FSD Africa invests £10m to support Nigeria’s climate infrastructure development

FSD Africa Investments (FSDAi) has collaborated with InfraCredit to invest £10 million into Nigeria’s sustainable infrastructure development efforts. The fund will be channelled to a risk-sharing facility meant to unlock local currency funding. 

Nigeria suffers from a vast infrastructure deficit in practically all sectors. The World Bank recommends that the country invests £3 trillion to cover the gap. By doing so, there’s a high possibility of the country’s infrastructure stock amounting to 70% of its GDP, per World Bank standards. 

FSADi and InfraCredit have high expectations for their pet project, the Risk Sharing Backstop Facility (RSBF). According to a statement seen by Technext, the RSBF will tackle the issue of low credit enhancement. It intends to do this by gathering local institutional investments via bonds and then funnelling them into climate-oriented infrastructure projects. 

Following the initial investment from the FSASi, the RSBF will attract funding in series from other investors. The goal is to hit a total capital base of up to $50 million. 

FSADi and InfraCredit believe that raising more funds for Nigeria’s green projects will contribute to its socio-economic and climate goals. This move resonates with one of FSADI’s visions which is to grow capital markets by addressing bottlenecks in the system. 

FSADi Chief Investment Officer, Anne-Marie, remarked on the announcement, saying that the collaboration between her organization and InfraCredit is highly beneficial to the critically needed infrastructure projects. According to her, such initiatives are deemed un-bankable unless there is a different way to get credit enhancement. 

“Moreover, as Africa’s economies struggle to mobilize capital to develop key climate mitigation and sustainable power generation projects, this facility comes as a timely and much-needed intervention for Nigeria’s infrastructure landscape,” she concluded.

Regarding the funding, James Cleverly, the UK Foreign Secretary said “This investment further demonstrates the UK’s commitment and contribution to Nigeria’s transition to clean energy and builds on decades of UK leadership in mobilizing support for climate-related infrastructure challenges.” 

He added that InfraCredit will build on the achievements of British International Investment (BII) and the Private Infrastructure Development Group (PIDG) use capital from the private sector to boost investments in green infrastructure projects. 

InfraCredit CEO, Chinua Azubuike expressed his delight at the opportunity to partner with FSADi, saying that the RSBF enables underfunded projects to reach their goals. In this case, climate-aligned schemes. 

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How this should help Nigeria’s green infrastructure goals 

According to a study conducted by the United Nations Office for Project Services, UNOPS, UN Environment Programm and the University of Oxford, infrastructure causes 79% of all greenhouse emissions. Therefore, the report enjoined countries to innocent radical strategies in infrastructure planning to complete climate goals. 

Unfortunately, Nigeria hasn’t done as advised because there’s a general idea that such problems come with an unhealthy amount of risk. But then, climate change is real and Nigeria must prepare. 

While there’s a growing trend of electric vehicles alongside the inflow of solar energy products, more needs to be done. Regarding the issue of limited infrastructure, the £10 million should encourage both government and private individuals to invest accordingly.