The Board of Directors for the African Development Bank (AfDB) has approved a US$5 million investment in the SPARK+Africa Fund to provide clean cooking solutions to more than two million households in Africa.
Following the commitment of the bank towards this fund, the European Commission has also offered to contribute an additional €10 million. The Bank’s investment, which will be sourced from its Sustainable Energy Fund for Africa (SEFA), is expected to encourage the participation of other interested investors.
As the main investor, the Bank seeks to channel first-loss equity (an environmentally and socially driven credit enhancement provided by an investor who agrees to bear first-losses) from SEFA and the European Commission thematic blending facility.
In addition to providing environmentally friendly cooking technologies, the investment is expected to reduce carbon emissions by 15.9 metric tonnes of CO2 equivalent, by reducing emissions from the use of inefficient stoves, firewood and charcoal.
The Bank’s investment into these clean solutions while contributing to reducing risks to the exposure of smoke emissions from cooking will also reduce time spent on collecting firewood, a burden borne mostly by women.
“By investing to rollout clean cooking solutions to millions of households, the Bank is also contributing to women’s empowerment, employment creation and reduced deforestation associated with charcoal production,” says Dr. Kevin Kariuki, the Bank’s Vice President for Power, Energy, Climate change and Green growth.
“Positive health impacts from the reduction of household in-door air pollution also contributes to resilience toward diseases attacking respiratory systems such as COVID-19.”
The Spark + Fund has been designed in such a way that it provides quality solutions to low-income communities through the provision of suitable investment instruments across the value chain.
SPARK + Africa is a pioneering impact investment fund launched by Enabling Qapital and the clean cooking Alliance to channel debt and equity financing to businesses involved throughout clean cooking solutions value chaining from manufacturing, distribution and financing of clean cooking solutions across Sub-Saharan Africa. The Fund aims at raising between US$ 50 million to US$70 million.
Raising capital for enhancing access to clean cooking solutions is a very daunting task in Africa, at least in part because of investors’ fear of risking loss of investment in such a high risk venture as this, and the potentially low returns that investors are likely to gain.
The SPARK + Africa is rising to this challenge to provide direct response and also serve as AfDBs key partner in response to the clean cooking challenge. As earlier noted, the disbursement of the bank’s first-loss credit will address the financing gap to a large extent and to bring on board the participation of other interested financiers.
