Interview with Africa Infrastructure Investment Managers (AIIM) opportunities. – JD Supra

Investment Strategy Aligned with Sustainable Development Goals (SDGs)

A report on the investment strategy of Africa Infrastructure Investment Managers (AIIM) indicates a framework deeply integrated with the United Nations Sustainable Development Goals (SDGs). The firm’s approach targets critical infrastructure gaps in Africa, focusing on sectors with strong secular growth trends and a clear potential for private capital to drive sustainable development.

Core Investment Themes and SDG Linkages

AIIM’s investment thesis is structured around three primary themes, each directly contributing to specific SDGs:

• Digitization: Investment in digital infrastructure such as fiber-optics, towers, and data centers supports SDG 9 (Industry, Innovation, and Infrastructure) by building a resilient communications backbone for the continent.
• Energy Transition: The development of accessible and clean energy through investments in wind, solar, and battery storage directly advances SDG 7 (Affordable and Clean Energy) and SDG 13 (Climate Action).
• Mobility and Logistics: This theme encompasses critical minerals and food security, addressing SDG 2 (Zero Hunger), SDG 9, and SDG 11 (Sustainable Cities and Communities) by improving the transportation and distribution of essential goods.

Advancing SDG 2 (Zero Hunger) through Food Security Investments

Food security is a cornerstone of AIIM’s investment strategy, recognized as a critical component for sustainable development. The firm’s activities in this sector are designed to build resilient food supply chains, reduce waste, and improve access to essential commodities, directly contributing to SDG 2.

Strategic Focus Areas in Food Security

AIIM’s investments in food security are concentrated in three key areas:

1. Temperature-Controlled Logistics: Through platforms like Commercial Cold Holdings, AIIM develops large-scale cold storage infrastructure. This is vital for reducing post-harvest food loss, a key target under SDG 12 (Responsible Consumption and Production).
2. Port and Back-of-Port Infrastructure: Investments focus on enhancing the efficiency of getting goods to and from Africa, a critical step in ensuring a stable supply of food.
3. Inland Transportation and Distribution: The firm invests in the storage and distribution infrastructure for bulk food commodities like wheat, fertilizer, and edible oils, strengthening the entire value chain.

The Role of Private Capital in Achieving Food Security

Private capital is identified as critical to closing the infrastructure gap that impedes food security in Africa. By acquiring and optimizing assets, private investors can create efficiencies that benefit consumers and support economic growth, aligning with SDG 8 (Decent Work and Economic Growth). For example, by carving out and repositioning logistics platforms, AIIM has enhanced capacity for handling key exports like citrus and imports like grain, ensuring benefits flow through to the end-consumer.

Integrating ESG Metrics for Sustainable Impact

AIIM’s investment evaluation extends beyond financial returns to include robust sustainability measures. This dual focus ensures that portfolio companies contribute positively to environmental and social goals.

Key Performance Indicators in Food Security Investments

For investments related to food security, specific ESG metrics are established and monitored to drive continuous improvement:

• Energy Efficiency: In energy-intensive businesses like cold storage, specific metrics are used to reduce energy consumption and carbon intensity, contributing to SDG 7 and SDG 13.
• Gender Initiatives: A focus on increasing the representation of women in the workforce directly supports SDG 5 (Gender Equality).

Infrastructure Growth Opportunities and Long-Term Trends

AIIM’s strategy is informed by three global mega-trends that present significant infrastructure investment opportunities in Africa, each linked to sustainable development outcomes.

Digital Transformation (SDG 9)

The surge in mobile data consumption in Africa creates a pressing need for the communications backbone. Investment in fiber, towers, and data centers is fundamental to building the innovative and resilient infrastructure required by SDG 9.

Energy Transition (SDG 7 & SDG 13)

Opportunities in renewable energy are growing, particularly in liberalized markets. AIIM’s Net Zero Africa platform exemplifies this trend, committing capital to develop generation assets (wind, solar, batteries) and provide clean energy solutions to private customers, directly advancing SDG 7 and SDG 13.

