There are a couple of fund managers that are structured in Jersey that I've also been part of in terms of introducing them to specialists in Jersey. We have Knife Capital, EduInnovate, there's also SOT Capital, just to mention just a few. They are actively investing in impactful businesses that are changing lives across the continent. There's also one example that I really want to elaborate on.

[00:26:06] There's a company called 4G Capital. It is registered in Jersey and is making transformative impact across Africa by delivering inclusive and responsible financial services to underserved micro and small enterprises in Africa. And it really manages to support SMEs. It means these SMEs, in a way, they are able to provide for their families.

[00:26:34] And also with more than 80% of its clients being women, 4G Capital empowers entrepreneurs to grow sustainably, build resilience. And by combining the digital innovation, which I mentioned earlier, with human capital-centered engagement, it ensures capital is delivered with both purpose and impact. This is a compelling example of how Jersey Best is contributing meaningfully to Africa's development,

[00:27:04] demonstrating the critical role that international finance centers can play in advancing inclusive growth and economic empowerment across the continent. So if we keep on the theme of impact and also looking ahead, what would you say excites you most about the future of sustainable development across Africa? I am very inspired by Africa's potential to become a global leader in sustainable development.

[00:27:33] The continent's young population, abundant natural resources, and increasing technological adoption position it uniquely to innovate, implement green solutions that can save its models worldwide. And in addition to that, what role do you see Jersey playing in the future over the next 5 to 10 years? Jersey will continue to be a strategic partner,

[00:28:02] facilitating investments into Africa's sustainable projects. By providing robust financial frameworks and leveraging its global networks, Jersey can help bridge the financing gap and support Africa's journey towards a resilient and inclusive green economy. As we've come to the end of today's conversation, I was wondering if you could leave our listeners with one key takeaway from today's conversation. What would that be?

[00:28:31] I love Africa. And what I can say is Africa is not a problem to be solved. It is a partner to be invested in. If we align purpose with capital, the future would not just be sustainable. It will be extraordinary. Brilliant. Fantastic way to end today's conversation. Thank you, Rufaro. I know for me, it's definitely been an enlightening discussion. We've heard today how sustainability isn't just a buzzword.

[00:29:01] It's something that's necessary for the future of the continent. So thank you for highlighting how collaboration, innovation and smart finance can turn what we'd like to say ambition into action. And thank you for taking the time to join us today. Thank you very much for the opportunity, Tessa. Thank you to everyone who has listened and stayed tuned to the podcast.

[00:29:26] If you've enjoyed this episode, please subscribe, share or tell a friend about it. You can also rate, review us in Apple podcast or wherever you download your podcast. Thank you and see you next week for the Unlocking Africa podcast.