Nigerian Sovereign Investment Authority (NSIA), London-based firm to set up infrastructure funding in Nigeria NSIA and GuarantCo The Nigerian Sovere
Nigerian Sovereign Investment Authority (NSIA), London-based firm to set up infrastructure funding in Nigeria
NSIA and GuarantCo
The Nigerian Sovereign Investment Authority NSIA and GuarantCo will be setting up a Credit Enhancement Facility Company that will let pension funds invest in Nigerian Infrastructure bonds.
The aim of the new company is to facilitate credit enhancements for critical infrastructure projects in Nigeria by improving their credit ratings to investment grade.
“The company will provide enhancements for infrastructure bonds, and we believe this will make an effective platform for Nigerian pension funds to invest in them” – Uche Orji, CEO Nigeria Sovereign Investment Authority (NSIA).
The dearth of a proper credit enhancement system is a challenge to attracting capital to invest in infrastructure funds.
An upgrade of credit ratings would enable a fresh inflow of capital like Nigeria’s pension fund with assets under management worth $26.4 billion at December of 2015.
According to the CEO of NSIA, Uche Orji, most pension funds do not buy into infrastructural funds when the credit rating of the issuer is not strong enough.
The new venture will provide a form of insurance, giving a guarantee and allowing pension funds and insurance companies to invest. “The NSIA cannot give guarantees by itself, so we have created a company that can do this,” he said.
The company is expected to be launched a few weeks from now with the aim to boost the financing of infrastructure projects in Nigeria.
Nigeria Sovereign Investment Authority (NSIA) is the Nigerian investment institution founded to manage the Nigeria sovereign wealth fund.
The sovereign wealth fund, SWF was instituted in 2011 for the purpose of managing and investing the funds obtained from the surplus of the excess oil reserves on behalf of the Federal government of Nigeria.
The NSIA have been raising investments for the Nigerian government to consequently develop the country.
In December of 2016, the Federal Government stated that it was working with NSIA to secure a $600 million investment for the mining sector in Nigeria.
The government also recently secured a $150 million support from the World Bank for the Mineral Sector Support for Economic Diversification (MSSED) programme.
About NSIA’s partner GuarantCo
GurantCo is a London-based development financing institution that supports infrastructure related projects in low-income African, Middle East, and Asian countries by issuing guarantees in local and international currencies to banks and bond investors.
The company specialises in frontier market infrastructure.
The sponsors of GuarantCo. are governments of Netherlands, Sweden, Switzerland, and the United Kingdom
The company is rated AA- by Fitch and A1 by Moody’s.
Infrastructure has been a major obstacle to harnessing Africa’s most populous country’s potential. Despite its vast amount of resources, NIgeria still suffers from a high level of poverty with 60 percent of its population lacking basic amenities such as water, electricity, education, and health facilities. An investment in infrastructure would help boost Nigeria’s growth and promote greater inclusiveness and poverty reduction.