Swedish International Development Cooperation Agency provides GuarantCo with a USD 100 million, 20-year re-guarantee facility to alleviate poverty across Africa and Asia

  • Date written
  • January, 2023

Swedish International Development Cooperation Agency (Sida) has provided GuarantCo, the guarantee arm of the Private Infrastructure Development Group (PIDG), with a USD 100 million (in Swedish Krona equivalent) 20-year re-guarantee facility to increase GuarantCo’s capacity to facilitate infrastructure financing solutions and further build local capital markets to the benefit of companies and people in lower income countries across Africa and Asia.

Swedish International Development Cooperation Agency

This innovative facility is the first of its kind to be offered by Sida. Taking inspiration from Sida’s previous experience in catalytic solutions and the private credit insurance markets, the facility has been structured to provide capacity to grow GuarantCo’s portfolio through Sida risk sharing in defined portions of transactions originated by GuarantCo. This will allow GuarantCo to undertake larger transactions while continuing to manage risk within single obligor, country and sectoral limits, enabling GuarantCo to deliver enhanced impact and local currency capacity in its target geographies and sectors.

The facility will also deliver additionality by allowing GuarantCo to originate transactions of sufficient size to allow wider syndication including to the private credit insurance market, thereby mobilising an additional source of private sector support into underlying transactions. The track record built with the international insurance market through these transactions is aiming to provide a long-term demonstration impact and encourage insurers to extend their risk appetite.

The re-guarantee facility will allow GuarantCo to enhance the sustainable development impact that it delivers and help achieve the company’s vision to become a centre of excellence for local currency credit solutions for infrastructure finance in lower income countries thereby assisting with the alleviation of poverty.

Since 2005, GuarantCo has made a significant difference to people’s lives including mobilising total investment of USD 6 billion and USD 5 billion of private sector investment, providing 43 million people with improved access to infrastructure and generating 327,000 jobs in Africa and Asia.*

GuarantCo 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.

True Schedvin, Head of Unit Global Sustainable Economic Development at Sida, said:

With this guarantee, Sida contributes to boosting GuarantCo’s investment capacity in crucial infrastructure in countries with limited economic resources. Green and sustainable infrastructure that is accessible for all is necessary to give people the opportunity to create better living conditions for themselves as individuals and economic actors. Sida expects this partnership with GuarantCo to give a strong contribution to Sida’s mission to reduce poverty globally.

Layth Al-Falaki, Chief Executive Officer of GuarantCo, said:

We are delighted that Sida has provided us with a USD 100 million re-guarantee facility to support GuarantCo and PIDG in delivering its strategic and developmental objectives to the benefit of local people in lower income countries across Africa and Asia. The facility provides essential support, allowing us to increase our capacity and facilitating local capital market development and poverty alleviation in lower income countries. It also demonstrates an efficient model for partnership with GuarantCo for other stakeholders who wish to leverage on our expertise in credit guarantees in lower income countries.

Philippe Valahu, Chief Executive Officer of PIDG, said:

We welcome this support from Sida, and this latest innovation allows us to build on our partnership to continue to deliver vital infrastructure in the countries where it is needed the most.

NOTES TO EDITORS

About GuarantCo

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

About PIDG

The Private Infrastructure Development Group (PIDG) is an innovative infrastructure project developer and investor which mobilises private investment in sustainable and inclusive infrastructure in sub-Saharan Africa and south and south-east Asia. PIDG investments promote socio-economic development within a just transition to net zero emissions, combat poverty and contribute to the Sustainable Development Goals (SDGs). PIDG delivers its ambition in line with its values of opportunity, accountability, safety, integrity and impact. Since 2002, PIDG has supported 190 infrastructure projects to financial close which provided an estimated 220 million people with access to new or improved infrastructure. PIDG is funded by the governments of  the United Kingdom, the Netherlands, Switzerland, Australia, Sweden, Germany and the IFC. www.pidg.org

About Sida

Sida is Sweden’s government agency for development cooperation. Our mission is to create opportunities for people living in poverty and under oppression to improve their living conditions. Sida’s activities are funded through Swedish tax revenue. In addition to grant funding, Sida offers a guarantee instrument which is designed to share risk with public and private actors in order to mobilize additional capital and bring in new partners to reach development impact. The purpose of Sida’s guarantee instrument is to promote sustainable development, inclusive economic growth and poverty reduction by unlocking existing finan¬cial resources and facilitating access to credit Sida’s guarantee instrument | Sida