AfDB approves $15m loan for Nigeria’s infrastructure financing gap

THE African Development Bank (AfDB) has approved a $15 million subordinated loan to Infrastructure Credit Guarantee Company Limited (InfraCredit) to strengthen its capital base in the country and help Nigeria close its infrastructure financing gap.

In a statement it issued on Thursday, May 18, the bank explained that the financing would enable InfraCredit to leverage domestic capital markets to bolster access to long-term local currency infrastructure financing in the country.

It also complements a 2019 investment that AfDB and other partners made in InfraCredit to help unlock domestic institutional capital for infrastructure.

According to the World Bank, it may take Nigeria 300 years to bridge its infrastructure gap with the current rate of expenditure allocations, adding that the country’s physical infrastructure gap would likely reach $3 trillion in the next 30 years.

In February 2021, the Federal government launched the Infrastructure Corporation of Nigeria Limited (InfraCorp) project to tackle its infrastructure deficits.

A N15 trillion project, InfraCorp officially commenced operation in April 2022 and was focused on addressing weak and dilapidated infrastructure, with yearly funding of N1 trillion. 

Not much, if any, has been heard of its operation.

According to the AfDB, InfraCredit is a specialised Nigerian credit guarantee company that mobilises long-term capital from institutional investors, including pension funds and insurance companies, to support infrastructure projects.

The loan comes at a time when InfraCredit is seeking to raise capital to finance an additional $375 million in infrastructure over the next few years, primarily by leveraging private-sector financing.






     

     

    “The African Development Bank is pleased to continue to support an innovative financial institution – InfraCredit –which has objectives that align closely with our priorities to mobilise institutional financing for the delivery of infrastructure for Nigeria in key sectors including transport, energy, water, agriculture and infrastructure,” the bank’s country director-general, Lamin Barrow, said.

    InfraCredit’s chief executive officer, Chinua Azubike, said, “This second round investment will strengthen our guarantee issuing capacity and bring AfDB’s total investments in InfraCredit to $25 million, which is a strong signal of commitment to the long-term growth of InfraCredit and the Nigerian economy.”

    The intervention also prioritises delivering infrastructure for transport, energy, water and sanitation, agriculture, industry and social development.

    It aligns with the National Development Plan, which envisages strong private sector resource mobilisation and participation in the plan’s priorities, including investment in infrastructure, promotion of the financial sector and capital market development in the country.

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