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The Board of Directors of the African Development Bank has approved a  total of $26.7million to support infrastructure financing in Nigerian and to facilitate access to fertilizers for African farmers.

According to a statement made available to FRONTVIEW AFRICA by APO Group on behalf of  the AfDB, the $15 million subordinated loan to Infrastructure Credit Guarantee Company Limited (InfraCredit) is to strengthen its capital base and help close Nigeria’s infrastructure financing gap.

The $11.7 million budgetary allocation to the African Fertilizer Financing Mechanism (AFFM) for its 2023 operations adds up to $16.4 million extended to the Facility to support its 2023 budget.

It includes $4.7 million, which was carried over from the previous year.

The $15million loan is to enable InfraCredit to leverage domestic capital markets to bolster access to long-term local currency infrastructure financing in Nigeria, complementing a 2019 investment into InfraCredit made by the African Development Bank and other partners to help unlock domestic institutional capital for infrastructure.

InfraCredit is a specialized Nigerian credit guarantee company that mobilizes long-term capital from institutional investors, including pension fund and insurance companies, to support infrastructure projects.

The loan comes at a time when InfraCredit is seeking to raise capital to finance an additional $375 million in infrastructure over the next few years, primarily by leveraging private sector financing.  

Lamin Barrow, Director General of the Bank’s Nigeria Country Department, said, “The African Development Bank is pleased to continue to support an innovative financial institution – InfraCredit –which has objectives that align closely with our priorities to mobilize institutional financing for the delivery of infrastructure for Nigeria in key sectors including transport, energy, water, agriculture and infrastructure.”

The company’s green finance track record and commitments under its Clean Energy Transition Strategy and Roadmap and Green Finance Framework fits with the African Development Bank’s commitments to promote low-carbon development and mitigation, leveraging climate finance from private sector sources, Barrow said.

Chinua Azubike, InfraCredit CEO said, “We are delighted and very pleased with the confidence that AfDB has demonstrated in the opportunity ahead for InfraCredit to scale its development impact of unlocking domestic institutional investments for long-term local currency infrastructure finance in Nigeria that will create jobs and support local economic growth. This second round investment will strengthen our guarantee issuing capacity and bring AfDB’s total investments in InfraCredit to $25 million, which is a strong signal of commitment to the long-term growth of InfraCredit and the Nigerian economy.”

AfDB Acting Director for Financial Sector Development, Ahmed Attout, said the support demonstrates the bank’s “continuing confidence in infrastCredit and recognition of the role it plays in Nigeria’s infrastructure development.”

According to Attout, the AfDB is committed to “capacitating the various players within Africa’s capital markets and stimulating the mobilization of long-term funding into Africa’s infrastructure.”

The partnership advances a number of strategic objectives under the Bank’s current Country Strategy Paper for Nigeria, which includes helping to stimulate local currency bond market financing across diverse infrastructure sectors, as well as enhancing economic diversification and competitiveness in the country. The strategy also prioritizes delivery of infrastructure for transport, energy, water and sanitation, agriculture, industry and social development.

The intervention is also aligned with the Nigeria’s National Development Plan which envisages strong private sector resource mobilization and participation in the delivery of the priorities of the plan including for investment in infrastructure, promotion of financial sector and capital market development in the country.

By de-risking local currency debt instruments (primarily bonds), InfraCredit channels financing to infrastructure projects, including green and climate-aligned projects in Nigeria. Infrastructure Credit Guarantee Company Limited was founded in 2016 by the Nigerian Sovereign Investment Authority in collaboration with GuarantCo (part of the Private Infrastructure Development Group).  

Besides the $11.7 million budgetary allocation, the Board of Directors of the AfDB also validated AFFM’s 2023 program of activities: strengthening the fertilizer sector through access to finance, supporting the development of sustainable policy reforms to improve fertilizer production, trade and use, and facilitating access to inputs and technical assistance for smallholder farmers.

AFFM plans to continue implementing three commercial credit guarantee projects amounting to $8.3 million. The recipient countries are Zimbabwe ($4.3 million), Côte d’Ivoire ($2 million), and Ghana ($2 million). For 2023, it plans to implement trade credit guarantee schemes totaling $9.7 million in Tanzania, Uganda, Mozambique and Kenya. Three more new projects could be launched in Senegal, Zambia and Ghana if the United States Agency for International Development (USAID) follows through on its $15 million commitment to the AFFM.

The 2023 projects will be implemented to support the second pillar of the Bank’s African Emergency Food Production Facility, which was launched to avert a looming food crisis in Africa following Russia’s invasion of Ukraine.

In addition, AFFM will actively work with African countries and other key stakeholders to develop the national food and agriculture pacts that the continent’s leaders presente dat the Feed Africa Summit in Dakar, Senegal, in January 2023.

The AFFM will facilitate smallholder farmers’ access to inputs and extension services through credit guarantee projects and capacity building for farmers and input distributors. Objectives: to ensure proper use of fertilizers, increase agricultural productivity and improve soil conditions.

AFFM will continue to work with the International Fertiliser Development Centre (IFDC) and the Alliance for a Green Revolution in Africa (AGRA) on initiatives to improve fertilizer production, trade and use launched in 2021. It will also conduct an in-depth analysis of fertilizer policy in at least ten African countries, which will map the current situation, identify gaps and prepare an action plan. The aim is to support policy orientations that will address the identified shortcomings.

Established by the African Union in Abuja in 2006, the African Fertiliser Financing Mechanism is a special fund that aims to improve agricultural productivity by providing the necessary financing to boost fertilizer use in Africa and achieve the 50 kilograms of nutrients per hectare target. It is hosted and managed by the African Development Bank. AFFM has a  strategic plan for the 2022 – 2028 period.

In Africa, AFFM’s work is crucial in addressing food crises and various threats to food security caused by Russia’s war in Ukraine, climate change (drought, floods, soil depletion, etc.), conflict, locust infestation and disease.


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