Accessing AFC’s USD 2 billion facility fund for space projects

Despite funding constraints, space technologies are critical for advancing societal well-being and long-term growth in the post-COVID-19 pandemic recovery. The Africa Finance Corporation’s (AFC) USD 2 billion facility fund is available to NewSpace companies and organisations to support space projects for sustainable development.

The space economy is integral to the economic development of any nation. As a vital component of the world’s rising digitisation, space technologies, in particular, help to bridge the digital gap, monitor changing climate, extreme weather, and natural resource consumption, and offer new economic possibilities. Government investments and funding remain crucial in the growth of space activities, particularly in research and development (R&D) and the acquisition of space products and services. Hence, decision-makers need to better understand and map the use of space technologies in government services and society as a whole.

The African space sector is growing at a fast enough pace to claim a sizable market share of the global space economy.  In 2021 alone, Africa’s space budget was USD 548.6 million. This represents a 9% increase from 2020 and nearly twice (94% of) the 2018 budget. Furthermore, the satellite market has risen as a result of the expansion of national space programs and increased commercial activities, and it is now viewed as a critical tool for sustainable development.

Space technologies are critical for promoting social well-being and sustainable growth in the post-COVID-19 pandemic recovery. As a result, private and public sector stakeholders in the EO industry need to drive the much-needed change to assist African economies to recover more quickly from the effects of the worldwide epidemic. On the contrary, the space sector faces funding issues as well as a hostile economic climate in which private entities can thrive. This is especially because the industry is dominated by the government until the entrants of NewSpace actors. 

Chart showing funding source by type
Funding sources for satellite projects in Africa. (Source: Space in Africa)

Government financing (both domestic and international) is the most common source of funding for space programs in Africa. However, it is largely spent on government-owned space projects through its space agency and institutions. In South Africa, however, the government-to-private finance approach is common. Another source of financing comes from foreign governments, the majority of which is obtained through research and development partnerships with a foreign institution, space agency, or newspace enterprise with the capital to support such initiatives.

On the plus side, investors are becoming more aware of the potential and prospects underpinning the over 283 private and public NewSpace companies operating in Africa, most of which require funding. As a result, there has been a steady rise in the involvement of international and African finance institutions like the World Bank, European Commission, The African Development Bank (AfDB), West African Development Bank, Industrial Development Corporation (IDC), and Development Bank of Southern Africa (DBSA), among others.

For example, the World Bank committed USD 424 million to the African Regional Communications Infrastructure program and provided the O3b with USD 50 million in debt financing. Similarly, the African Development Bank authorised a USD 25 million credit for the New Dawn Satellite Project in 2009. With the help of Nedbank, AfDB, and IDC, a further USD 250 million was raised for the New Dawn project. A project to design, build, launch, and operate a pan-African communications satellite system into the 33° East orbital location, which is suited for serving the African continent.

Another funding opportunity for NewSpace companies will become available sometime in May 2022. In response to the COVID-19 global pandemic and the Russia-Ukraine crisis, the Africa Finance Corporation (AFC) has announced a USD 2 billion facility fund to help economic recovery and resilience in Africa. 

The facility would be distributed through AFC loans to selected commercial banks, regional development banks, and central banks in several African nations, providing them with much-needed hard currency liquidity to support trade and other economic operations. These institutions will be able to leverage AFC’s established global fundraising network to get funds at reasonable rates.

Space technologies are drivers of economic development and innovation in a number of sectors. Many use cases of space for development abound in Africa, ranging from agri-food to healthcare, from the environment to telecommunications. Space-based applications can be used to support projects in education and distance learning, social care, support for medical operations, monitoring and security, telemedicine, and epidemiology and resource planning.