Ethiopia’s capital markets regulator and Nigeria-based Infrastructure Credit Guarantee Company Limited (InfraCredit) signed a memorandum of understanding to explore setting up a credit guarantee facility in the country, a step aimed at boosting long-term financing for infrastructure projects.
The Ethiopian Capital Market Authority (ECMA) said InfraCredit will provide technical assistance to draft a concept paper assessing the feasibility of the facility, while the regulator will coordinate engagement with domestic stakeholders.
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Credit guarantee facilities reduce risk for lenders by covering potential losses if borrowers default. By offering partial guarantees on infrastructure-related debt, they encourage private investors to commit funds to projects that might otherwise be deemed too risky.
InfraCredit, established in 2017, is backed by the Nigerian Sovereign Investment Authority and international partners including GuarantCo and InfraCo Africa. Its guaranteed portfolio stood at 278.8 billion naira (around $115 million) as of June 2025. The company has mobilized support from development partners, including a $25 million contingent capital injection from GuarantCo in 2017 and a $27 million equity investment from InfraCo Africa in 2020.
Ethiopia, which inaugurated its first securities exchange this year, faces a significant infrastructure financing gap in energy, transport, and housing. A guarantee mechanism could attract local pension funds, insurers, and foreign investors who are often cautious about long-term lending in emerging markets.
