InfraCredit, an AAA-rated infrastructure credit guarantee firm, has confirmed the credit enhancement of Hotspot Network Limited’s debt issue, under a co-financing agreement with the £10 million Climate Finance Blending Facility (Climate Facility). The Climate Facility is funded by the United Kingdom’s Foreign, Commonwealth and Development Office (FCDO), marking this as the second transaction under this Facility.
In a recent announcement, it was stated that Hotspot, a telecom infrastructure provider specializing in solar-powered rural telephony networks, will secure a 7-year fixed-rate debt issue in local currency. This will facilitate the construction, installation, and commissioning of 120 solar-driven rural telecom base stations in 22 Nigerian states as part of their latest project.
Operating in off-grid rural areas of Nigeria, Hotspot harnesses renewable energy and eco-friendly technology to provide telecommunication services. In this project, the company established a special purpose vehicle, Micropolitan Mobile Connectivity Limited. Its aim is to gather local currency financing from debt capital markets. The end goal is to construct, possess, and manage solar-powered mobile network base stations in chosen rural communities, in cooperation with Mobile Network Operators (MNOs) in Nigeria.
The Managing Director of Hotspot made the following remarks about the transaction: We are very excited at this milestone transaction. Hotspot Network Limited is connecting the unconnected in Sub-Saharan Africa by providing mobile network access for unserved and underserved rural communities. We have a unique opportunity to accelerate digital inclusion in growth markets and digital infrastructure as a key driver of sustainable growth and shared prosperity. The InfraCredit led blended financing facility provides a unique opportunity for accelerating digital inclusion In Nigeria and the greater sub region. We specially thank our development partners facilitated through InfraCredit, including USTDA, FSD Africa, KFW and FCDO for co-travelling with us on this digital inclusion journey to self-reliance.
Chinua Azubike, the CEO of InfraCredit, commented: At InfraCredit, we are all very excited about the uniqueness and impact of this transaction, enabling local currency finance that is designed to promote inclusive, sustainable infrastructure and foster innovation that would not have been possible without the smart use of catalytic capital from FCDO and our development partners. We believe that working with our development partners in leveraging private sector and domestic institutional investors to unlock climate-aligned inclusive digital infrastructure projects in off-grid unserved communities has the greatest potential to create most jobs, bridge the digital gender gap and lift more people out of poverty which aligns with our strategy to increase climate action and gender impact in our guarantee portfolio.
Sally Woolhouse, the Acting UK Deputy High Commissioner in Lagos, expressed: “The UK remains committed to increasing access to clean energy and digital connectivity in Nigeria, to drive sustainable and resilient growth, and support Nigeria in meeting its climate goals. We are very pleased that this innovative UK-funded blended finance facility, managed by InfraCredit, has supported the first local currency debt issue for solar powered rural telephony in Nigeria. Using a scalable approach, this UK-funded facility is mobilising domestic institutional investment into much needed climate aligned projects. By providing green and affordable financing for local developers, the Facility is creating access to digital infrastructure in unserved and underserved communities in Nigeria, for both households and businesses.”