African banks bet on debt guarantees to lure private capital
With aid budgets shrinking and development finance under pressure, African governments and development banks are increasingly turning to debt guarantees to attract private capital into infrastructure projects.
The push for guarantees comes as development aid from Western nations declines and African institutions seek to mobilise the continent’s own savings, estimated at $4 trillion, to fill an annual infrastructure funding gap of $100 billion, potentially reshaping how the continent finances everything from railways to ports.
Fehintola said African multilateral development banks are focused on guarantees that can raise a project’s credit rating to investment grade, the level needed to attract the biggest investors, including African pension and insurance funds.
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