The Board of Directors of the African Development Bank Group has given approval for a $10 million equity investment in Dhamana Guarantee Company Limited. This investment aims to support the utilization of capital markets as an alternative source for long-term funding in infrastructure and the real sector within East Africa.
Dhamana will be based in Kenya as a limited liability company with a regional mandate to provide credit guarantees on debt capital market instruments. The funds from the African Development Bank Group will enable Dhamana to issue guarantees for debt instruments, particularly local currency bonds. The goal is to enhance the credit rating of these instruments, attracting investment from pension funds, insurance companies, and sovereign wealth funds to finance infrastructure and the real sector in East Africa.
The African Development Bank, along with partners such as InfraCo Africa, Financial Sector Deepening Africa, local institutional investors, and others, will support the operationalization of Dhamana. The company is poised to facilitate financing access for key sectors like transport, water, renewable energy, and waste management, with a commitment to catalyzing financing for green and sustainable projects in East Africa.
Nnenna Nwabufo, African Development Bank Director General for the East Africa region, expressed satisfaction in supporting innovative solutions like Dhamana to unlock long-term local currency funding for the real sector.
Philippe Valahu, CEO of PIDG, emphasized the significance of the African Development Bank’s involvement in Dhamana, highlighting the potential to mobilize untapped pools of domestic institutional capital for East Africa’s real economy.
Ahmed Attout, African Development Bank Acting Director for Financial Sector Development, emphasized the catalytic role of guarantee companies in leveraging opportunities for real sector and infrastructure financing in local currency and local corporate debt capital markets in the East Africa region.
This investment aligns with the African Development Bank’s strategic objectives, including stimulating local currency debt market financing, promoting economic diversification, and fostering regional integration through improved infrastructure development. The collaboration with Dhamana is part of broader efforts to operationalize credit enhancement companies in selected Regional Member Countries in partnership with development partners like PIDG.
Source: Africa Development Bank