Annual Report 2015




Providing local currency guarantees for infrastructure financing in lower-income countries in Africa and Asia and providing dollar-denominated guarantees in fragile and conflict-affected countries

Projects that reached Financial Close in 2015

Pakistan ByCo Oil Pakistan Limited (BOPL)

India Calcom Cement 2 India Limited (Calcom)

Cameroon Noha Nyamedjo & Transmar S.A. (NNT)

Ghana Quantum Terminals Limited II (QTL)

South Africa South Africa Development Finance Company III

Zambia Ulendo Road Infrastructure Note Programme


Projects that became fully operational in 2015

Ghana Quantum Terminals Limited

Thailand Thai Biogas Energy Company

Achievements in 2015

In 2015, GuarantCo achieved financial close on six projects, with a total exposure of $107.5m. The projects were delivered across the energy, construction and transport sectors.

In Zambia, GuarantCo provided a guarantee to Ulendo RINP, a special purpose company set up to finance local contractors working on Government of Zambia priority road repair programmes. The pioneering deal, in Zambian Kwacha, has contributed towards building local capital markets.

In Cameroon, GuarantCo helped support financing for a cocoa processing project, one of the first project financings it has achieved in Central Africa.



GuarantCo is highly rated internationally. In 2015, both Fitch and Moody’s renewed their existing ratings, Fitch at AA- and Moody’s at A1, with Bloomfield also renewing its AAA rating.

Importantly, GuarantCo achieved an AAA rating from the Pakistan Credit Rating Agency (PACRA), making it the first international DFI operating in Pakistan to have a local credit rating. GuarantCo also received regulatory approval from the State Bank of Pakistan. In another first, GuarantCo received regulatory approval from the Capital Markets regulator of West Africa, giving it a full licence to issue guarantees in the region.


Other notable highlights

GuarantCo has strengthened its presence in east and southern Africa, opening an office in Nairobi, Kenya. This presence will accelerate GuarantCo’s activities in the region and it is hoped that other PIDG facilities will co-locate in an expanded office.

In Nigeria, GuarantCo is in discussions with the Nigerian Sovereign Investment Authority (NSIA), the country’s sovereign wealth fund, to initiate the development of a dedicated Nigerian infrastructure currency guarantee organisation. It is anticipated that this initiative will provide a model for replication in other countries.


2016 and beyond

The practice of providing debt finance in hard currencies, while revenues are in local currency, presents a key obstacle in closing the infrastructure gap; exposing local borrowers to significant currency risk or, as is often the case in the electricity sector, passing that risk down to the consumer, who is least able to absorb it. In 2016 and beyond, GuarantCo will work closely with TAF to provide advice to governments in a small group of PIDG target countries, demonstrating the benefits of ‘de-dollarising’ infrastructure projects. The work will particularly focus on the power sector where infrastructure continues to be financed almost exclusively in hard currencies, even for smaller renewables projects that could be readily financed by the local markets in the target countries.

Why are ratings and regulatory approvals important?

Formal ratings and regulatory approvals make it easier for banks based in PIDG’s target countries to use GuarantCo’s guarantees.

“In practical terms, Central Bank approval means that local banks can utilise a GuarantCo guarantee more efficiently. They don’t have to put so much capital into a transaction when they lend. In this way it helps to bring down the cost of finance, increases the finance available and enables longer tenors.”

Chris Vermont GuarantCo

Zambia Ulendo Road Infrastructure Note Programme (RINP)

Providing Zambian road contractors with the liquidity they need to complete government contracts


The Government of Zambia has embarked upon an ambitious road improvement programme designed to shift Zambia from a ‘landlocked to a land-linked country. Better road infrastructure will increase the country’s connectivity and accessibility, cut transport costs and times and reduce poverty by creating jobs for Zambians. Investment in the sector will support economic growth and help diversify the Zambian economy from its heavy dependency on copper exports.

In the past, the road-transport sector was dominated by foreign contractors who had the capital and technical capacity to execute large contracts. As a means of empowering Zambian contractors, the government introduced a policy requiring at least 20% local component with every road contract. A further policy, issued in 2015, designated 30% of local tenders for female contractors. These initiatives have driven local contractor participation in the industry, but such small and medium enterprise (SME) contractors face challenges in accessing sufficient financing, particularly as there can be delays in the timing of any payments due from governmental bodies.



The Focus Investment Group (FIG) has been involved in a number of financing initiatives to support local road contractors. Through its Focus Financial Services subsidiary, it was already involved in invoice discounting but realised that it was unable to service the demand without significantly scaling its own funding resources. Accordingly, FIG established Ulendo RINP Limited (Ulendo), to raise funds from local capital markets through a listed Kwacha medium-term note programme and be available to international and local investors, including the public. Interim payment certificates (IPCs) are issued by the National Road Fund Agency against the satisfactory completion of set construction targets, negating any performance risk associated with the contractor, but payment under the IPCs can be delayed, which can strain the financial resources of the local contractors. The funds obtained by Ulendo would be used to purchase IPCs from local contractors at a discount that would provide contractors with the certainty of timely working capital to continue to operate. Ulendo would then take on the timing and payment risk under the IPC but potentially secure the full value to cover its operating costs and debt service, to pay interest to investors.

FIG approached GuarantCo to provide a liquidity guarantee covering interest payments to investors in the note programme and to provide certainty of payment. Should there be non-payment (rather than just delayed payment) against the IPCs, then this is insured by the Africa Trade Insurance Agency (ATI). Collectively, this has delivered the necessary credit enhancement to ensure the programme’s success.



The project is an innovative capital markets transaction for Africa, and certainly for Zambia. It is anticipated that GuarantCo’s involvement in strengthening local capital markets to fund the road sector will, once proven, have a demonstration effect for other markets. With support from TAF and working with FIG, GuarantCo intends to increase investor participation in the next tranche of notes through ongoing investor education around the initiative.

Empowering local contractors to participate in the government’s ambitious road building programme will not only facilitate swifter progress in improving Zambia’s road infrastructure, it will help local road contractors to complete government contracts, securing employment and helping to reduce poverty levels in Zambia.

Cameroon Noha Nyamedjo & Transmar (NNT) will double cocoa processing in-country

Cameroon is the world’s fourth largest cocoa producer. However, only 15% of its cocoa is processed onshore due to lack of processing infrastructure. NNT, a joint venture between a local cocoa entrepreneur and an international cocoa trader, will double local processing, creating jobs and additional export earnings.

NNT required debt finance to build, own and operate the 32,000 mtpa cocoa processing factory in Douala. Smallholder farmers will sell directly to the factory and hold a 2% share of the business. GuarantCo’s 50% partial credit guarantee of XAF 6.6bn enabled SCB Cameroon (a subsidiary of Attijari Wafa Bank of Morocco) to undertake its first project finance transaction in Cameroon. Using TAF grant funding, GuarantCo was also able to work with NNT and SCB Cameroon to help make the project bankable and set precedents which will build local capacity for future project financings in the region.