Analysts Laud IFC’s $50m InfraCredit Facility For Infrastructure Financing

Analysts have said stronger credit enhancement could help address one of the major challenges facing infrastructure development in Nigeria: the difficulty of matching long-term projects with equally long-term financing.

The analysts spoke yesterday while commenting on the $50 million financing facility secured by Infrastructure Credit Guarantee Company Plc (InfraCredit) from the International Finance Corporation (IFC), describing the facility as a potential boost to long-term infrastructure financing in Nigeria.

An economist, John Arize, said infrastructure projects typically require substantial upfront investment and extended repayment periods, making short-term and expensive financing unsuitable for many projects.

He said greater availability of long-term financing could improve the ability of viable infrastructure projects to reach financial close.

Another analyst, Kelvin Henry, said the involvement of an institution such as IFC could provide additional confidence to investors and development partners considering participation in Nigeria’s infrastructure financing market.

He said the facility could also support the expansion of local-currency financing, helping infrastructure developers reduce exposure to foreign-exchange risks associated with dollar-denominated obligations and naira-denominated revenues.

The $50 million facility, structured as subordinated unsecured 10-year debt, is expected to strengthen InfraCredit’s capital base and increase its capacity to support infrastructure projects and mobilise long-term local-currency financing. The commitment will be disbursed in two tranches of $25 million each.

The financing is expected to support projects across sectors including renewable energy, climate-smart agriculture, digital infrastructure, telecommunications, healthcare, transportation and other productive areas of the economy.

IFC, a member of the World Bank Group, said the investment was aimed at strengthening Nigeria’s infrastructure financing ecosystem and mobilising long-term private capital.

Commenting on the transaction, IFC’s Financial Institutions Group Director for Africa, Aliou Maiga, said that supporting InfraCredit’s institutional capacity would help mobilise domestic resources for infrastructure investments that can drive economic growth, job creation and sustainable development.

He said IFC was pleased to deepen its partnership with InfraCredit as the company continued to support the development of Nigeria’s local capital markets.

The chief executive officer of InfraCredit, Chinua Azubike, said the additional institutional capacity was important as the company’s transaction pipeline grows and its financing solutions expand.

According to him, the IFC investment would strengthen InfraCredit’s ability to mobilise long-term domestic capital for infrastructure.

He added that the transaction reflected continued support from international development finance institutions for InfraCredit’s business model.

Since commencing operations in 2017, InfraCredit said it had facilitated more than N600 billion in long-term local-currency financing across 28 infrastructure projects and supported 14 first-time issuers in accessing Nigeria’s domestic debt capital market.