Pangaea and PIDG Plan Zambia-Anchored Infrastructure Credit Facility

Pangaea Securities and the Private Infrastructure Development Group have signed a letter of intent to develop a local-currency credit enhancement facility for infrastructure projects across the Southern African Development Community. Zambia is proposed as the anchor market for the initiative.

The facility would provide local-currency credit guarantees for infrastructure bonds and loans. This structure is designed to enable pension funds, insurers and banks in Zambia to invest in infrastructure projects at greater scale than is currently possible.

According to a joint announcement on August 24, the proposed facility aims to raise the credit quality of qualifying projects to investment grade on Zambia’s national scale. It is intended to mobilise domestic institutional savings for projects in energy, transport, agriculture and digital infrastructure.

Zambia’s annual infrastructure financing gap in these priority sectors is estimated at about one billion US dollars. Closing this gap through local capital is seen as critical for long-term development and reduced dependence on foreign-currency funding.

The initiative remains at an early stage. Pangaea said the proposed structure draws on successful credit enhancement facilities developed by PIDG in other emerging markets, including InfraCredit in Nigeria, InfraZamin in Pakistan and Dhamana in Kenya.

Under the planned model, Zambia would serve as the initial market before the facility is expanded to other SADC countries, excluding South Africa. This phased approach is intended to allow the structure to be tested and refined before regional rollout.

Ceaser Siwale, chief executive of Pangaea, said the facility would seek to connect domestic institutional capital with viable infrastructure projects. Denesh Srishanker, head of credit enhancement facilities at PIDG, noted that local-currency guarantees can help attract more domestic investment into the sector.

Pangaea Holdings, through its investment banking arm Pangaea Securities, and PIDG have not yet disclosed the proposed size of the facility, its capital structure or a detailed timeline for establishment.

The initiative forms part of a growing trend in emerging markets to use credit enhancement mechanisms. These tools help channel domestic savings into infrastructure while reducing reliance on external foreign-currency financing.

If successfully developed, the Zambia-anchored facility could become an important model for mobilising local capital across Southern Africa and supporting critical infrastructure development in the region.

Source: FSX Business News