November 28, 2022 – Lagos, NigeriaInfraCredit, Convergence Blended Finance and NSIA: Nigeria Sovereign Investment Authority working alongside Pension Fund Operators Association of Nigeria (PenOp) last week, organised a domestic institutional investor roundtable with the strategic aim of promoting gender lens investing, impact investing as well as climate finance as a way of unlocking capital flows to climate-smart, resilient and inclusive infrastructure projects in Nigeria.
The interactive session was attended by 19 Pension Fund Managers and 5 Insurance Companies, which together manage assets in aggregate of over US$30 Billion (NGN Equiv) growing at 15% per annum. These institutional investors constitute a bulk of domestic resources that can be mobilised to scale up climate aligned infrastructure financing in Nigeria from billions to trillions.
The participating institutional investors at the session expressed their interest to diversify their investment portfolios into alternative climate-aligned assets working in consortia, however, some key feedback was: (i) for less developed markets like Nigeria, affordability and accessibility is key to ensuring clean energy transitions are people-centred and inclusive; and (ii) importantly, to attract domestic institutional capital to climate-aligned and impactful projects with higher perceived risk, blended finance structures that can reduce the overall investment risk and protect their conservative, return-seeking capital from potential losses, is critical.
InfraCredit conducted a case study presentation of its recently completed maiden credit-enhanced green certified blended finance transaction for a solar rural electrification project under the UK-Funded Climate Finance Blended Facility, where domestic institutional investors (4 of which participated at the roundtable event) directly invested for the first time in the local currency debt issued to finance rural electrification in unserved communities. For more information, please visit: https://infracredit.ng/infracredits-guarantee-supported-by-uk-funded-climate-finance-blending-facility-mobilises-first-green-certified-local-currency-debt-issue-for-off-grid-solar-rural-electrification-project-in-n/
The success of this financing approach and the firm interest from the pension fund managers and insurance companies at the session, demonstrates that such institutional models that can pool concessionary capital providers to join forces directly on the ground with private capital from domestic institutional investors to provide “blended” local currency finance to high-impact, climate aligned projects, has the potential to scale to reach millions of people in Nigeria.
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