The International Finance Corporation (IFC), African Development Bank (AfDB) and Nordic Development Fund (NDF), together, have invested a sum of $87 million towards building a climate-resilient Africa.
This investment was made into the AfricaGoGreen Fund (AGGF) – designed to pump funds into projects in Africa that reduce greenhouse gas emissions and is the second of its kind, indicated AGGF.
Breaking down of the total sum $87 million among the donors, IFC offered $17 million in equity and $30 million in debt to the fund, totaling $47 million from IFC. The corporation derived its equity from the IDA20 Private Sector Window Blended Finance Facility. The $30 million provision for debt was to aid AGGF with long-term capital to complete the second close fundraised.
“IFC is partnering with AfricaGoGreen because its innovative energy efficiency-focus is making critical capital available to businesses that are supporting the region’s energy transformation while also expanding access to electricity, green building, and e-mobility solutions.”
Henrik Elschner Pedersen, IFC Regional Industry Director in Africa for Manufacturing, Agribusiness, and Services
Independently, the AfDB, NDF and Sustainable Energy Fund (SEF) committed $10 million equity in AGGF. An additional $10 million was committed in debt by Calvert Impact Capital (CIC). Altogether, the amounts invested by IFC, AfDB, NDF, SEF and CIC constituted $87 million.
The funding provided will enable AGGF finance some of its projects including purchasing high-efficiency appliances and industrial equipment, retrofitting existing buildings, as well as new ones and installing rooftop solar and battery storage for residential, commercial and industrial consumers.
Dr. Daniel Schroth, Director of the Renewable Energy and Energy Efficiency Department, in his speech expressed delight to have collaborated for such a good cause and hopes to see more investors contributing their quota.
“With great pride, the African Development Bank and the Sustainable Energy Fund for Africa united other investors with the same ambition to build a more climate-resilient Africa and support the decarbonization of African countries.
“We look forward to seeing other like-minded development institutions and commercial investors join us in fighting the detrimental impacts of climate change on the continent.”
Dr. Schroth
Increasing access to clean and affordable energy in Africa is crucial for achieving the SDGs and enhancing climate resilience, indicated Henrik Franklin, Director for Portfolio Origination and Management, Nordic Development Fund.
“AGGF is a trailblazing initiative to promote energy efficiency, not only through financing, but also by strengthening the enabling environment through capacity-building and developing regulations. NDF is a proud early-stage and catalytic investor in AGGF and looks forward to joining forces with AfDB, KfW, IFC, SEFA, Lion’s Head and other partners to deliver climate action.”
Franklin
Subsequently, Clemens Calice, CEO of LHGP expressed confidence AGGF transforming the climate in Africa and felt honored to be part of the change.
“With AGGF we are breaking new ground in supporting the African climate transition. The urgency of combatting global warming forces all of us to leave no stone unturned to reduce C02 emissions.
“This is precisely what AGGF has been set up to do. Having such a strong group of investors shows broad alignment on the objectives of AGGF. We are proud to be given the opportunity to meet the tasks and challenges ahead of us.”
Calice
Background of AGGF
In early 2021, on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ), launched by Kreditanstalt für Wiederaufbau (KfW), and managed by LHGP Asset Management, AGGF is the first structured debt fund in Africa focused on energy efficiency solutions.
The fund targets reaching between $230 million and $250 million at final close. With the current fundraising round, total funding stands at $138 million, demonstrating that the fund is getting traction to reach its full scale.
AGGF is accompanied by a technical assistance facility of $3.3 million provided by KfW on behalf of BMZ, which supports project development and market studies, and provides transaction advisory and capacity building to stakeholders.
Fully operational since 2021, AGGF has provided financing to AktivCo, a telecom tower distributed generation energy services company, to develop clean energy solutions for powering telecommunication towers in Burkina Faso, Cameroon, Chad, Côte d’Ivoire and Niger, and to BBOXX, a pay-as-you-go solar-powered solutions provider, to accelerate access to clean cooking solutions for millions of Africans.
AGGF has also more recently closed the Solarise transaction investing in energy efficient appliances in Kenya, South Africa and Mauritius, and upsized both the AktivCo and BBOXX transactions.
Johannes Scholl, Head of Division at KfW, welcomed the new investors to the AfricaGoGreen Fund – which was initiated with seed capital from the German Government, with excitement.
“We hope that more like-minded investors will follow. This successful second fundraising demonstrates that the fund is on track to play a crucial part in the just energy transition in Africa.”
Scholl
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