UK FSD Africa Investments Injects £10m to Unlock Local Currency Funding for Nigeria

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The FSD Africa Investments (FSDAi), in collaboration with InfraCredit has invested £10 million into a first-of-its-kind risk-sharing backstop facility, designed to unlock local currency funding for sustainable infrastructure development in Nigeria.

FSD Africa Investments (FSDAi) is the investing arm of FSD Africa, a UK International Development funded regional programme operating in more than 30 countries from its Kenya base, to make finance work for Africa’s future.

The need for infrastructure investment in Nigeria is vast and according to the IMF, Nigeria requires an estimated US$3 trillion to finance its infrastructure deficit over the next 30 years.

Therefore, the Risk Sharing Backstop Facility (RSBF) would address the challenge of low credit enhancement by mobilising local institutional investment via bonds into viable early-stage or green-field climate-aligned infrastructure projects.

By increasing the accessibility of finance for the, “climate-aligned” infrastructure projects, the facility would help Nigeria accelerate her social and economic development, green economic transition as well as deliver on its climate goals.

InfraCredit’s current investments and project pipeline demonstrates the breadth and variety of projects the facility would support, with projects ranging from distributed renewable energy services for urban residences, to commercial and industrial renewable projects, edge-certified green housing and e-mobility infrastructure.

The RSBF would raise funding in series, initially from FSDAi, and eventually from other funders – aiming to reach a total capital base of up to $50 million.

Commenting on the initiative, UK Foreign Secretary, James Cleverly, said: “This investment further demonstrates the UK’s commitment and contribution to Nigeria’s transition to clean energy and builds on decades of UK leadership in mobilising support for climate-related infrastructure challenges. 

“Just like the successes of British International Investment (BII) and our Private Infrastructure Development Group (PIDG), I am optimistic that InfraCredit will continue to grow and mobilise even more private sector capital to invest in better, greener infrastructure.”

Chief Investment Officer, FSD Africa Investments, FSD Africa, Anne-Marie, said: “FSDAi’s partnership with InfraCredit on the bridge-to-bond facility introduces a derisking financing solution to mobilise short and medium-term local institutional investment into critically needed infrastructure projects that are currently considered un-bankable without alternative credit enhancement.”

On his part, Chief Executive Officer, InfraCredit, Chinua Azubike, said: “I am delighted to work with FSD Africa Investments on an innovative facility which will support much needed but underfinanced projects realise their ultimate goals and purpose.

“Smart use of catalytic capital can dramatically increase the role of private capital and local intermediaries in investing in Nigeria’s sustainable infrastructure space and help the country develop responses to the significant challenges which confront it from the deteriorating environment and ecology to an unstable energy mix and severe social inequality.”