The African Development Bank (AfDB) and Infrastructure Credit Guarantee Company Limited (InfraCredit) finalized a $15 million subordinated loan facility agreement on June 14, 2024, in Lagos.
This strategic move aims to bolster InfraCredit’s capital base and attract institutional investor resources, ultimately bridging the infrastructure financing gap in Nigeria.
Key Signatories
Representing the AfDB was Lamin Barrow, Director General of the Bank’s Country Department for Nigeria. Chinua Azubike, CEO of InfraCredit, signed on behalf of the company.
The facility is set to catalyze InfraCredit’s efforts to unlock additional long-term local currency financing in the capital markets for infrastructure projects. This will primarily be achieved by leveraging capital pools from pension funds and other institutional investors in the West African nation.
InfraCredit: A Catalyst for Infrastructure Investment
InfraCredit is a Nigerian credit guarantee company specializing in mobilizing long-term capital from institutional investors to support infrastructure projects, with a focus on green and climate-focused initiatives.
Mr. Barrow expressed the AfDB’s satisfaction with the transaction, emphasizing the importance of fostering innovative and scalable solutions to leverage domestic institutional investor capital pools.
This approach positions the local capital market as a viable alternative source of long-term financing to address the continent’s substantial infrastructure deficit.
InfraCredit’s Robust Track Record
Mr. Azubike highlighted InfraCredit’s successful facilitation of private sector investments in impactful infrastructure projects and its clean energy roadmap, which has accelerated green financing for climate-aligned infrastructure.
He noted the company’s strong fundamentals, robust portfolio performance, proven track record, and profitability, even in challenging market conditions.
The capital base expansion through this facility will further enhance InfraCredit’s capacity to support long-term local currency credit access for its growing pipeline of infrastructure projects, currently exceeding 625 billion naira ($430 million), thereby fostering job creation and economic growth.
Scaling the Model Across Africa
Solomon Quaynor, AfDB Vice President for Private Sector, Infrastructure, and Industrialization, expressed the Bank’s enthusiasm for providing additional capital to InfraCredit Nigeria.
He highlighted InfraCredit’s success as an inspiration for replicating its business model across the continent, a key element of the AfDB’s strategy to expand private sector financing in Africa.
The establishment of a similar institution in Kenya, covering the East African region, is a testament to this commitment.
This partnership advances several strategic objectives within the AfDB’s current country strategy for Nigeria, including stimulating local currency bond market financing in key infrastructure sectors and enhancing the diversification and competitiveness of the economy.