Hybrid bonds issued by multilateral development institutions are increasingly bridging the gap between concessional and commercial capital. In January 2025, the Africa Finance Corporation (AFC) priced its inaugural $500 million perpetual hybrid bond, attracting over $1.1 billion in orders. The bond blends features of equity and debt, with full equity credit recognition from Moody’s, strengthening AFC’s capital base to support high-impact infrastructure including energy projects. Key beneficiaries include the Red Sea Power Project in Djibouti and the Lobito Corridor Rail Project, which improves power and energy logistics for landlocked countries. These hybrids allow multilateral issuers to mobilize large-scale capital while offering investors predictable returns and a proven route into African energy markets.

Syndicated Receivables and Structured Trade Finance

Trade and receivables financing has become vital for oil and gas firms seeking liquidity without selling assets. Earlier this month, Afreximbank arranged a $1.75 billion syndicated receivables purchase facility for Angola’s Sonangol, providing working capital and bridging cash flow volatility in upstream operations, while freeing balance sheet room for offshore drilling and export activity. Backed by predictable export receivables, structured trade finance attracts institutional lenders to commodity-linked projects, mitigating risk through export credit structures and commodity price hedging.

Islamic finance is emerging as a strategic source of capital, particularly where Sharia‑compliant instruments appeal to Middle Eastern and North African investors. In February 2025, the AFC arranged a $400 million Murabaha facility underwritten by 11 Islamic banks. Murabaha – a cost‑plus financing structure – allows project sponsors to access capital for oil, gas and renewable infrastructure while catering to investors seeking ethical and asset‑backed returns. This has key implications for deepening finance pool diversity and attracting sovereign wealth funds and Islamic financial institutions into African energy markets.

Commercial bank‑led project financing continues to be a backbone of energy sector growth, especially in upstream oil and gas. Standard Bank’s recent announcement of a $250 million structured finance facility for Nigerian energy firm Aradel Energy is a prime example. The funds support Aradel’s acquisition and expansion strategy, including increasing equity stakes in major Nigerian oil assets, while refinancing existing debt to strengthen cash flow. Facilities like these demonstrate banks’ increasing willingness to back oil and gas growth when paired with robust commercial plans and predictable revenue streams.

Development finance institutions remain critical in de-risking early-stage renewable and transmission projects. The World Bank, IFC and Afreximbank have backed projects with blended finance packages of concessional loans, guarantees and technical support. For example, the IFC has launched a $150 million green bond to support solar projects and transmission upgrades across Africa, significantly improving project bankability for private investors. Blended finance mechanisms reduce perceived risk for private capital and are especially effective where grid access and off‑taker credit risk would otherwise deter funding.