DFID, Karandaaz bring credit enhancement facility to Pakistan for infrastructure projects

ISLAMABAD: Karandaaz Pakistan and UK’s Department for International Development (DFID) on Tuesday introduced the Pakistan Credit Enhancement Facility (PCEF) to public and private sector stakeholders.

According to the Karandaaz Pakistan the purpose of the local currency credit enhancement facility is to address and overcome existing constraints in the supply of local financing to infrastructure projects and to help the development of the local financial market.

Patricia Seex, Head of Economic Growth, DFID Pakistan while speaking at the conference said,

“I am delighted that DFID has supported the development of this innovative and important facility to help infrastructure developers access the finance they need at a price they can afford. This facility will contribute to addressing both Pakistan’s infrastructure gaps, particularly for smaller projects and social infrastructure, and to the development of the financial sector which is underserving all but largest businesses.”

LasithaPerera, CEO of GuarantCo said that it is expected that the Pakistan Credit Enhancement Facility (PCEF) will enhance Pakistan’s capacity to attract and unlock latent pools of capital from pensions and insurance for infrastructure investment into key sectors of the country’s economy. GuarantCo has been active in Pakistan since 2013 as an international credit enhancement provider and is delighted to be part of this constructive partnership to establish a Pakistan-based credit enhancement facility as we have successfully done in Nigeria. In Pakistan, this facility will provide local currency guarantees for infrastructure projects making them bankable for commercial lending. PCEF is expected to support smaller scale power projects (including renewables); logistics including storage, warehouses, industrial parks, pipelines, smaller port developments, etc.; secondary roads with some demand risk; hospitals; education; housing; waste water and water including desalination; local transportation; and inputs to infrastructure projects.”

Ali Sarfraz, CEO of Karandaaz said “We are happy to have partnered with this initiative. The Credit Enhancement Facility will help mobilise private investment in infrastructure, in order to increase service provision for the poor, boost economic growth and alleviate poverty. Similar facilities have been established in some of the world’s poorest countries. This first-of-its-kind facility in Pakistan will invigorate the debt market to fuel infrastructure development in the country in the long-term while working through local commercial banks & NBFIs. There is an existing strong need for credit enhanced debt instruments and given the eligibility criteria of the types of transactions that can benefit from this, there is a strong identifiable deal flow in Pakistan.”

Published in Daily Times, September 12th 2018.

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