The Nigerian power sector requires considerable investment, but funding for infrastructure is limited. Zenith Bank is one of the largest banks in Nigeria and had both the reach and capacity to identify the right power sector borrowers and projects to fund, but required financial support to fund such projects.
The on-lending facility provided to Zenith was focussed on supporting the capital expenditure programmes of newly privatised power generation and distribution companies in Nigeria. The support of USAID and GuarantCo was critical to enabling Standard Chartered to provide a facility of this size (USD 90 million) to Zenith, which consequently facilitated development of critical infrastructure in the power sector.
The intervention of USAID and GuarantCo also provided additional benefit to the proposed financing by extending tenor from the commercial market out by a further 2 years for a total tenor of 5 years.
A lack of power is one of Nigeria’s biggest barriers to economic growth and consequently poverty alleviation.
Significant investments is needed to boost current infrastructure levels and grow the network to optimum capacity but access to funding is a key constraint for all participants in the power sector.
The on-lending facility provided to Zenith focussed on supporting the capital expenditure programmes of the distribution and generation companies in Nigeria, helping them to fund priority projects required to stabilise existing power infrastructure and create a strong base from which incremental growth could take place.