Pan-African partnership Reaches Milestone for Long-Term Climate Finance Solutions in Kenya
Investors back Dhamana Guarantee Company’s work to transform East Africa’s financial landscape.
Tackling climate change given another boost in Kenya as, for second time in a week, a UK-Government backed investor in green finance solutions puts pen to paper.
Monday 30 September 2024 – Dhamana Guarantee Company Ltd (Dhamana) has reached a major milestone, marked at an event in Nairobi today.
Investors in the new company put pen to paper at a signing ceremony, which will allow the company to kick-start operations.
Dhamana aims to mobilise private sector finance to support the development of sustainable businesses. It will do so by issuing guarantees to commercially viable projects, businesses, and institutions that tackle the climate crisis and make progress towards the Sustainable Development Goals (SDGs).
The design and creation of the company was supported by the UK-Government backed investor the Private Infrastructure Development Group (PIDG) through InfraCo Africa. With its anchor investment, PIDG kick-started Dhamana, attracting further equity investment from the African Development Bank (AfDB) and CPF Group, with support provided by Cardano Development and FSD Africa.
Dhamana is a new limited liability company based in Kenya with a mandate to deliver for the East African region - including Kenya, Tanzania, Uganda and Rwanda. It will provide credit guarantees on debt capital market instruments, to boost the credit rating of such instruments and crowd in investment from pension funds, insurance companies and sovereign wealth funds to support sustainable infrastructure and business development in East Africa.
Dhamana will target businesses that add value to people’s lives, improving the day-today life of Kenyans and of people across the region. The increase in affordable finance for Kenyan businesses will mean projects will require less capital to get off the ground, make money, and generate growth. Dhamana will also enable investors to diversify their portfolios, acting as a catalyst to transform East Africa’s financing landscape.
This is the second time in a week that an investor in climate solutions backed by the UK Government has achieved a milestone. Last week, MOBILIST signed a partnership with the Nairobi Securities Exchange which aims to drive the listing of new investment products in the Kenyan market and increase the amount of private sector capital available for development and climate projects in Kenya and drive growth.
Dhamana CEO, Christopher Olobo, said, “With the support of our investors and supporters, we have worked to develop Dhamana as an important catalyst for long-term sustainable finance in the region. 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.”
Deputy High Commissioner and Development Director, British High Commission Nairobi, Leigh Stubblefield, said, “For the second time in a week I am proud to say that the UK has supported a climate finance solution in Kenya – an example of our long-term commitment to long-term investment and growth. This is a great pan-Africa partnership that will improve the lives of East Africans for the better, and as the saying goes, we go far when we go together.”
Representing PIDG, InfraCo Africa CEO, Gilles Vaes, added, “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. Crucially, Dhamana will engage new partners and investors in our efforts to urgently address the climate crisis and accelerate delivery of the UN sustainable development goals.”
In his remarks at the launch event, Solomon Quaynor, African Development Bank Vice President for Private Sector, Infrastructure & Industrialisation, said, “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 and supporting debt capital markets deepening in our regional member countries. We intend to replicate this business model in appropriate markets across Africa with partners such as the Private Infrastructure Development Group (PIDG) and others. The first example of this type of credit enhancement company was InfraCredit in Nigeria which has had demonstrated success, and now Dhamana in East Africa. 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.”
On his part, Dr. Hosea Kili, OGW – CPF Group Managing Director/CEO – said, “We are proud to be part of this transformative initiative through Dhamana Guarantee Company.We believe in the power of innovative financial solutions to drive sustainable growth. By leveraging local currency guarantees, Dhamana will unlock critical capital for critical infrastructure projects, advancing economic development. This partnership aligns with our commitment to investing in initiatives that improve the lives of people’s lives and our economy while contributing to a more sustainable future.” Joost Zuidberg, CEO of Cardano Development concluded - "Dhamana's true strength lies in its capacity to attract significant investments from East Africa's institutional capital, laying a strong foundation for future scaling up according to its sizeable potential and thus meaningfully contribute to sustained economic growth in the region. Part of our core work is to incubate guarantee solutions for emerging and frontier markets, and we are thrilled to formalise this partnership today, as we collectively provide Dhamana with the crucial support and capital needed to fulfil this vital objective."
