The fund, which is Africa’s first structured debt vehicle focused on energy efficiency solutions, invests into early-stage businesses that are working on boosting climate resilience on the continent.
British International Investment (BII), the UK’s development finance institution and impact investor, has made a $16m (€15m) investment in the Africa Go Green Fund (AGGF), which is managed by Cygnum Capital Asset Management.
Home to nine out of the 10 of the world’s poorest countries, Africa is highly vulnerable to climate change. In fact, it needs $2.5trn of climate finance between 2020 and 2030, the BII said, citing a report by the Climate Policy Initiative.
The Africa Go Green Fund, which has raised more than $166m so far, is trying to help bridge that financing gap by investing in companies that are developing energy efficiency solutions in sectors that are often overlooked by traditional lenders. These include energy efficiency, green buildings, electric vehicles and clean cooking.
“Expanding the universe of bankable climate projects across Africa is a priority for BII to achieve our goal to invest at least 30% of total commitment in climate finance,” said Chris Chijiutomi, managing director and head of Africa at BII.
‘Gaining momentum’
Since it became operational three years ago, the Africa Go Green Fund has backed a number of pan-African clean energy platforms, while it has also invested in AktivCo, which is expanding clean energy solutions for telecoms infrastructure in Burkina Faso, Cameroon, Chad, Côte d’Ivoire, Nigeria and Senegal.
The fund further invested in M-Kopa, an asset financing platform that helps underbanked customers in Africa gain access to essential products such as smartphones and financial services, as well as Ampersand, which is scaling electric motorbikes and charging infrastructure across Rwanda and Kenya.
The fund’s approach “allows our capital to reach more nascent climate sub-sectors such as clean cooking and waste-to-energy, which are equally important to energy transition but face the challenge of getting finance to support their growth”, Chijiutomi said.
Energy efficiency as an investment strategy is “gaining momentum”, said Clemens Calice, chief executive officer of Cygnum Capital, an investment bank and asset manager operating in frontier and emerging markets.
The Africa Go Green Fund is “testimony to the belief that energy transition in Africa requires the collaborative effort of investors that want to support viable and innovative businesses, whilst also contributing to a low carbon economy across all of Africa”, Calice said.
BII’s commitment to the Africa Go Green Fund for climate-friendly projects is “yet another example of the UK’s development finance institution championing innovation to drive more private finance towards tackling the climate crisis”, said Anneliese Dodds, the UK Minister for Development.
