AfDB grants Infrastructure Credit Guarantee Company Limited $15 million loan to support infrastructure financing in Nigeria
The African Development Bank’s (www.AfDB.org) Board of Directors has granted a $15 million subordinated loan to Infrastructure Credit Guarantee Company Limited (InfraCredit) to help improve its capital base and narrow Nigeria’s infrastructure financing deficit.
The funding will allow InfraCredit to obtain long-term local currency infrastructure financing in Nigeria by leveraging domestic capital markets. It supplements the African Development Bank’s and other partners’ 2019 investment in InfraCredit to assist unlock domestic institutional funding for infrastructure. InfraCredit is a specialist Nigerian credit guarantee organization that raises long-term funding for infrastructure projects from institutional investors such as pension funds and insurance companies.
The loan comes as InfraCredit seeks to raise cash to finance an additional $375 million in infrastructure over the next four years, mostly through private sector financing.
“The African Development Bank is pleased to continue to support an innovative financial institution – InfraCredit – which has objectives that align closely with our priorities to mobilize institutional financing for the delivery of infrastructure for Nigeria in key sectors including transport, energy, water, agriculture, and infrastructure,” said Lamin Barrow, Director General of the Bank’s Nigeria Country Department.
According to Barrow, the company’s green finance track record and commitments under its Clean Energy Transition Strategy and Roadmap and Green Finance Framework align with the African Development Bank’s commitments to promote low-carbon development and mitigation by leveraging climate finance from the private sector.
“We are delighted and very pleased with the confidence that AfDB has demonstrated in the opportunity ahead for InfraCredit to scale its development impact of unlocking domestic institutional investments for long-term local currency infrastructure finance in Nigeria that will create jobs and support local economic growth,” said Chinua Azubike, CEO of InfraCredit. This second round investment will increase our guarantee issuance capabilities and raise AfDB’s total investment in InfraCredit to $25 million, demonstrating AfDB’s long-term commitment to the expansion of InfraCredit and the Nigerian economy.
“The support demonstrates our continuing confidence in InfraCredit and recognition of the role it plays in Nigeria’s infrastructure development,” said Ahmed Attout, African Development Bank Acting Director for Financial Sector Development. The African Development Bank is dedicated to strengthening the various actors in Africa’s capital markets and encouraging the mobilization of long-term investment for Africa’s infrastructure.”
The collaboration advances a number of strategic objectives outlined in the Bank’s current Country Strategy Paper for Nigeria, including assisting in stimulating local currency bond market financing across diverse infrastructure sectors and improving the country’s economic diversification and competitiveness. In addition, the strategy targets infrastructure delivery for transportation, electricity, water and sanitation, agriculture, industry, and social development.
The intervention is also in line with Nigeria’s National Development Plan, which calls for strong private sector resource mobilization and participation in delivering the plan’s priorities, such as infrastructure investment and financial sector and capital market development in the country.
InfraCredit distributes financing to infrastructure projects in Nigeria, particularly green and climate-aligned projects, by de-risking local currency financial instruments (mainly bonds). The Nigerian Sovereign Investment Authority, in partnership with GuarantCo (part of the Private Infrastructure Development Group), established Infrastructure Credit Guarantee Company Limited in 2016.