African Development Bank Approves $15 Million Loan for Infrastructure Credit Guarantee Company Limited to Support Infrastructure Finance in Nigeria | African Development Bank

The Board of Directors of the African Development Bank has approved a $15 million subordinated loan to Infrastructure Credit Guarantee Company Limited (InfraCredit) to strengthen its capital base and help close the infrastructure funding gap in Nigeria.

The financing will enable InfraCredit to leverage domestic capital markets to strengthen access to long-term local currency infrastructure financing in Nigeria. It complements a 2019 investment in InfraCredit 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 funds and insurance companies, to support infrastructure projects.

The loan comes as InfraCredit is looking to raise capital to finance an additional $375 million in infrastructure over the next several years, primarily leveraging private sector financing.

Lamin Barrow, Director General of the Bank’s Nigeria Country Department, said: “The African Development Bank is pleased to continue to support an innovative financial institution – InfraCredit – which has objectives closely aligned with our priorities to mobilize institutional funding for the provision of infrastructure for Nigeria in key sectors such as 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 align with the African Development Bank’s commitments to promote low-carbon development and mitigation, leveraging of climate finance from private sources, Barrow said.

Chinua Azubike, CEO of InfraCredit, said: “We are delighted and very pleased with the confidence that AfDB has shown in InfraCredit’s opportunity to scale its development impact by unlocking domestic institutional investment for long-term infrastructure financing in local currency in Nigeria, which will create employment and support local economic growth.This second-round investment will strengthen our underwriting capacity and bring AfDB’s total investment in InfraCredit to $25 million, sending a strong signal is committed to the long-term growth of InfraCredit and the Nigerian economy.

Ahmed Attout, acting director for the development of the African Development Bank’s financial sector, said: “The support demonstrates our continued confidence in InfraCredit and recognition of the role it plays in Nigeria’s infrastructure development. The African Development Bank is committed to strengthening the various players in the African capital markets and to stimulate the mobilization of long-term finance in the African infrastructure.”

The partnership advances a number of strategic objectives under the Bank’s current Country Strategy Paper for Nigeria, including helping to boost local currency bond market financing across various infrastructure sectors, as well as improving economic diversification and competitiveness in the country. The strategy also prioritises the provision of infrastructure for transport, energy, water and sanitation, agriculture, industry and social development.

The intervention is also aligned with Nigeria’s National Development Plan, which provides for strong mobilization of private sector resources and participation in the implementation of the plan’s priorities, including infrastructure investment, financial sector promotion and development of the capital market in the country.

By reducing the risk of local currency debt instruments (primarily bonds), InfraCredit can funnel funding to infrastructure projects, including green and climate-focused projects in Nigeria. Infrastructure Credit Guarantee Company Limited was established in 2016 by the Nigerian Sovereign Investment Authority in partnership with GuarantCo (part of the Private Infrastructure Development Group).