Mobility, Logistics, and Urbanization (SDG 11)

Africa’s rapid urbanization, with a projected 900 million people moving to urban areas in the next 25 years, necessitates massive investment in supportive infrastructure. This includes integrated logistics for food supply to urban centers, which is critical for creating the inclusive, safe, and sustainable cities envisioned in SDG 11.

Investment Environment and Strategic Considerations

Successful infrastructure investment requires a stable and predictable environment. AIIM prioritizes jurisdictions that offer clarity and security for long-term capital deployment.

Fostering an Investor-Friendly Climate for SDG Achievement

Attracting the private capital needed to achieve the SDGs depends on key environmental factors. Investors require confidence in property rights and concession terms. AIIM’s strategy involves focusing on larger markets with a track record of attracting global buyers and managing macro-volatility. Such stable environments are crucial for fostering the public-private partnerships highlighted in SDG 17 (Partnerships for the Goals).

Conclusion: A Business Imperative for Sustainable Development

The convergence of geopolitical trends, population growth, and urbanization makes supply chain resilience a critical issue for Africa. Addressing food security is not merely a business opportunity but a business imperative. Collaborative efforts between private and public actors are essential to building the infrastructure needed to solve this challenge and advance the Sustainable Development Goals across the continent.

Analysis of Sustainable Development Goals in the Article

1. Which SDGs are addressed or connected to the issues highlighted in the article?

SDG 2: Zero Hunger

• The article’s primary focus is on “food security” in Africa. It discusses investments in infrastructure critical to the food value chain, such as temperature-controlled logistics, cold storage, and port infrastructure for handling bulk food commodities. This directly addresses the goal of ending hunger and ensuring food security.

SDG 5: Gender Equality

• The article explicitly mentions gender initiatives as a key sustainability measure for investments. It states, “We are also focused on gender initiatives to increase the representation of women in the workforce,” connecting investment practices to the goal of achieving gender equality and empowering women.

SDG 7: Affordable and Clean Energy

• One of AIIM’s key investment themes is “energy transition, which is about developing accessible and clean energy through the continent.” The article details investments in a platform called Net Zero Africa, which owns “energy generation assets (including wind, solar and batteries),” directly aligning with the goal of ensuring access to affordable, reliable, sustainable, and modern energy.

SDG 8: Decent Work and Economic Growth

• The article discusses how private capital creates “a leading bulk storage platform that operates efficiently and is competitive.” By investing in and developing infrastructure, creating new business platforms, and improving logistics, these activities foster sustained, inclusive, and sustainable economic growth and productivity.

SDG 9: Industry, Innovation and Infrastructure

• This is a central theme of the article. AIIM’s investment strategy focuses on building resilient infrastructure across three key areas: “digitization (digital infrastructure),” “energy transition (clean energy infrastructure),” and “mobility and logistics (ports, cold storage, inland transportation).” This directly supports the goal of building resilient infrastructure, promoting inclusive and sustainable industrialization, and fostering innovation.

SDG 11: Sustainable Cities and Communities

• The article highlights the challenge of rapid urbanization, stating that “over the next 25 years, there will be more than 900 million people in Africa moving from rural to urban areas.” It underscores the importance of infrastructure, particularly for “food supply to these urban centres,” which is crucial for making cities and human settlements inclusive, safe, resilient, and sustainable.

SDG 17: Partnerships for the Goals

• The article emphasizes the role of multi-stakeholder partnerships. It mentions attracting “sovereign wealth capital, including from the Middle East and Asia-Pacific,” and highlights how “private sector actors could help support the public sector in progressing infrastructure and societal needs.” This reflects the goal of strengthening the means of implementation and revitalizing the global partnership for sustainable development.

2. What specific targets under those SDGs can be identified based on the article’s content?

SDG 2: Zero Hunger

• Target 2.1: By 2030, end hunger and ensure access by all people… to safe, nutritious and sufficient food all year round. The investments in cold storage and logistics infrastructure aim to reduce post-harvest losses and ensure a stable supply of food commodities like grain, fish, and citrus, contributing to food access and stability.
• Target 2.a: Increase investment, including through enhanced international cooperation, in rural infrastructure… to enhance agricultural productive capacity. The article’s focus on “port and back of port (inland) infrastructure” and “inland transportation, storage and distribution” directly aligns with this target.

