The launch of a $150m Infrastructure Climate-Resilient Fund by AFC Capital Partners is set to strengthen Nigeria’s drive towards sustainable infrastructure by directing institutional capital into renewable energy and climate-resilient transport projects.
The fund, approved by the Securities and Exchange Commission (SEC), was formally launched in Lagos on Monday as a closed-end investment vehicle designed to mobilise domestic institutional funds for green infrastructure.
The initiative comes as Nigeria faces mounting pressure to close its infrastructure deficit while adapting critical assets to the effects of climate change, including flooding, rising temperatures and extreme weather events.
AFC Capital Partners, the asset management subsidiary of the Africa Finance Corporation, said the Nigerian fund forms part of a wider $750m pan-African climate initiative. It is expected to help unlock investments from pension fund administrators, insurance companies and sovereign wealth funds, contributing to a broader project financing pool estimated at $3.7bn.
Speaking at the launch, the Chief Financial Officer of AFC Capital Partners Nigeria Limited, Chika Dotimi-Beke, said the immediate priority was to raise capital from institutional investors and begin deploying funds.
“Our focus is now on onboarding institutional investors,” she said, adding that the fund expects to make its first investment before the end of the year.
According to Dotimi-Beke, transport and renewable energy will be among the fund’s priority sectors once the Nigerian vehicle achieves its first close.
The move could provide an important boost to Nigeria’s sustainability drive by expanding the pool of private capital available for projects that simultaneously address infrastructure needs and climate risks.
The fund also arrives at a time when Nigeria has a significant pool of domestic savings that could potentially be channelled into long-term sustainable investments.
Gbadebo Adenrele, Managing Director/CEO of Investment Banking at United Capital Plc and financial adviser and issuing house for the transaction, said Nigeria’s investment pool, particularly pension assets, was estimated at between N31tn and N32tn and continued to grow.
He said the availability of such capital presented an opportunity to finance infrastructure while creating investment opportunities for institutional investors.
However, Adenrele noted that Africa still faces an annual infrastructure financing gap of between $130bn and $170bn. Closing the gap, he said, would require projects to be sufficiently de-risked to attract institutional investors, development finance institutions and commercial banks.
For Nigeria’s sustainability agenda, the fund’s focus on climate-resilient transport could be particularly significant.
AFC Chief Risk Officer, David Johnson, said climate-related disruptions cost Africa an estimated $200bn annually. In Nigeria, he cited flooding as a major threat to roads and transport networks, while rising temperatures accelerate infrastructure deterioration.
He noted that transport costs account for nearly 40 per cent of the cost of goods, suggesting that more resilient transport infrastructure could deliver both environmental and economic benefits.
“Investing in resilient transport assets would lower logistics costs for businesses and consumers while generating competitive returns for investors,” Johnson said.
The fund will seek to manage investment risks through a diversified portfolio covering early-stage projects, mid-stage financing and mature operational assets. This structure is intended to mitigate project execution risks and currency volatility while giving investors exposure to different stages of infrastructure development.
Ayaan Adam, Chief Executive Officer of AFC Capital Partners, said the fund would give institutional investors access to climate-resilient assets while combining private capital with AFC’s infrastructure expertise and blended-finance mechanisms.
The Green Climate Fund is supporting the vehicle through first-loss capital and technical assistance, measures designed to reduce investment risks and encourage greater participation from private investors.
The significance of the fund extends beyond its $150m size. By creating a mechanism for domestic institutional savings to finance renewable energy and climate-resilient infrastructure, it could help strengthen the link between Nigeria’s financial sector and its sustainability objectives.
If successfully deployed, the initiative could also demonstrate how pension and other long-term institutional funds can support the transition towards a lower-carbon and more climate-resilient economy while generating financial returns.
The first investments, expected before the end of the year, will therefore provide an early indication of how effectively the fund can translate Nigeria’s growing institutional capital base into tangible sustainability outcomes.
AFC Capital Partners is an SEC-licensed asset manager registered in Mauritius and Nigeria. Its parent organisation, the Africa Finance Corporation, established in 2007, has deployed more than $20bn across 36 African countries.
