On December 5, 2023, during the Finance Day at COP28 in Dubai, the Right Honourable Andrew Mitchell MP, UK Minister of State for Development and Africa, celebrated the launch of the Dhamana Guarantee Company Limited (Dhamana). This innovative initiative, backed by InfraCo Africa and Cardano Development, aims to unlock local capital for sustainable infrastructure projects in East Africa, specifically focusing on climate change mitigation and adaptation.
Dhamana, established in Nairobi, Kenya, is designed to facilitate investment in climate-resilient infrastructure by addressing a significant gap in local capital markets. With the support of the African Development Bank (AfDB) and CPF Financial Services, Dhamana seeks to leverage the substantial pension and insurance funds within Kenya, allowing for local currency financing that reduces reliance on US dollar-denominated loans.
Mitchell emphasized the importance of this initiative, stating…
“The UK is committed to supporting countries that want to draw on their own resources to tackle climate change.”
He highlighted how Dhamana will enable Kenyan pension funds to invest directly in sustainable infrastructure, demonstrating a model for African resources to fund African development.
Dhamana CEO Christopher Olobo remarked on the urgency of climate action, noting that the company is positioned to strengthen local capital markets and connect bankable projects with untapped domestic institutional capital. This strategic alignment will not only enhance funding for critical infrastructure but also contribute to achieving the United Nations Sustainable Development Goals (SDGs).
The initiative reflects a collaborative effort among stakeholders including InfraCo Africa, PIDG, and FSD Africa, all committed to strengthening local currency bond markets and enhancing credit facilities to mobilize climate finance. As PIDG CEO Philippe Valahu stated…
“Dhamana’s local currency guarantees will support the growth of local capital markets, unlocking domestic capital for climate-resilient infrastructure.”
The Dhamana Guarantee Company is set to play a crucial role in transforming the landscape of infrastructure financing in East Africa, paving the way for sustainable economic development and climate resilience. With the backing of key stakeholders and innovative funding solutions, Dhamana is poised to make a lasting impact in the region.
