The African Development Bank Group (AfDB) has approved a USD 10 million equity investment in Dhamana Guarantee Company Limited in a bid bolster capital markets as a viable source of long-term funding for infrastructure and the real sector in East Africa.
“The investment in Dhamana follows the Bank’s priority to mobilize institutional financing for infrastructure investment in East Africa,” said Ahmed Attout, AfDB Acting Director for Financial Sector Development.
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Dhamana, set to be based in Kenya as a limited liability company, will have a regional mandate to provide credit guarantees on debt capital market instruments. The funding from the African Development Bank will enable the company to issue guarantees for debt instruments, specifically local currency bonds.
It will do so with the aim of enhancing the credit rating of these instruments, attracting investment from pension funds, insurance companies, and sovereign wealth funds to finance infrastructure projects and the real sector in East Africa.
The project has also received support from partners including InfraCo Africa (part of the Private Infrastructure Development Group), Financial Sector Deepening Africa, and local institutional investors.
Once operationalized Dhamana’s focus will be facilitating access to financing for key sectors including transport, water, renewable energy, and waste management. The company is committed to catalyzing financing to scale up green and sustainable financing in East Africa. Its credit guarantee activities are expected to provide investors with the confidence needed to support the allocation and intermediation of funding from private institutional investors into infrastructure projects.
“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, AfDB Director General for the East Africa region
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The investment in Dhamana is in line with the African Development Bank’s strategic objectives, including stimulating local currency debt market financing across diverse infrastructure sectors and enhancing economic diversification and competitiveness in the region.
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