FSD Africa Invests £10m to Support Nigeria’s Climate Infrastructure Development

FSD Africa Investments (FSDAi) has partnered with InfraCredit to invest £10 million in Nigeria’s sustainable infrastructure development endeavours. This investment will be directed towards a risk-sharing facility aimed at unlocking local currency funding.

Nigeria faces a significant infrastructure deficit across various sectors, with the World Bank recommending a £3 trillion investment to bridge the gap. Achieving this investment could result in the country’s infrastructure stock reaching 70% of its GDP, according to World Bank standards.

FSADi and InfraCredit are highly optimistic about their joint initiative, the Risk Sharing Backstop Facility (RSBF). The RSBF aims to address the issue of low credit enhancement by aggregating local institutional investments through bonds and directing them towards climate-oriented infrastructure projects.

Following FSADi‘s initial investment, the RSBF will attract funding from other investors in multiple rounds, with the ultimate goal of reaching a total capital base of up to $50 million.

The collaboration between FSADi and InfraCredit aligns with FSADi’s vision to grow capital markets by addressing systemic bottlenecks. FSADi’s Chief Investment Officer, Anne-Marie, emphasized the significance of such initiatives, stating that infrastructure projects are often deemed unbankable without innovative approaches to credit enhancement. She further highlighted the facility’s timely intervention for Nigeria’s infrastructure landscape, particularly in climate mitigation and sustainable power generation projects.

The UK Foreign Secretary, James Cleverly, praised the investment as a demonstration of the UK’s commitment to Nigeria’s transition to clean energy. He also acknowledged InfraCredit’s role in building on the achievements of British International Investment (BII) and the Private Infrastructure Development Group (PIDG), utilizing capital from the private sector to boost investments in green infrastructure projects.

InfraCredit’s CEO, Chinua Azubuike, expressed enthusiasm for the partnership with FSADi, emphasizing that the RSBF enables underfunded projects, particularly climate-aligned schemes, to realize their goals.

The funding is expected to have a positive impact on Nigeria’s green infrastructure goals. Infrastructure is responsible for 79% of all greenhouse emissions, according to a study conducted by the United Nations Office for Project Services, UNOPS, UN Environment Program, and the University of Oxford. Therefore, it is crucial for countries to adopt innovative strategies in infrastructure planning to achieve climate goals.

Nigeria must address the challenge of limited infrastructure while combating climate change. The £10 million investment is expected to encourage both the government and private individuals to invest more significantly in green projects, further promoting sustainable development in the country.