Devt Partners Explore InfraCredit Model to Catalyse Infrastructure Financing

A joint initiative of the World Economic Forum (WEF) and Organisation for Economic Cooperation and Development (OECD) are exploring InfraCredit model to unlock up to $100 billion in global infrastructure funds for emerging and frontier markets

THISDAY gathered that the Sustainable Development Investment Partnership (SDIP) strategic dialogue, supported by Private Infrastructure Development Group (PIDG), held recently in London, which featured the InfraCredit model as a localised financial framework for local currency guarantees in emerging and frontier markets

SDIP, a joint initiative of the World Economic Forum and the OECD, is a collaboration of public, philanthropic and private institutions committed to mobilising $100 billion in blended finance for sustainable and climate-resilient infrastructure in emerging and frontier markets.

InfraCredit is a specialised guarantee company established by the Nigeria Sovereign Investment Authority in partnership with GuarantCo, to provide guarantees that enhance the credit quality of eligible local currency denominated infrastructure debt instruments, issued with up to 20-year maturity. Its guarantees will act as a catalyst to attract the investment interest from pension funds, insurance firms and other long term investors in the Nigerian debt capital markets for infrastructure projects.

THISDAY checks revealed that, the strategic dialogue highlighted key issues related to local financing, by demonstrating the application and the viability of local currency guarantees, and providing some insights on a framework to explore replication of the InfraCredit model in new markets.

Managers of large pools of capital, both within and outside developing countries, are increasingly looking to partner with governments, donors and development finance institutions through blended finance transactions to diversify their portfolios in markets that generate higher yields in a low global interest rate environment.