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The Cityriz guarantee: promoting sustainable investments in Africa
In conjunction with the European Union, AFD has developed this dedicated guarantee to encourage banks to take on the risk of supporting local authorities and allowing cities of all sizes to take out loans under favorable financial conditions, all while emphasizing the climate transition in financing their investments.
Objectives
Cityriz is a key tool in advancing the territorial and ecological transition of African cities, combining bank guarantees and technical assistance. Through the Cityriz guarantee, AFD Group aims to help create or strengthen domestic banking markets for local public debt, giving African cities of all sizes access to financing in their local currency, with long maturities that meet their needs.
Cityriz makes lending to cities, especially intermediary cities, a less risky option for private and public African banks.
In February 2022, the European Commission and AFD Group signed a €30 million guarantee agreement for Cityriz, AFD Group’s guarantee program for African banks looking to finance sustainable urban infrastructure.
Am I eligible?
The Cityriz guarantee is primarily designed for African public and private financial institutions interested in developing their lending operations in the local public sector (local authorities and municipal operators) and in contributing to the financing of sustainable infrastructure.
By contacting their local AFD field office, commercial and development banks looking to lend to local authorities can benefit from Cityriz guarantees and offer more attractive interest rates and longer loan maturities to cities and municipal operators with higher risk profiles.
To find out about our solutions tailored to your needs
Benefits
The Cityriz guarantee is offered on a “loan-by-loan”, first request, unconditional, and irrevocable basis. It is valid for loans awarded by banks to local authorities for a maximum period of 15 years, in hard or local currency. The guarantee applies to a maximum of 50% of the total amount of the loan, and up to a maximum guaranteed amount equivalent to €20 million.
To promote investment in at-risk communities, the Cityriz guarantee has been priced at a more attractive rate for intermediary cities.
40 million euros maximum per guaranteed loan
with 50% of losses covered by the Cityriz guarantee.
A total of €2 million in technical assistance is made available to help banks and local authorities prepare their projects.
- A first-demand, unconditional and irrevocable guarantee
- A “loan-by-loan” guarantee
- A framework agreement with AFD
- A 50% loss coverage
- A period of inclusion of the guarantee until May 2026
- Loans in local or hard currency
- A maximum duration of the guarantee: 15 years
- A maximum amount of individual exposure for guaranteed loans equivalent to €40M
The Cityriz guarantee comes with technical assistance financed by the European Union. The purpose of the technical assistance is to support the banking sector and local authorities by providing consultancy, capacity-building, and project-preparation services, particularly for credit risk analysis and environmental and social risk management procedures.
Cityriz technical assistance is designed to:
- improve the ability of banks to assess the credit risk of the local public sector,
- help local authorities prepare the technical aspects of their financing projects,
- strengthen banks’ and local authorities’ procedures for analyzing the environmental, social, and financial risks of resilient infrastructure projects,
- build the capacities of banks and local authorities to address climate issues.
