The African Development Bank (AfDB) has taken a $10 million (Sh1.3 billion) equity stake in credit insurer Dhamana Guarantee Company to finance the transport, water, renewable energy, and waste management sectors.
The pan-African lender is betting on Dhamana’s commitment to catalysing green and sustainable financing into East Africa, providing credit guarantees to stimulate private institutional investment in infrastructure.
“The African Development Bank’s equity investment in Dhamana reinforces the catalytic role and potential of credit enhancement companies in leveraging opportunities for infrastructure financing in local currency,” said Solomon Quaynor, AfDB vice president for the private sector, infrastructure, and industrialisation during the signing ceremony.
“We intend to replicate this business model in appropriate markets across Africa with partners such as the Private Infrastructure Development Group (PIDG) and others.”
Dhamana is set to compete with the government for investors keen on sustainable financing, acting as a catalyst to pool domestic liquidity sitting with pension funds and insurance companies.
The stakes add to the CPF’s investment of Sh600 million in the company as it looks to leverage alternative investments to rival the government in the race for investor funds looking for higher returns.
“The investment in Dhamana aligns with the bank’s priority to mobilise financing through innovative vehicles from African institutional funds, including pension funds, sovereign wealth funds, and insurance companies, for infrastructure development in Africa,” added Mr Quaynor.
AfDB’s equity follows an anchor investment from the UK-government-backed Private Infrastructure Development Group through its subsidiary, InfraCo Africa.
“Building on the success of other PIDG-supported credit enhancement facilities in Nigeria and Pakistan, Dhamana will demonstrate the value of such a facility in the East African market, opening up opportunities for investors and clients alike,” said InfraCo Africa CEO Gilles Vaes, who represented PIDG.
Dhamana will also receive technical assistance support from Financial Sector Deepening Africa (FSD Africa) and Cardano Development.
“With the support of our investors and supporters, the PIDG, Cardano Development, FSD Africa, CPF Financial Services, and the AFDB, we have worked to develop Dhamana as an important catalyst for long-term sustainable finance in the region," said Mr Christopher Olobo, chief executive officer of Dhamana.
"Dhamana’s local currency guarantees will connect pools of untapped capital with East Africa’s real economy, making a tangible difference to people’s lives and offering local investors the opportunity to invest in Paris-aligned initiatives.”
