InfraCredit, a ‘AAA’ rated specialised infrastructure credit guarantee institution has secured a US$30 million risk-sharing and blended local currency co-financing facility from British International Investment (BII), the UK’s development finance institution and impact investor, to support clean energy transition in Nigeria.
The US$30 million investment is a dual financing instrument combining a US$20 million (NGN32 billion) local currency counter-guarantee and a US$10 million (NGN16 billion) concessional financing to support decentralised renewable energy (DRE) projects, originated and guaranteed by InfraCredit.
The concessional financing will be provided through the Climate Finance Blending Facility (CFBF) which is a catalytic first loss multi-donor facility. It aims to mobilise additional funding from development partners and domestic institutional investors to co-finance decentralised clean energy investments alongside InfraCredit’s local currency guarantees in Nigeria.
Nigeria has the world’s largest energy access deficit, with over 85 million people, or 43 per cent of the population, without access to electricity. With electrification rates as low as 31 per cent in some regions, it underscores the urgent need for DRE solutions such as solar mini-grids to reach those communities. The investment from BII will improve quality of life particularly in rural areas and lower-income groups by providing more reliable power supply for productive use and reducing reliance on diesel power.
BII’s investment will catalyse additional private institutional capital and scale the support for a wider range of DRE transactions, leveraging InfraCredit’s guarantee. It will reduce the risk profile of DRE projects and lower the cost of local currency debt for developers allowing them to reach low-income customers in Nigeria.
InfraCredit’s pipeline of DRE projects has expanded consistently over the years, reaching US$497.37 million (NGN746.05 billion) and is projected to continue its upward trajectory in the coming years. This innovative facility is projected to enable over 57,000 new energy connections, increase renewable energy capacity by 20.1 MWp, reach 564 communities, create 2,558 jobs, and reduce greenhouse gas emissions by 158.3 tonnes.
Additionally, the investment is expected to mobilize private capital at scale, highlighting the role of sustainable finance in long-term sector growth.
Richard Montgomery CMG, British High Commissioner to Nigeria, commented: “It has been encouraging to see how the Climate Finance Blending Facility (CFBF) has successfully mobilised a total of US$11.48 million (NGN8.92 billion) to support four Green Certified Local Currency Debt Issuances for rural mini grids and solar powered telephony projects in Nigeria; with more projects in the pipeline. With BII’s latest investment, we look forward to amplifying the impacts through this facility, which was seeded with £10 million concessional funding by the UK Foreign, Commonwealth & Development Office in 2021.”
Benson Adenuga, Head of Office and Coverage Director, Nigeria at BII, said: “Expanding distributed renewable energy in Nigeria is not just an environmental necessity; it’s a path to empowering millions without power, bolstering economic resilience, and reducing costly reliance on diesel. As Nigeria’s energy demand rises, decentralized clean energy offers a reliable, scalable, and sustainable solution for communities nationwide. We are delighted to work with InfraCredit to mobilise more capital to drive this shift. It can redefine growth, from rural villages to bustling cities, lighting the way to a greener future.”
According to the Chief Executive Officer of InfraCredit, Chinua Azubike, “We are very delighted to work with BII through this innovative stapled investment of a subordinated first loss facility, alongside a counter-guarantee facility that will strengthen InfraCredit’s capacity to de-risk, reduce the capital cost and catalyse domestic institutional investments that will scale up renewable energy infrastructure for productive use in unserved and underserved markets in Nigeria. This transaction aligns with our strategy to collaborate with our development partners using proven and scalable funding models such as the Climate Finance Blending Facility to accelerate the mobilisation of pools of domestic resources that will promote green growth by creating jobs, reducing poverty, promoting gender diversity and stimulating local economic growth in line with our country’s nationally determined contributions (NDCs).”