NOTES FOR EDITORS
The UK-Kenya Strategic Partnership
The UK-Kenya strategic partnership joint statement can be found here.
About Dhamana
Dhamana Guarantee Company (Dhamana): Dhamana is working to catalyse the development of domestic capital markets in East Africa. It does this by connecting significant under-utilised sources of domestic institutional capital with the real economy, such as new green infrastructure, and providers of credit to businesses. This increases access and the affordability of local capital, providing new low-risk opportunities for local investors. Dhamana will also serve to provide a portfolio of businesses with access to the local currency capital needed to deliver bankable projects, meeting the high demand for new affordable housing, transportation, water, and energy infrastructure, and promoting long term economic development. www.dhamana.com
About PIDG
The Private Infrastructure Development Group (PIDG) is an innovative infrastructure project developer and investor which mobilises private investment in sustainable and inclusive infrastructure in sub-Saharan Africa and south and south-east Asia. PIDG investments promote socio-economic development within a just transition to net zero emissions, combat poverty and contribute to the Sustainable Development Goals (SDGs). PIDG delivers its ambition in line with its values of pioneering, partnership, safety, inclusivity, and urgency. PIDG offers Technical Assistance for upstream, early-stage activities and concessional capital; its project development arm – which includes InfraCo Africa and InfraCo Asia – invests in early-stage project development and project and corporate equity. PIDG credit solutions include EAIF (the Emerging Africa Infrastructure Fund), one of the first and more successful blended debt funds in low-income markets; GuarantCo, its guarantee arm that provides credit enhancement and local currency solutions to de-risk projects; and a growing portfolio of local credit enhancement facilities, which unlocks domestic institutional capital for infrastructure financing. Since 2002, PIDG has supported 233 infrastructure projects to financial close, which provided an estimated 228 million people with access to new or improved infrastructure. PIDG is funded by the governments of the United Kingdom, the Netherlands, Switzerland, Australia, Sweden, Global Affairs Canada, Germany, and the IFC. www.pidg.org
About the African Development Bank (AfDB)
The African Development Bank (AfDB) is Africa’s premier development finance institution. It comprises three distinct entities: the African Development Bank (AfDB), the African Development Fund (ADF) and Nigeria Trust Fund (NTF). On the ground in 34 African countries with an external office in Japan, the AfDB contributes to the economic development and the social progress of its 54 regional member states. www.afdb.org
About the CPF Group
The CPF Group offers a comprehensive range of services through its various subsidiaries including CPF Financial Services which administers both private and public pension funds; notably - the Public Service Superannuation Scheme (PSSS); The Local Authorities Pensions Trust (LAPTRUST); the Taifa Pension Fund; the County Pension Fund and CPF Individual Pension Plan. The funds under our administration have a total membership of just over 500,000 members.
Other subsidiaries include Laser Infrastructure & Technology Solutions (LITES); Laser Property Services; Rukisha Advances payment platform; CPF Asset Managers; CPF Capital & Advisory; and Laser Insurance Brokers (LIB). The Group offers a wide range of services in ICT & renewable energy solutions, Property Services, Insurance Brokerage, Smart Money platform, fund management, Transaction Advisory, Trust fund services, training & consultancy, and Corporate Trustee Services. Derived from uncompromised commitment to fulfilling lives, the CPF Group prioritises new models and approaches in engineering turnkey solutions for clients across the region. www.cpfgroup.or.ke
About Cardano Development
Cardano Development (CD), established in 2007, incubates new companies, and creates and manages fund managers. Through careful risk-management analysis in data poor settings, CD identifies scalable solutions that can help to make frontier financial markets more inclusive, investible, and sustainable to unlock lasting economic value. CD creates scalable solutions for currency, credit, and liquidity risks in these markets. With over USD 6 billion assets and USD 3.1 billion capital under management, CD supports scale-up ventures (TCX, GuarantCo, Frontclear, BIX Capital, ILX Fund, AGRI3 Fund), and a number of new start-ups, with ongoing management support services and corporate governance oversight.