SDG 5: Gender Equality

• Target 5.5: Ensure women’s full and effective participation and equal opportunities for leadership in political, economic and public life. The stated focus on “gender initiatives to increase the representation of women in the workforce” is a direct contribution to this target within the economic sphere.

SDG 7: Affordable and Clean Energy

• Target 7.2: By 2030, increase substantially the share of renewable energy in the global energy mix. The investment in the “Net Zero Africa” platform, which develops “wind, solar and batteries,” directly supports this target.
• Target 7.a: By 2030, enhance international cooperation to facilitate access to clean energy research and technology… and promote investment in energy infrastructure. The article describes private capital investment in clean energy infrastructure as a key theme.

SDG 8: Decent Work and Economic Growth

• Target 8.2: Achieve higher levels of economic productivity through diversification, technological upgrading and innovation. The article describes creating efficient and competitive platforms for logistics and storage, such as Commercial Cold Holdings, which drives service efficiencies and passes cost savings to consumers, thereby boosting economic productivity.

SDG 9: Industry, Innovation and Infrastructure

• Target 9.1: Develop quality, reliable, sustainable and resilient infrastructure… to support economic development and human well-being. This is the core subject of the article, which details investments in digital (fiber-optic, data centres), energy (renewables), and transport infrastructure (ports, logistics).
• Target 9.4: By 2030, upgrade infrastructure and retrofit industries to make them sustainable, with increased resource-use efficiency and greater adoption of clean and environmentally sound technologies. The initiative to monitor and reduce the energy intensity of cold storage businesses is a clear example of this.

SDG 11: Sustainable Cities and Communities

• Target 11.a: Support positive economic, social and environmental links between urban, peri-urban and rural areas by strengthening national and regional development planning. The investment in logistics and supply chain infrastructure to ensure “food supply to these urban centres” directly addresses the need to manage the links between food-producing rural areas and consuming urban areas.

SDG 17: Partnerships for the Goals

• Target 17.3: Mobilize additional financial resources for developing countries from multiple sources. The article highlights the successful attraction of “sovereign wealth capital, including from the Middle East and Asia-Pacific” for infrastructure projects in Africa.
• Target 17.17: Encourage and promote effective public, public-private and civil society partnerships. The article’s central argument is that “private capital and private investment [are] critical to the development… of infrastructure” and that “private sector actors could help support the public sector,” exemplifying the importance of public-private partnerships.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

Indicators for SDG 2 and SDG 9

• Physical Infrastructure Capacity: The article provides specific metrics for its cold storage platform, Commercial Cold Holdings, which can be used as indicators of progress. These include “a capacity of approximately 160,000 pallets” and “27,000 sqm of controlled warehousing.”
• Volume of Commodities Handled: The types of goods managed, such as “wheat, fertilizer, and edible and vegetable oils,” as well as being “one of the biggest exporters globally of citrus products,” can serve as indicators of the infrastructure’s impact on the food supply chain.

Indicators for SDG 5

• Workforce Gender Representation: The article explicitly mentions a focus on “initiatives to increase the representation of women in the workforce.” The percentage of women employed or in leadership positions within the portfolio companies would be a direct indicator.

Indicators for SDG 7

• Financial Investment in Clean Energy: The commitment of “over US$200 million of equity into that platform [Net Zero Africa]” is a quantifiable financial indicator of investment in renewable energy.
• Energy and Carbon Metrics: The article states that for energy-intensive businesses like cold storage, “we therefore look at certain specific energy metrics across the portfolio, with the aim of reducing both costs and carbon intensity.” This implies the use of indicators such as energy consumption per unit of storage and CO2 emissions.

Indicators for SDG 17

• Mobilization of Foreign Capital: The successful attraction of “sovereign wealth capital, including from the Middle East and Asia-Pacific” serves as an indicator of mobilizing international financial resources for development.

4. Table of SDGs, Targets, and Indicators

Source: jdsupra.com