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Nigeria, Tower Aluminium Roofing

Using innovative financing to support the delivery of affordable aluminium roofing

Nigeria Tower Aluminium

Context
The Government of Nigeria has highlighted access to affordable housing as a key element of its economic development plan. Currently, the majority of Nigeria’s population do not own their homes and are unable to improve them to meet their housing needs. Access to affordable materials to build and upgrade low-cost housing, particularly in fast-growing urban areas, will be key to delivering the government’s target of 50% home ownership by 2020.

Project
Tower Aluminium Group Ltd, West Africa’s largest producer of aluminium products, experienced difficulties during the 2008 global financial crisis when the Nigerian Naira was devalued against the US dollar by 25%. In response, Tower sought to refinance its dollar-denominated debt using Nigeria’s debt capital markets. Having struggled to access key corporate bond investors in Nigeria’s pensions sector, Tower approached GuarantCo for support. GuarantCo’s local AAA credit rating and NGN 2.2bn (US$14.2m) local currency  guarantee enabled Tower to structure and issue a 7 year, Naira-denominated credit-enhanced corporate bond, the first of its kind in Nigeria.

Impact
Aluminium roofing costs less than traditional steel roofing and lasts five times longer. At the end of its life, aluminium roofing can be recycled, reducing environmental impacts and providing homeowners with income to re-roof their homes. The Tower project is expected to benefit 690,000 people by improving their access to affordable roofing. In developing the project, GuarantCo overcame a number of procedural and regulatory challenges to deliver an effective structure for the bond transaction. This transaction established a working relationship with the Nigerian Securities and Exchange Commission (SEC), the main regulatory institution of the Nigerian Capital Markets, which has led to GuarantCo’s support for a new infrastructure credit enhancement company, InfraCredit.