Preparing projects for capital market financing

Oscar Onyema, the Group CEO of the NGX Group, shared insights on the importance of dedicated capital in scaling recent projects through the capital market at the Africa Investment Forum in Marrakech. He highlighted the vast opportunities for capital flows into Africa, given its growing population and the need for investments to develop human potential and capabilities. Onyema also emphasized the significance of early conversations to facilitate continuous project financing. The theme of unlocking value chains and developing ecosystems to channel financing across sectors was a key focus of the discussion. The capital market plays a significant role in this ecosystem, serving as the final stage in the financing value chain. Onyema outlined the progression from donations to grants, catalytic capital, blended capital, private equity, and venture capital before reaching the capital markets. He noted that many projects today require dedicated institutional capital for scaling, especially once proof of concept and productivity are established. Starting conversations early and completing project preparations are essential steps to attract investors and bring projects to fruition. The challenge lies in the early stages of project development, where securing proof of concept and preparing projects for investment can be costly and complex. Organizations like the African Development Bank, Afrexim Bank, and Africa 50 are working to de-risk this segment of the market, making projects more attractive to institutional investors. By completing project preparations, providing equity and debt investments, and crowding in funding, these organizations are paving the way for successful project financing. Their integrated approach ensures that promising projects reach the investment-ready stage, facilitating smoother capital market entry. Public-private partnerships between governments and capital markets are crucial for advancing national projects and driving market growth. Onyema highlighted the example of the Nigerian market, where the government plays a significant role in issuing various bonds on the fixed income side. He stressed the need for increased collaboration between domestic capital markets and governments across Africa to stimulate market activity. While government policies have historically driven market growth, private capital remains the primary driver of market development. The role of African investors is paramount in addressing Africa's development challenges and unlocking value chains. Onyema emphasized the need to make it easier and more attractive for African investors to participate in the market through tax incentives and improved investment conditions. Building confidence among local investors in domestic businesses can attract international investors, who value transparency, ethics, and corporate governance standards. Creating an ecosystem that welcomes diverse investment philosophies and players is essential for fostering a robust and inclusive market environment. In conclusion, Onyema's insights underscored the critical role of capital markets in driving African development by facilitating project financing, unlocking value chains, and engaging a diverse spectrum of investors. By leveraging dedicated capital, fostering early conversations, and promoting public-private partnerships, Africa can harness its immense potential and propel sustainable growth across the continent.