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Investors back Dhamana Guarantee Company's work to transform East Africa's financial landscape.
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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-to-day 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.
