InfraCredit, a ‘AAA”(NG) rated specialised infrastructure credit guarantee institution in Nigeria and the Agence Française de Développement (AFD), the development agency of the French government and the main implementing agency for France’s official development assistance, have signed a Technical Assistance Financing Agreement.
Under the latter, AFD will provide project preparation and development technical assistance support for InfraCredit’s prospective pipeline of public private partnership (PPP) projects in selected state governments that require support to improve their bankability and attract private sector participation. Thus, it will enable them to reach financial close and access long term local currency financing from the domestic debt capital markets.
The successful implementation of the project will support eligible projects with technical, legal and feasibility studies for PPP projects to be selected in agreement between InfraCredit and AFD. This will enable eligible sub-national infrastructure projects to reach financial close, support new job creation, and enable more capital markets instruments to be issued to institutional investors.
InfraCredit’s Annuity PPP Guarantee was developed to facilitate the sustainable financing of new infrastructure projects alongside subnational governments in Nigeria. It is done through technical assistance and catalytic capital to accelerate state supported and private sector led development of bankable, revenue generating infrastructure projects under design, build, finance, operate and maintain (“DBFOM”) arrangements by the private partner, supported by a transitional annuity revenue assurance by the state government to be replenished from the future cash flows generated from the project.
Such eligible projects could benefit from InfraCredit’s guarantee which can mobilise up to 20-year local currency financing from the domestic debt capital markets.
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As a result, additional finance is unlocked, reaching critical sectors most in need, supporting new viable infrastructure that will have an impact:job creation, poverty reduction, protection of the environment and local economic growth.
Speaking on the Agreement with AFD, Chinua Azubike, chief executive officer of InfraCredit, stated that “To date, InfraCredit’s guarantees have enabled the issuance of up to $266 million (N114.38bn) of local currency infrastructure bonds, of which 61 percent include PPP projects, however an increasing pipeline of sub-national infrastructure projects require project preparatory support to deliver well-structured bankable projects that can access the debt capital markets, our collaboration with AFD through technical assistance support will enable state governments adopt new funding tools and PPP models that will attract and retain private sector’s financial incentive to invest in viable infrastructure projects.
AFD’s technical assistance funding will enable InfraCredit build deal pipelines of well-prepared state government-supported and private sector-led infrastructure projects to be executed under InfraCredit’s Annuity PPP guarantee product”
Speaking on the Agreement entered into with InfraCredit, Xavier Muron, the country director of AFD in Nigeria, noted that: “This €600,000 grant to Infracredit will finance studies for future infrastructure projects through public-private partnerships throughout Nigeria. Ultimately, it aims at mobilising further the private sector in PPP infrastructure projects.”
