FSD Invests $13M in ARM-Harith Fund to Draw Nigerian Pension Capital
TLDR
- FSD Africa Investments (FSDAi) has committed £10 million ($13 million) to the ARM-Harith Climate and Transition Infrastructure Fund
- The FSDAi facility will enable Nigerian pension funds to invest in infrastructure with the option of early liquidity
- Notably, 75% of the funding will be provided in local currency to reduce exposure to foreign exchange risks, a structure being deployed for the first time
FSD Africa Investments (FSDAi), the UK-backed development finance investor, has committed £10 million ($13 million) to the ARM-Harith Climate and Transition Infrastructure Fund (ACT Fund), a move aimed at mobilising local institutional capital for climate-related infrastructure in Nigeria.
The ACT Fund is managed by ARM-Harith Infrastructure Investments, a private equity firm focused on sustainable infrastructure development across Africa. The FSDAi facility will enable Nigerian pension funds to invest in infrastructure with the option of early liquidity, addressing a key obstacle that has previously limited their participation in the asset class.
Notably, 75% of the funding will be provided in local currency to reduce exposure to foreign exchange risks, a structure being deployed for the first time in Nigeria's infrastructure equity space. The capital will support investments in climate-resilient sectors, including clean energy, transport, water, and digital infrastructure, and aligns with FSDAi’s broader goal of accelerating green economic transformation in Africa.
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Key Takeaways
Nigeria faces an infrastructure financing gap estimated at $100 billion annually, with low levels of domestic institutional capital participation. Pension funds in Nigeria manage over ₦18 trillion ($11.2 billion) in assets, but only a small fraction is allocated to infrastructure. FSDAi’s investment introduces a liquidity structure designed to overcome regulatory and cash flow concerns, allowing pension managers to invest in long-duration projects with more confidence. The local currency facility also helps align returns with liabilities, avoiding the risks of currency mismatch. This approach may set a precedent for other markets facing similar barriers. If successful, the model could unlock greater flows of local capital into infrastructure, reduce reliance on hard currency funding, and increase private sector participation in Nigeria’s net-zero transition.
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