AfDB Grants $15 Million Loan to Enhance Infrastructure Credit Guarantee and Bolster Nigeria’s Infrastructure Financing
The African Development Bank‘s Board of Directors has approved a $15 million subordinated loan to Infrastructure Credit Guarantee Company Limited (InfraCredit) to help it strengthen its capital base and close Nigeria’s infrastructure financing gap.
The funding will allow InfraCredit to access 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 help unlock domestic institutional capital for infrastructure. InfraCredit is a specialized Nigerian credit guarantee company that raises long-term capital for infrastructure projects from institutional investors such as pension funds and insurance companies.
The loan comes as InfraCredit seeks to raise capital to finance an additional $375 million in infrastructure over the next few years, primarily 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.
InfraCredit CEO Chinua Azubike stated,“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. This second round investment will strengthen our guarantee issuing capacity and bring AfDB’s total investments in InfraCredit to $25 million, which is a strong signal of commitment to the long-term growth of InfraCredit and the Nigerian economy.”
Ahmed Attout, African Development Bank Acting Director for Financial Sector Development, said: “The support demonstrates our continuing confidence in InfraCredit and recognition of the role it plays in Nigeria’s infrastructure development. The African Development Bank is committed to capacitating the various players within Africa’s capital markets and stimulating the mobilization of long-term funding into 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 prioritizes infrastructure delivery for transportation, energy, 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 channels financing to infrastructure projects in Nigeria, including green and climate-aligned projects, by de-risking local currency debt instruments (primarily bonds). The Nigerian Sovereign Investment Authority, in collaboration with GuarantCo (part of the Private Infrastructure Development Group), established Infrastructure Credit Guarantee Company Limited in 2016.
