By zainab.joaque@awokonewspapersl.com
Abuja, Nigeria, June 30, 2025 – At a high-level panel on financing Africa’s development, Simon Tiemtoré, Chairman of Lilium Capital Group and Vista Group Holding, called for a fundamental shift in how African infrastructure projects are financed—starting with a rethinking of sovereign credit risk.
Speaking during a session moderated by Lerato Mbele, Tiemtoré argued that traditional credit ratings often misrepresent the actual risks involved in investing in Africa. “The ratings are based on perceived risk—risk that, frankly, doesn’t exist in the way it’s portrayed,” he said. He emphasized that many African countries have a stronger debt repayment track record than their Western counterparts, yet face disproportionately high financing costs due to their ratings.
Tiemtoré advocates for de-risking African infrastructure projects through structured finance solutions that appeal to long-term investors such as pension funds and sovereign wealth funds. One example he cited is the use of monoline guarantees—credit enhancement mechanisms backed by multilateral development banks (MDBs)—that make it viable for capital markets to commit to infrastructure financing with 30- to 50-year tenors.
“These MDBs, like Afreximbank and the Africa Finance Corporation, can be treated as local counterparties by African pension funds, enabling them to invest directly into infrastructure via these vehicles,” Tiemtoré explained. This strategy bypasses some regulatory barriers and unlocks capital that is otherwise underutilized.
Tiemtoré also highlighted future flow financing, a model in which countries use projected revenues—particularly from natural resources—as collateral for infrastructure investment. He pointed to successful applications of this model in countries such as Burkina Faso, Guinea, Mozambique, Gambia, and Sierra Leone. These arrangements allow governments to access financing without accumulating unsustainable debt burdens, as loan repayments are directly linked to revenue-generating activities like mining royalties.
A major hurdle in project finance for many African countries is the absence of sovereign credit ratings. Tiemtoré suggested a more pragmatic solution: financing based on cash flow projections rather than relying solely on sovereign guarantees. “As a banker, my first question is, ‘Where’s the cash flow? How do I get repaid?’” he noted. His firms partner closely with governments to structure blended finance solutions—mixing local currency and foreign exchange loans—customized to fit national debt profiles and ensure project viability.
Tiemtoré’s approach reflects a broader paradigm shift in African development finance: from dependency on external aid and capital to leveraging domestic financial markets and institutions. By focusing on innovative financial structures and risk-sharing mechanisms, he argues, Africa can take greater ownership of its infrastructure agenda.
“Infrastructure development in Africa doesn’t have to hinge on foreign capital or sovereign guarantees,” Tiemtoré concluded. “We can build our own solutions, grounded in African realities and powered by African institutions.”
This perspective signals growing momentum behind homegrown financial innovation—positioning the continent not just as a destination for capital, but as a credible originator of sustainable investment strategies. ZIJ/30/6/2025
