AfDB $15m to support Nigeria infrastructure

The African Development Bank (www.AfDB.org) has approved a $15m investment package to Infrastructure Credit Guarantee Company (InfraCredit) to support infrastructure financing through the domestic debt capital markets in Nigeria.

The investment package to InfraCredit is comprised of a subordinated loan of $10m, a risk sharing facility of up to $5m, and will promote local currency infrastructure financing, and further development of the domestic capital market.

InfraCredit is a specialized infrastructure credit guarantee company established to enhance local currency debt instruments, mainly bonds, to finance eligible infrastructure projects in Nigeria. This is intended to uplift the credit rating of such bonds, allowing institutional investors to include them in their portfolios.

InfraCredit was founded by the Nigerian Sovereign Investment Authority (NSIA) in collaboration with GuarantCo (part of the Private Infrastructure Development Group). These initial investors have been joined by the Africa Finance Corporation (AFC) and KfW, the German Development Bank.

AfDB’s InfraCredit investment will catalyze local institutional investor funds, including pension funds, into financing long-term infrastructure projects through the local bond markets. The investment boosts InfraCredit’s qualifying capital base through the subordinated loan; it also improves its capacity to expand its guarantee business through the proposed risk sharing arrangement.

Through this intervention, AfDB’s helping to stimulate local currency financing across diverse infrastructure transactions, thereby improving economic diversification and competitiveness, as well as promoting more equitable growth, strengthening local value chains and financial markets in Nigeria.

InfraCredit’s operations will catalyze infrastructure investments in critical sectors such as renewable energy, housing, transportation, agricultural infrastructure, and telecommunications, which are critical for the country’s economic development, and also align with its High 5 (www.AfDB.org/en/the-high-5/) agenda.