The International Finance Corporation has committed $50 million in long-term financing to Infrastructure Credit Guarantee Company Plc, InfraCredit, to strengthen its capacity to support infrastructure development and mobilise more domestic capital for projects across Nigeria.
The financing is structured as a 10-year unsecured subordinated debt facility and will be disbursed in two equal tranches of $25 million.
The agreement was formalised in Lagos between the IFC, a member of the World Bank Group, and InfraCredit, Nigeria’s specialised infrastructure credit guarantee institution.
The facility is expected to strengthen InfraCredit’s capital base and increase its capacity to support a growing pipeline of infrastructure transactions.
It will also support the mobilisation of long-term financing in naira for projects across sectors including renewable energy, climate-smart agriculture, digital infrastructure, telecommunications, healthcare and transportation.
Financing to support infrastructure projects
InfraCredit provides credit guarantees for infrastructure-related debt transactions, helping project developers and businesses access long-term funding from domestic capital markets.
Through its guarantee structure, the company helps make infrastructure debt instruments more accessible to institutional investors seeking long-term investment opportunities.
The new IFC facility is expected to increase InfraCredit’s ability to support additional infrastructure transactions while attracting more domestic institutional capital into the sector.
The financing is supported by the International Development Association Private Sector Window Blended Finance Facility and the Concessional Capital Window.
According to the IFC, the investment is intended to help channel domestic savings towards infrastructure projects that can contribute to economic growth, employment and sustainable development.
InfraCredit has mobilised more than N600bn
Since commencing operations in 2017, InfraCredit said it has facilitated more than N600 billion in long-term local-currency financing for 28 infrastructure projects in Nigeria.
The company has also supported 14 first-time issuers in accessing the country’s domestic debt capital market.
Its guaranteed transactions have included Nigeria’s first 15-year green infrastructure bond, while some corporate infrastructure bonds have achieved maturities of up to 20 years.
The company said 20 of Nigeria’s 25 pension fund administrators have participated in InfraCredit-guaranteed securities.
The use of domestic institutional capital is significant for infrastructure projects because many of them require financing over periods that are considerably longer than the maturities commonly available through conventional bank lending.
By providing credit guarantees, InfraCredit helps infrastructure developers access the domestic bond market and secure longer-term naira financing.
CEO says facility will strengthen capacity
InfraCredit Chief Executive Officer, Chinua Azubike, said the additional capital would strengthen the company’s ability to support its expanding transaction pipeline and develop new financing solutions.
He said building institutional capacity had become increasingly important as the company’s pipeline grows and its financing products evolve.
Azubike described the IFC facility as evidence of continued confidence from international development finance institutions in InfraCredit’s business model and its role in mobilising long-term domestic capital for infrastructure.
He also pointed to the company’s wider network of development finance institutions and partners, which have provided support through different capital and risk-sharing structures.
These include equity investments, subordinated debt, portfolio risk-sharing arrangements, counter-guarantees, first-loss capital, specialised financing facilities and technical assistance.
Focus on long-term naira financing
The facility comes as Nigeria continues to seek ways to increase the availability of long-term financing for infrastructure projects.
The targeted sectors include renewable energy, climate-smart agriculture, digital infrastructure, telecommunications, healthcare and transportation.
For infrastructure developers, access to long-term local-currency funding can help reduce exposure to foreign-exchange risks associated with borrowing in international currencies.
InfraCredit’s guarantee model is designed to connect infrastructure projects requiring long-term financing with domestic investors such as pension funds and other institutional investors.
The company said the new facility would strengthen its ability to mobilise these sources of capital as its project pipeline expands.
The IFC investment therefore adds another layer of capital to InfraCredit’s existing financing and risk-sharing structure as the company works to expand its role in Nigeria’s infrastructure financing market.
The company said it would continue developing financing structures and co-financing platforms capable of attracting long-term domestic investment into infrastructure projects across the country.
