The World Economic Forum’s (WEF) community paper on “Mobilizing Investments for Clean Energy in Nigeria” includes InfraCredit as a case study solution. The WEF collaborates with Marsh and the Renewable Energy & Energy Efficiency Associations Alliance (REEEA-A) to publish the community paper.
The WEF community paper, which was launched during the Nigeria Country Roundtable on May 2, 2023, highlights key observations and recommendations on Nigeria’s priority areas and potential solutions to deal with investment difficulties.
The case study illustrates InfraCredit’s distinctive function in securing long-term funding in local currency for renewable energy projects to support the expansion of community-based developers in Nigeria.
InfraCredit’s Clean Energy Funding Programme is also highlighted in the study. Through this program, we helped Darway Coast’s green debt issuance for solar mini-grid rural electrification and the North South Power Company’s green bond issue for a hydropower facility in Nigeria improve their credit ratings.
According to WEF in the community paper, InfraCredit, as part of its clean energy transition strategy, has developed a Clean Energy Funding Programme (CEFP) that seeks to aggregate, de-risk and unlock domestic institutional investments to support eligible clean energy projects in Nigeria to contribute to meeting Nigeria’s universal electrification goal by 2030 and the Sustainable Development Goal (SDG) 7 target of ensuring access to affordable, reliable, sustainable and modern energy for all, while putting Nigeria on a path to achieve net-zero emissions by 2060.
InfraCredit has developed a project pipeline worth about $180.7 million (NGN equivalent) under the CEFP, and it was further claimed that this pipeline “requires the mobilization of at least NGN41.6 billion ($90 million) of private domestic institutional capital.” One such is the backing of the Darway Coast Nigeria green debt issue’s credit improvement. The project was funded by a blended instrument, making it the first-ever certified blended local currency green debt issue for a solar mini-grid project in Nigeria. The facility enabled a 7-year fixed-rate local currency debt financing for the project by investing in the subordinated debt tranche.
Another such is the green bond offering by the North South Power Company (NSP) for the 600 MW Shiroro Hydro power facility in Niger State.
“In February 2019, InfraCredit guaranteed NSP’s NGN8.5 billion, 15-year corporate infrastructure green bond, which was the longest local currency green debt issue in sub-Saharan Africa at the time. Leveraging its historical track record from the first issue supported by InfraCredit’s guarantee in 2019, NSP established a credit history, built investor confidence and subsequently, in 2020, issued another NGN6.2 billion corporate infrastructure bond without the need for a guarantee, attracting seven local pension funds,” WEF added in the paper.
Chinua Azubike, the CEO of InfraCredit, made the following statement: “At InfraCredit, we recognise that our role in mobilising domestic institutional investment and promoting the use of long-term local currency-denominated finance to meet the country’s infrastructure development needs could become an effective investment tool to collaborate with development partners in promoting green growth and climate resilient development.”
With backing from the Nigeria Sovereign Investment Authority, GuarantCo, KfW, Africa Finance Corporation, African Development Bank, and InfraCo Africa, InfraCredit is a AAA-rated specialized financial guarantor with a mandate to act as a catalyst and expand Nigeria’s domestic debt capital markets for infrastructure financing.
Through its guarantees, InfraCredit has during the past six years provided first-time access to local currency debt financing from the domestic bond market with a duration up to 20 years for infrastructure projects totaling NGN145 billion ($315 million).
