Project General Description
The proposed project is a $15-million investment package to Infrastructure Credit Guarantee Company (InfraCredit), to support infrastructure financing through the domestic debt capital markets in Nigeria. InfraCredit is a private company, established in 2016 to enhance local currency debt instruments - mainly bonds, to finance eligible infrastructure projects in Nigeria. This is intended to uplift the credit rating of such bonds, allowing institutional investors to include them in their portfolios. InfraCredit aims to support up to $1.25 billion in infrastructure financing over the next few years, by involving the private sector in infrastructure financing, essential to Nigeria’s economic resilience. The investment package to InfraCredit is comprised of a subordinated loan of $10 million and a risk sharing facility of up to $5 million. The Bank’s support will strengthen the capital base of InfraCredit, underpinning the expansion of the Company’s core business of guaranteeing of bonds issued to fund infrastructure projects. This ultimately helps to increase private sector financing for critical infrastructure projects in key sectors including energy, agriculture, water, health and education, through local capital markets. The transaction will also result in the leverage and enhancement of the scope and impact of the Bank’s interventions alongside private sector financing, especially from pension funds as well as from co-investment partners. This intervention adds to the Bank’s existing initiatives to mobilize domestic institutional savings and stimulate non-sovereign local debt capital market development in Nigeria.
The investment boosts InfraCredit’s qualifying capital base through the subordinated loan; it also improves its capacity to expand its guarantee business through the proposed risk sharing arrangement. This intervention will catalyze local institutional investor funds, including pension funds, into financing long-term infrastructure projects through the local bond markets.
The project activities directly promote the development of social and economic infrastructure. Improved infrastructure including more energy and better roads will generate more direct and indirect economic benefits, stimulating productivity and growth that will benefit private enterprises including SME’s in the respective value chains and households. Job creation is mainly expected at the level of InfraCredit’s sub-projects both during the construction and operation of the different infrastructure projects. The total number of incremental full-time equivalent jobs is estimated at 845 jobs.