Across East Africa, the call for institutional investors to support infrastructure has never been louder. At Dhamana, we are receiving increasing interest from Kenyan pension funds and asset managers eager to invest in sectors like transportation (toll roads & airports), utilities (energy & water), and affordable housing. To address the most common questions we’ve been asked, here’s Dhamana’s perspective on investing in infrastructure debt and how institutional investors can participate.
1. What is Infrastructure Debt?
Infrastructure debt refers to long-term financing for essential infrastructure projects that generate stable cash flows. Broadly, it falls into the following categories:
Economic Infrastructure – Toll roads, airports, and ports that drive economic growth. Renewable Energy – Geothermal, solar, wind, and electric vehicle charging networks.
Utilities – Transmission lines and water distribution infrastructure.
Social Infrastructure – Affordable housing, hospitals, and schools.
Digital Infrastructure – Data centers, telecom towers, and fiber optic networks.
The key to assessing infrastructure investments is ensuring that they meet critical economic or social needs and that the assets will remain essential for decades to come.
2. Who typically Invests in Infrastructure Debt?
Historically, commercial banks were the dominant lenders in infrastructure, but following the global financial crisis, their commitments significantly declined due to Basel III capital and liquidity regulations. As banks withdrew, institutional investors in Europe and the U.S. stepped in to fill the gap. In East Africa, while development finance institutions (DFIs) continue to provide infrastructure debt, most of it is in hard currency, exposing borrowers to foreign exchange risks.
3. Why should Pension Funds invest in Infrastructure?
For institutional investors like pension funds and insurance companies, infrastructure offers long-term, stable cash flows with additional benefits, including:
Essential assets – Defensive investments that remain in demand across economic cycles.
High barriers to entry – Infrastructure projects are typically monopolistic with strong pricing power. Priority cash flows – Infrastructure debt is often secured and holds a senior position in repayment structures.
Built-in protections – Covenants ensure investor rights during restructurings or renegotiations.
Premium yields – Private infrastructure debt offers higher returns than traditional bonds due to its complex structuring and illiquidity premium.
Portfolio diversification – Infrastructure debt provides exposure beyond traditional fixed-income assets like government bonds.
4. What’s driving the need for investment into this asset class?
Several factors are creating an urgent need for investment in this asset class:
Africa’s $100 billion annual infrastructure gap (World Bank estimate).
A growing population demanding better roads, energy, and social services.
The global push for renewable energy and clean infrastructure.
Expanding digital economies requiring stronger telecom and IT infrastructure.
Grid extensions to serve off-grid communities in rural areas.
5. How can Institutional Investors access this market?
Despite holding significant local currency liquidity, institutional investors have historically had limited access to infrastructure financing due to perceived risks and lack of direct origination opportunities. To successfully invest in infrastructure, investors should build relationships with:
Project sponsors – Developers leading infrastructure projects.
Commercial banks – Active lenders in infrastructure financing.
Financial advisors – Arranging capital for large-scale projects.
Specialist institutions like Dhamana – Experts in credit enhancement and risk mitigation, with proprietary deal origination strategies.
6. Why should Investors partner with Dhamana?
Investors working with Dhamana benefit from our AA-rated guarantees, ensuring that their investments are fully protected.
“If the issuer of a bond or the borrower of a loan does not pay on time the full amount of scheduled principal and interest guaranteed by Dhamana, the debt provider will receive prompt payment from Dhamana irrespective of any conditions”
Additional Benefits of Partnering with Dhamana:
Expert Credit Analysis & Underwriting – Our capital is at risk, so we conduct rigorous due diligence before backing a transaction.
Regulatory Acceptance – Dhamana’s guarantees allow investors to access infrastructure assets that regulators might otherwise restrict (e.g., projects with construction risk or unrated securities).
Proactive Monitoring & Risk Detection – We closely track transactions to detect and address potential issues before they escalate.
Enhanced Market Liquidity – By working with exchanges like the Nairobi Securities Exchange (NSE), we create highly rated, tradeable infrastructure investment products.
7. Does Dhamana have the capacity to support high value transactions?
Absolutely. Dhamana underwrites, holds, and syndicates infrastructure investments using a structured approach:
For transactions below $20 million – Dhamana can hold the entire position.
For transactions above $20 million – We syndicate with DFI partners and private credit insurers (including Lloyd’s of London).
Project Finance Structuring – We structure infrastructure financing as off-balance-sheet, cash flow-backed investments, ensuring projects don’t contribute to government debt ceilings.
With Africa’s infrastructure needs growing rapidly, institutional investors have a critical role to play in financing the future. Through guarantees, risk mitigation, and expert structuring, Dhamana is making infrastructure debt accessible, secure, and rewarding for local investors.
Ready to explore infrastructure investment opportunities? Let’s start the conversation. Contact us.
