AfDB approves $15m loan to InfraCredit for Nigeria’s infrastructure financing gap
Board of Directors of the African Development Bank (AfDB), Thursday, approved a $15 million subordinated loan to Infrastructure Credit Guarantee Company Limited (InfraCredit) to strengthen the firm’s capital base and help close Nigeria’s infrastructure financing gap.
InfraCredit was founded in 2016 by the Nigerian Sovereign Investment Authority (NSIA), in collaboration with GuarantCo (part of the Private Infrastructure Development Group).
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 complements a 2019 investment into InfraCredit made by the African Development Bank 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.
Director General of the Bank’s Nigeria Country Department, Lamin Barrow, expressed pleasure over the intervention, adding that it aligns with its own priorities geared towards mobilsing institutional financing for the delivery of infrastructure for Nigeria’s key sectors.
“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.
“The company’s green finance track record and commitments under its Clean Energy Transition Strategy and Roadmap and Green Finance Framework fits with the African Development Bank’s commitments to promote low-carbon development and mitigation, leveraging climate finance from private sector sources,” Barrow said.
Also remarking, InfraCredit CEO, Chinua Azubike, 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. 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.”
On his part, AfDB’s Acting Director for Financial Sector Development, Ahmed Attout, expressed confidence in the role which InfraCredit plays in Nigeria’s infrastructure development.
“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,” Attout said.
The partnership advances a number of strategic objectives under AfDB’s 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.
