AFC launches $150m climate fund for Nigerian infrastructure

Africa Finance Corporation (AFC) has officially launched its $150 million Infrastructure Climate-Resilient Fund in Nigeria, following regulatory approval from the Securities and Exchange Commission. This SEC-registered closed-end fund is designed to direct domestic institutional capital towards critical green infrastructure across the nation.

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The primary goal is to bring investors into the fund. Today marks the approval of our license from the SEC, so our focus is now on onboarding institutional investors.

The Nigerian fund is a component of AFC's broader $750 million pan-African climate initiative. The overall goal is to unlock investments from entities such as pension fund administrators, insurance firms, and sovereign wealth funds, with the aim of accumulating a total project financing pool of $3.7 billion.

Chika Dotimi-Beke, CFO of AFC Capital Partners Nigeria Limited, stated that the immediate focus is on raising and deploying capital. "The primary goal is to bring investors into the fund. Today marks the approval of our license from the SEC, so our focus is now on onboarding institutional investors," she said, adding that capital deployment would follow swiftly, with the first investment anticipated before the year's end.

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We anticipate making our first investment before the end of the year. Once we achieve our first close for the Nigerian fund, we are set to prioritise investments in the transport and renewable energy sectors.

Initial investments will prioritize the transport and renewable energy sectors. Gbadebo Adenrele, MD/CEO of Investment Banking at United Capital Plc, highlighted Nigeria's growing domestic savings pool, estimated between N31 trillion and N32 trillion, primarily within pension funds. He noted Africa's annual infrastructure financing gap of $130 billion to $170 billion, emphasizing the need to mitigate risks to attract institutional investors, development finance institutions, and commercial banks.

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Nigeria’s investment pool, especially within pension funds, is currently estimated at about N31tn to N32tn and is still growing.

David Johnson, Chief Risk Officer at AFC, pointed out that Africa faces an estimated $200 billion in annual losses due to climate disruptions. In Nigeria, flooding damages roads and causes traffic delays, while rising temperatures increase wear on transport networks, contributing to transport costs making up nearly 40 percent of the cost of goods. Investing in resilient transport assets is expected to lower logistics costs for businesses.

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In Nigeria, flooding damages roads and causes severe traffic delays, while rising temperatures accelerate the wear and tear of transport networks. Transport costs currently make up nearly 40 per cent of the cost of goods.