FCDO provides GuarantCo, through PIDG, with an additional GBP 90 million funding to invest in essential infrastructure across Africa and Asia
The Foreign, Commonwealth & Development Office (FCDO) has provided GuarantCo, a Private Infrastructure Development Group (PIDG) company, with an additional GBP 90 million callable capital facility to increase GuarantCo’s efforts to close the infrastructure financing gap in Africa and Asia through blended finance, local currency credit solutions and building local capital markets.
The further GBP 90 million investment is in addition to the GBP 40 million callable capital facility that FCDO provided in 2016 and is part of the GBP 500 million which FCDO committed to PIDG in 2018 as a result of the British Prime Minister announcement to commit GBP 4 billion public sector investment in Africa over four years.
By leveraging the investment up to three times, GuarantCo will be able to mobilise a portfolio of up to GBP 270 million of guarantees, creating enhanced public sector investment impact. The local currency financing and the local capital market capability building that GuarantCo provides is crucial to sustainably support infrastructure development in lower income countries across Africa and Asia as they mainly rely on long-term revenues in local currency. GuarantCo’s work will therefore significantly support essential local infrastructure and economies to the benefit of the population.
The further FCDO investment, in addition to the EUR 100 million funding as provided by Agence Française de Développement (AFD) in December 2020 and the CAD 40 million by Global Affairs Canada in April 2021, will provide increased capacity to grow and leverage GuarantCo’s portfolio. This will enable the company to achieve its strategic and development impact objectives including developing local capital markets, growing economies and improving local people’s lives through essential infrastructure.
PIDG and its companies, including GuarantCo, are committed to focus their work on projects that are aligned with the Paris Agreement on climate change and the PIDG Gender Equity Action Plan.
James Duddridge, FCDO Minister for Economic Development, said: “We are excited to build on our long partnership with GuarantCo as a leader in local currency solutions, unlocking the finance for critical infrastructure to be developed in frontier markets across Africa and Asia in a sustainable and inclusive way. This support demonstrates the UK’s continued commitment to finding innovative solutions to mobilise finance towards the Sustainable Development Goals, partnering with the private sector to enable improved livelihoods in some of the world’s poorest countries.”
Emily Bushby, Interim CEO of GuarantCo, said: “We are delighted with FCDO’s additional funding which will make a significant impact to further our efforts to develop local capital markets and provide long-term, local currency credit solutions to finance life changing infrastructure projects to the benefit of local people. Since 2005, GuarantCo’s innovative approach has made a significant contribution to lower income countries and fragile states across Africa and Asia which to date has resulted in the investment enablement of USD 5.6 million, improved access to infrastructure for 43 million people and job creation for 235,000 people.
Philippe Valahu, CEO of PIDG, said: “This latest funding commitment from one of our founding and largest public sector funders reinforces the confidence that FCDO has in PIDG and GuarantCo. FCDO has played a crucial role in the development of PIDG from its initial establishment through to the transformation of the group since 2002. We highly value our partnership with FCDO to further deliver the much needed impact to people in Africa and Asia through financing of essential infrastructure.”
GuarantCo mobilises private sector local currency investment for infrastructure projects and supports the development of financial markets in lower income countries across Africa and Asia. GuarantCo is part of the Private Infrastructure Development Group (PIDG) and is funded by the governments of the United Kingdom, Switzerland, Australia and Sweden, through the PIDG Trust, the Netherlands, through FMO and the PIDG Trust, France through a stand-by facility and Global Affairs Canada through a repayable facility. GuarantCo is rated AA- by Fitch and A1 by Moody’s. GuarantCo’s activities are managed by GuarantCo Management Company which is part of Cardano Development. www.guarantco.com
The Private Infrastructure Development Group (PIDG) is an innovative infrastructure development and finance organisation which encourages and mobilises private investment in pioneering infrastructure in the frontier markets of sub-Saharan Africa and south and south-east Asia to promote economic development and combat poverty. PIDG delivers its ambition in line with its values of opportunity, accountability, safety, integrity and impact. Since 2002, PIDG has supported 157 infrastructure projects to financial close and provided 209 million people with access to new or improved infrastructure. PIDG is funded by six governments (the United Kingdom, the Netherlands, Switzerland, Australia, Sweden, Germany) and the IFC. www.pidg.org