NSIA was established with a mandate to promote fiscal stability.
The Nigeria Sovereign Investment Authority, NSIA, has established the Nigerian Credit Enhancement Facility, NCEF, to provide the necessary credit for investment in critical infrastructure projects in the country.
The existing funding gap has been identified as one of the major factors militating against efforts to mobilise capital for critical infrastructure development projects.
To bridge the gap, the NSIA on Tuesday announced that it has gone into partnership with GuarantCo, a development finance fund, to develop a strategy towards redressing the country’s infrastructure deficit.
The NSIA is a Federal Government agency established in 2011 with the mandate to promote fiscal stability, build a savings base for future generations of Nigerians and enhance the development of Nigeria’s infrastructure with investments made through special funds for economic stabilisation, future generations, and the Nigeria Infrastructure development.
The NSIA said GuarantCo’s key objective is to encourage private sector involvement in the domestic financing of infrastructure projects and promote local capital market development in low income countries.
The creation of NCEF, according to NSIA Managing Director/CEO, Uche Orji, was with the specific objective of attracting the investment interest of a pool of capital for whom safety was paramount using pension funds, insurance companies and Sovereign Wealth Funds.
Apart from improving their credit ratings to investment grade, Mr. Orji said NCEF could also potentially attract international capital to the critical infrastructure sector.
“NSIA and GuarantCo see this partnership as a potential catalyst for unlocking long-term patient capital, typically required by infrastructure projects to be commercially successful,” Mr. Orji said.
He said the expectation is that it would have positive effects on the Nigerian economy given the strong correlation between critical infrastructure and accelerated economic growth.
According to Mr. Orji, considering that one of the statutory mandates of the NSIA is the enhancement of Nigeria’s infrastructure, NCEF has the potentials of helping to fulfill the mandate.
This, he said, could be achieved through the establishment of the necessary institutional framework and sustainable enablers that would attract long term capital necessary for infrastructural development.
“We are excited about the potential role this partnership can play in revolutionising the extant model of infrastructure development in Nigeria; now and into the future,” Mr. Orji said.
The Head of GuarantCo at Frontier Markets Fund Managers, FMFM, Chris Vermont, said the company shared NSIA’s vision for mobilising new sources of financing for infrastructure through creating a Nigerian Credit Enhancement Facility.
“We are proud to be partnering with NSIA as they map out a prudent, but ambitious pathway for Nigeria. We hope our experience of best practice across many markets can be combined with NSIA’s local expertise in the service of the country,” Mr. Vermont said.
GuarantCo is a Private Infrastructure Development Group, PIDG funded by four of its Members – the Department for International Development UK, DFID, the Swiss State Secretariat for Economic Affairs, SECO, the Swedish International Development Cooperation Agency, SIDA and the Ministry of Foreign Affairs of the Netherlands, DGIS.
Its aim is to encourage private sector involvement in the domestic financing of infrastructure projects and to promote local capital market development in low income countries through the provision of local currency guarantees.