NSIA, GuarantCo partner for infrastructure financing

The Nigeria Sovereign Investment Authority (NSIA) and GuarantCo have struck an arrangement to explore the possibility of creating a Nigerian Credit Enhancement Facility (NCEF).

This is to attract the investment interest of a pool of capital to finance infrastructure in the country.

The targeted capital will come from pension funds, insurance companies and sovereign wealth funds.

Creating NCEF is expected to provide credit enhancement for critical infrastructure projects by improving their credit ratings to investment grade. This could potentially attract international capital.

A key barrier preventing these forms of capital from investing in infrastructure projects is the absence of an appropriate credit enhancement mechanism that helps bring infrastructure projects up to a credit quality that represents appropriate investments for their stakeholders.

GuarantCo is a development finance fund whose key objective is encouraging private sector involvement in the domestic financing of infrastructure projects.

It also promotes local capital market development in low-income countries.

Speaking on the partnership, Mr. Uche Orji, managing director and CEO of the NSIA, said: “One of the statutory mandates of the NSIA is the enhancement of Nigeria’s infrastructure and in fulfilling this mandate we are desirous of establishing the necessary institutional frameworks and sustainable enablers that will attract long term capital necessary for this purpose.

“We are excited about the potential role this partnership can play in revolutionising the extant model of infrastructure development in Nigeria; now and into the future.”

Mr. Chris Vermont, head of GuarantCo at Frontier Markets Fund Managers, said GuarantCo shares NSIA’s vision for mobilising new sources of finance for infrastructure through creating a Nigerian Credit Enhancement Facility.

“We are proud to be partnering NSIA as they map out a prudent but ambitious pathway for Nigeria. We hope our experience of best practice across many markets can be combined with NSIA’s local expertise in the service of the country,” he said.