The Board of Directors of the African Development Bank (AfDB) has approved $15 million loan for Infrastructure Credit Guarantee Company Limited (InfraCredit) to support infrastructure financing in Nigeria.
Nigerian Anchor reports that InfraCredit is a specialized Nigerian credit guarantee company that mobilises long-term capital from institutional investors, including pension funds and insurance companies, to support infrastructure projects.
According to the Bank, the subordinated loan is to strengthen InfraCredit’s capital base and help close Nigeria’s infrastructure financing gap.
The financing, which will enable InfraCredit to leverage domestic capital markets to bolster access to long-term local currency infrastructure financing in Nigeria, complements a 2019 investment into InfraCredit made by the AfDB and other partners to help unlock domestic institutional capital for infrastructure.
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.
“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 mobilise institutional financing for the delivery of infrastructure for Nigeria in key sectors including transport, energy, water, agriculture and infrastructure,” the Director General of the Bank’s Nigeria Country Department, Lamin Barrow said.
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, Barrow 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,” InfraCredit CEO, Chinua Azubike, said.
The AfDB’s Acting Director for Financial Sector Development, Ahmed Attout, explained why AfDB made the support.
“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 mobilisation of long-term funding into Africa’s infrastructure,” he said.
