SDIP Strategic Dialogue Explores the Replication of InfraCredit’s Model for Local Currency Guarantees to Catalyse up to $100 Billion

The Sustainable Development Investment Partnership (SDIP) Strategic Dialogue, supported by Private Infrastructure Development Group (PIDG), held on March 03, 2017 in London, and featured the InfraCredit model as a localised financial framework for local currency guarantees in emerging and frontier markets. 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.

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

However, challenges ranging from credit and political risks to the lack of local capacity, debt tenors, currency volatility and liquidity have limited the financing options to support sustainable infrastructure projects.

In Nigeria, InfraCredit, a specialised guarantee company has been 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.

GuarantCo is a supranational established by PIDG to provide local currency guarantees in frontier economies to help infrastructure projects raise debt finance. PIDG is a multi-donor organisation with members from seven countries and the World Bank Group. The PIDG also supported the establishment of InfraCredit through its Technical Assistance Fund.

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