FSD Africa Investments (FSDAi) has announced a £10 million (almost $13 million) investment in a groundbreaking risk-sharing backup facility in conjunction with InfraCredit.
The project intends to increase local currency investment for long-term infrastructure development in Nigeria.
The new facility’s (RSBF) purpose is to solve the low credit enhancement problem.
It attempts to accomplish this by encouraging local institutional investment in early-stage or new climate-aligned infrastructure projects through bonds.
It is projected to improve the financial resources available for climate-change-related infrastructure activities.
As a result, Nigeria should expect faster socioeconomic development, the transition to a green economy, and the achievement of its climate targets.
FSDAi, which is backed by the UK International Development through the Foreign, Commonwealth and Development Office (FCDO), expressed excitement at this £10 million investment in collaboration with InfraCredit, a well-known name in sustainable infrastructure financing.
The current investments and project pipeline of InfraCredit demonstrate the breadth and scope of the projects that will benefit from this facility.
Edge-certified green housing, distributed renewable energy services for urban residences, commercial and industrial renewable projects, and e-mobility infrastructure are among the initiatives.
The RSBF seeks to raise funds in stages, first from FSDAi and later from other funders, with a total capital base of up to $50 million.
As a result, this investment contributes to one of FSD Africa’s primary goals, which is to grow capital markets by reducing systemic impediments.
“This investment exemplifies the UK’s commitment and contribution to Nigeria’s shift to clean energy,” said UK Foreign Secretary James Cleverly. I am optimistic that InfraCredit will continue to grow and attract more private sector finance to invest in superior, greener infrastructure, similar to the accomplishments of British International Investment and our Private Infrastructure Development Group.”
“Our partnership with InfraCredit introduces a derisking financing solution that can mobilize short and medium-term local institutional investment into infrastructure projects that are currently viewed as un-bankable without alternative credit enhancement,” said Anne-Marie, chief investment officer, FSD Africa Investments.
“We’re delighted to partner with FSD Africa Investments on this innovative facility, supporting underfinanced projects to achieve their objectives,” said Chinua Azubike, CEO of InfraCredit. Smart use of catalytic capital may greatly increase the role of private capital and local intermediaries in Nigeria’s sustainable infrastructure area, assisting the government in addressing important difficulties such as a deteriorating environment, an unstable energy mix, and severe socioeconomic inequality.”