By Adedapo Adesanya
FSD Africa Investments, in partnership with InfraCredit, have invested a £10 million risk-sharing backstop facility designed to unlock local currency funding for sustainable infrastructure development in Nigeria.
The first-of-its-kind Risk Sharing Backstop Facility (RSBF) will 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 climate-aligned infrastructure projects, the facility will help Nigeria accelerate social and economic development and green economic transition, as well as deliver on climate goals.
Backed by the UK International Development through the Foreign, Commonwealth & Development Office (FCDO), FSD Africa Investments (FSDAi) will be undertaking this £10 million investment in partnership with InfraCredit – an established player in the sustainable infrastructure financing space.
InfraCredit’s current investments and project pipeline demonstrates the breadth and variety of projects this facility will 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 will raise funding in series, initially from FSDAi, and eventually from other funders – aiming to reach a total capital base of up to $50m. This investment, therefore, aligns with one of FSD Africa’s primary objectives – developing capital markets by tackling blockages in the system.
Speaking on this, the UK Foreign Secretary, Mr 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.”
On her part, Chief Investment Officer, FSD Africa Investments, FSD Africa, Mrs Anne-Marie Chidzero, 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. Moreover, as Africa’s economies struggle to mobilise capital to develop key climate mitigation and sustainable power generation projects, this facility comes as a timely and much-needed intervention for Nigeria’s infrastructure landscape.”
Adding his input, Mr 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 to realise their ultimate goals and purpose.”
