The Nigerian Sovereign Investment Authority (NSIA) and InfraCredit, a specialized infrastructure credit guarantee institution, have launched the Construction Finance Warehouse Facility (CFWF), a fund that aims to mobilize up to N500 billion in local currency for well-structured, bankable infrastructure projects in Nigeria.
The CFWF is a multi-funder revolving facility that provides short-term loans to infrastructure developers during the construction phase of their projects, and then refinances them through long-term bonds issued in the domestic capital markets with InfraCredit’s guarantees, Business Day Nigeria has reported.
The NSIA provided N10 billion as the initial funding for the CFWF, with the goal of attracting additional funding from other investors to reach a capacity of N100 billion within three years. The NSIA is also the sponsor and anchor investor of InfraCredit, which was established in 2017 as a joint venture between the NSIA and GuarantCo, a member of the Private Infrastructure Development Group (PIDG).
The CFWF is designed to reduce the risks and costs associated with greenfield infrastructure projects, and to make them more attractive for private sector investors. The CFWF will support the development of essential infrastructure sectors, such as power, water, transport, health, and education.
According to the International Monetary Fund (IMF), Nigeria has a large infrastructure gap, and it will need to invest $100 billion annually over the next 30 years to close this gap. The CFWF is one of the initiatives that can help bridge this gap by unlocking more sources of funding for infrastructure projects.
Chinua Azubike, CEO of InfraCredit said: “To close the infrastructure gap in a sustainable way, we need more greenfield infrastructure projects to reach financial close. We are pleased to be supported by our sponsor, the NSIA, in sustaining strategic innovative funding solutions at the earlier stages of the infrastructure project’s life cycle, which is a crucial and urgent intervention to make projects more resilient, and accelerate private sector investments in infrastructure that will improve Nigeria’s economic trajectory.”
Aminu Umar-Sadiq, managing director/CEO of NSIA said: “NSIA, through the creation of InfraCredit, has successfully channelled long-term institutional funding towards brownfield infrastructure projects in Nigeria. The CFWF is set to amplify this capital mobilization, unlocking a source of long-term local currency capital for sustainable greenfield investments, in a downside-protective manner. This will significantly enhance access to sustained financing for green projects, consequently driving the development of sustainable infrastructure across Nigeria.”
The CFWF is therefore a game-changer for Nigeria’s infrastructure sector, as it demonstrates the viability and attractiveness of greenfield infrastructure projects, and creates a pipeline of bankable projects that can access long-term financing from the domestic capital markets.
