By Onome Amuge
The board of directors of the African Development Bank (AfDB), has approved a $15 million subordinated loan to Infrastructure Credit Guarantee Company Limited (InfraCredit) to strengthen its capital base and help close Nigeria’s infrastructure financing gap.
The financing is expected to enable InfraCredit to leverage domestic capital markets to bolster access to long-term local currency infrastructure financing in Nigeria. It also complements a 2019 investment into InfraCredit made by the AfDB and other partners to help unlock domestic institutional capital for infrastructure. InfraCredit is a specialized Nigerian credit guarantee company that mobilizes long-term capital from institutional investors, including pension fund and insurance companies, to support infrastructure projects.
The loan comes at a time when InfraCredit is seeking to raise capital to finance an additional $375 million in infrastructure over the next few years, primarily by leveraging private sector financing. InfraCredit also stated that de-risking local currency debt instruments (primarily bonds), helps in channeling financing to infrastructure projects, including green and climate-aligned projects in Nigeria.
The intervention, according to the AfDB, is aligned with Nigeria’s national development plan which envisages strong private sector resource mobilization and participation in the delivery of the priorities of the plan including for investment in infrastructure, promotion of financial sector and capital market development in the country.
AfDB also stated that the partnership serves to advance a number of strategic objectives under its current country strategy paper for Nigeria, which includes helping to stimulate local currency bond market financing across diverse infrastructure sectors, as well as enhancing economic diversification and competitiveness in the country. The strategy also prioritizes delivery of infrastructure for transport, energy, water and sanitation, agriculture, industry and social development.
Commenting on the loan approval, Lamin Barrow, director general of AfDB’s Nigeria country department, said, “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.”
Barrow added that the company’s green finance track record and commitments under its clean energy transition strategy and roadmap and green finance framework fits with the AfDB’s commitments to promote low-carbon development and mitigation, leveraging climate finance from private sector sources.
Chinua Azubike, InfraCredit CEO said, “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.”
Azubike assured that the second round investment will strengthen the company’s guarantee issuing capacity and bring AfDB’s total investments in InfraCredit to $25 million, which he described as a strong signal of commitment to the long-term growth of InfraCredit and the Nigerian economy.
On his part, Ahmed Attout, AfDB’s acting director for financial sector development, said the financial support demonstrates the bank’s continuous confidence in InfraCredit and recognition of the role it plays in Nigeria’s infrastructure development.
Attout noted further that the AfDB is committed to capacitating the various players within Africa’s capital markets and stimulating the mobilization of long-term funding into Africa’s infrastructure.
