FSD Africa Investments and InfraCredit have committed £10 million to a risk-sharing backstop facility that will enable local currency funding for Nigeria’s long-term infrastructure development.
The first-of-its-kind Risk Sharing Backstop Facility will address the issue of low credit enhancement by mobilizing local institutional investment through bonds into viable early-stage or green-field climate-aligned infrastructure projects.
The facility would assist Nigeria in accelerating social and economic growth, the transition to a green economy, and the achievement of climate targets by making financing for infrastructure projects that are in line with the needs of the environment more readily available.
FSD Africa Investments, a recognized participant in the financing of sustainable infrastructure, that will make this £10 million investment with the support of the UK International Development through the Foreign, Commonwealth & Development Office.
The breadth and variety of projects this facility will support are shown by InfraCredit’s current investments and project pipeline, which include projects like distributed renewable energy services for urban residences, commercial and industrial renewable projects, edge-certified green housing, and e-mobility infrastructure.
The RSBF plans to raise money in stages, first from FSDAi and then from additional funders, with the goal of achieving a total capital base of up to $50 million. As a result, this investment supports one of FSD Africa’s main goals, which is to expand capital markets by removing systemic barriers.
The UK’s foreign secretary, Mr. James Cleverly, commented on this, saying that the investment “further underscores the UK’s commitment and contribution to Nigeria’s transition to sustainable energy and builds on decades of UK leadership in mobilizing funding for climate-related infrastructure issues.
“I am certain that InfraCredit will continue to expand and mobilize even more private sector financing to invest in better, greener infrastructure, similar to the achievements of British International Investment and our Private Infrastructure Development Group.
Chief Investment Officer of FSD Africa Investments, Mrs. Anne-Marie Chidzero, commented on the matter: “FSDAi’s partnership with InfraCredit on the bridge-to-bond facility introduces a derisking financing solution to mobilize short- and medium-term local institutional investment into critically needed infrastructure projects that are currently regarded as un-bankable without alternative credit enhancement.
“This facility also comes as a timely and much-needed intervention for Nigeria’s infrastructure environment at a time when Africa’s economies are struggling to raise financing to undertake important climate mitigation and sustainable power production projects.
Adding his thoughts, Mr. Chinua Azubike, Chief Executive Officer of InfraCredit, said, “I am delighted to work with FSD Africa Investments on an innovative facility that will support desperately needed but underfinanced projects to realize their ultimate goals and purpose.”
