The African Development Bank Group (AfDB) has approved a $10 million equity investment in Dhamana Guarantee Company Limited to provide long-term funding for East Africa’s infrastructure and real sector.
The investment aims to encourage the utilization of capital markets as a potential alternative financing method.
Dhamana, a Kenyan company with a regional mandate, will concentrate on offering credit guarantees for debt capital market instruments.
The Bank Group’s financial support will empower Dhamana to issue guarantees, enhancing the credit rating of debt instruments.
Local currency bonds generated through this initiative are anticipated to attract investment from pension funds, insurance companies, and sovereign wealth funds, fostering infrastructure and real sector development in East Africa.
“The African Development Bank is pleased to continue to support the operationalization of innovative solutions such as those provided by Dhamana to unlock and channel long-term local currency funding towards the real sector,” said Nnenna Nwabufo, African Development Bank Director General for the East Africa region.
The African Development Bank will collaborate with InfraCo Africa, Financial Sector Deepening Africa, local institutional investors, and other partners to operationalize Dhamana.
The company is committed to promoting green and sustainable financing in East Africa, facilitating financing for critical sectors like transport, water, renewable energy, and waste management.
PIDG CEO Philippe Valahu highlighted the African Development Bank’s role in unlocking domestic institutional capital for East Africa’s real economy, especially in green infrastructure.Philippe Valahu, CEO of PIDG, expressed the significance of the African Development Bank’s participation, emphasizing its role in unlocking domestic institutional capital for East Africa’s real economy, particularly in green infrastructure.
“We are committed to catalysing the development of domestic capital markets in Africa, as we seek to unlock investment for bankable, climate-resilient projects to be delivered with the scale and urgency required to meet the challenges of climate change and welcome the support of African Development Bank in Africa to help achieve this goal,” said Valahu.
Acting Director for Financial Sector Development at the African Development Bank Ahmed Attout emphasized the importance of guarantee companies in expanding local currency financing opportunities for infrastructure and the real sector.
The investment aligns with the Bank’s strategic objectives, focusing on regional integration, improved infrastructure development, inclusive and sustainable industrialization, and innovation.
The partnership marks a significant turning point in the promotion of competitiveness, economic diversification, and institutional financing mobilization for East African infrastructure projects.
