In collaboration with InfraCredit, FSD Africa Investments (FSDAi) has announced a £10 million (almost $13 million) investment into a ground-breaking risk-sharing backstop facility.
The project aims to increase local currency funding for Nigeria’s long-term infrastructure development.
The goal of the novel facility (RSBF) is to find a solution to the low credit enhancement problem.
It intends to achieve this by promoting local institutional investment through bonds into early-stage or new infrastructure projects that are climate-aligned.
It is expected to increase the financial resources available for infrastructure initiatives that are in line with climate change.
As a result, Nigeria can anticipate faster socioeconomic development, making the switch to a green economy, and achieving its climate goals.
In conjunction with InfraCredit, a well-known name in sustainable infrastructure financing, FSDAi, which is supported by the UK International Development through the Foreign, Commonwealth and Development Office (FCDO), expressed excitement over this £10 million investment.
The variety and extent of the projects this facility will assist are represented by InfraCredit’s current investments and project pipeline.
The projects include edge-certified green housing, distributed renewable energy services for urban homes, commercial and industrial renewable projects, and e-mobility infrastructure.
The RSBF intends to raise money in stages, first from FSDAi and then from additional funders, with the goal of achieving a capital base of up to $50 million overall.
Thus, this investment supports one of FSD Africa’s main objectives, which is to expand capital markets by removing systemic barriers.
UK foreign secretary, James Cleverly, commented, “This investment exemplifies the UK’s commitment and contribution to Nigeria’s shift to clean energy. Just like the successes of British International Investment and our Private Infrastructure Development Group, I am hopeful that InfraCredit will continue to grow and attract more private sector capital to invest in superior, greener infrastructure.”
Anne-Marie, chief investment officer, FSD Africa Investments, FSD Africa, said, “Our partnership with InfraCredit introduces a derisking financing solution that can mobilize short and medium-term local institutional investment into infrastructure projects currently viewed as un-bankable without alternative credit enhancement.
Chinua Azubike, chief executive of InfraCredit, added, “We’re delighted to partner with FSD Africa Investments on this innovative facility, supporting underfinanced projects to achieve their objectives. The smart use of catalytic capital can significantly boost the role of private capital and local intermediaries in Nigeria’s sustainable infrastructure space, helping the country confront significant challenges such as a deteriorating environment, unstable energy mix, and severe social inequality.”
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