InfraCredit - Promoting a Credit Guarantee Fund for Infrastructure in Nigeria

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Despite the long-term planning periods for infrastructure investments, infrastructure companies in Nigeria mainly refinance themselves through short-term bank loans, often denominated in foreign currency, because they do not have access to long-term financing options in local currency on the Nigerian capital market. The aim of the FC project is to contribute to the mobilization of local private capital for investments in infrastructure through cooperation with InfraCredit, the first credit guarantee facility for infrastructure financing in Nigeria. InfraCredit guarantees local currency bonds from infrastructure companies, which thereby improve their rating and become attractive to the local market. Local pension funds in particular are very interested in investing in good quality local currency bonds. In order to successfully implement its business model, InfraCredit needs adequate capital resources in order to be able to back the guarantees issued with equity. The provision of an equity-eligible FC subordinated loan enables InfraCredit to expand its guarantee portfolio and successfully introduce credit guarantees for infrastructure financing on the Nigerian capital market. The loan guarantees provided by InfraCredit significantly improve the financing situation for infrastructure companies and lead to the expansion and repair of infrastructure. This secures and creates new jobs in the construction industry and supports the economic activity of companies in the affected regions. The living conditions of the population in the catchment area of the projects made possible by the guarantees also improve.