By Musa Adamu
Abuja
The United States Agency for International Development (USAID), GuarantCo and Standard Chartered Bank yesterday agreed to make available $90 million in new private sector financing for the power sector in Nigeria.
By this agreement, a loan from Standard Chartered Bank, supported by a partial credit co-guarantee from both USAID’s Development Credit Authority (DCA) and GuarantCo will provide Nigeria’s Zenith Bank with $90 million in new capital earmarked for on-lending to the distribution (Discos) and generation companies (Gencos).
USAID Administrator, Rajiv ShahIt, said the funding would provide much-needed liquidity to the sector and support capital expenditures required by these companies to stem losses and generate revenue.
“This transaction exemplifies the strengths of the Power Africa model, engaging with our development partners and private sector actors to advance meaningful power projects at scale,” he said.
He further said with this support, businesses and individuals would eventually have greater access to power, boosting opportunities for Nigerians and others across Sub-Saharan Africa.
He said this facility was expected to contribute to the sustainability of the power sector in Nigeria while creating local jobs in the assembly and installation of power equipment such as meters and switches, and in the installation of equipment in local businesses and homes.
“Nigeria privatized its power generation and distribution companies in 2013. This project directly addresses the capital needs of those companies while complementing ongoing efforts by the government of Nigeria to support the sector.
Also speaking, Group Chief Executive of Standard Chartered Bank, Peter Sands, said reliable access to power was an absolute pre-condition to economic progress and inclusive growth, saying however that it was not available in Nigeria and many parts of Africa today.
“This agreement illustrates how the right partnerships and financing models can address the problem of power distribution in Nigeria.
“It also demonstrates our commitment to Power Africa, a catalyst that galvanises partnerships and facilitates the delivery of efficient electricity in Sub-Saharan Africa,” he said.
USAID’s DCA uses partial credit guarantees to mobilise local financing in developing countries.
Credit guarantees encourage private lenders to extend financing to under-served borrowers in new sectors and regions.
By opening up local channels of financing, USAID is empowering entrepreneurs and municipalities in developing countries at a minimal cost to the U.S. taxpayer.
DCA has cost-effectively mobilized more than $3.9 billion in private, local funds to finance development.
This guarantee is one of 32 transactions closed this year by DCA, which mobilized a record $769 million in financing for USAID development priorities around the world.
