AfDB secures $20m investment agreement on COVID-19 recovery platform
The African Development Bank (AfDB) has attained a close on financing agreements for a $20 million concessional investment from the Sustainable Energy Fund for Africa (SEFA) for the COVID-19 Off-Grid Recovery Platform (CRP).
The CRP is a 5-year, $50 million blended finance platform designed to unlock private capital for energy access (EA) companies to mitigate the negative impacts of the COVID-19 pandemic while advancing access to clean electricity and ensuring a green economic recovery.
AfDB via a statement released on Saturday said the concessional loan agreements were signed with fund managers Lion’s Head Global Partners, Triple Jump, and Social Investment Managers and Advisors.
This development comes following approval by the board of directors of the bank in December 2020, for the $20 million concessional investment from SEFA, to establish the platform.
The three fund managers are the selected partners with specialized investment funds lending to the energy access sector.
Triple Jump manages the Energy Entrepreneurs Growth Fund (EEGF); Lion’s Head Global Partners manages the Facility for Energy Inclusion Off-Grid Energy Access Fund (FEI OGEF); and Social Investment Managers and Advisors (SIMA) manages the SIMA Off-Grid Solar and Financial Access Fund.
Reacting to the development, Harry Guinness, managing director of OGEF, part of the wider FEI, expressed gratitude for the support from the AfDB.
“Lion’s Head is immensely grateful for the support from the AfDB, in particular the SEFA team and funders, for developing this innovative and catalytic co-investment instrument,” he said.
“African markets have been disproportionately affected by COVID-19 due to lack of infrastructure, macro vulnerabilities, especially in terms of currency and credit shocks and increasing global protectionism.”
Also, Jan-Henrik Kuhlmann, head of Sustainable Energy, Triple Jump, said: “The COVID-19 Off-Grid Recovery Platform comes at a critical moment for early-stage energy access companies affected by COVID-19 and allows the Energy Entrepreneurs Growth Fund to continue releasing flexible capital into the sector at a time when risk capital is increasingly scarce.”
In his remarks, Asad Mahmood, chief executive officer and managing partner of SIMA, said the AfDB’s relief efforts were market-driven and flexible, and would help to leverage existing funds to ultimately assist energy distribution business in Africa.
Meanwhile, Joao Duarte Cunha, division manager for Renewable Energy, AfDB, said the pandemic has jeopardised the progress achieved over the last decade in electrification, through off-grid technologies across Africa.
“We are pleased that this initiative will increase resilience of the sector and look forward to working closely with our partners to safeguard energy access services and enable continued business expansion through and beyond the crisis,” Cunha said.
The AfDB said, through the platform, it is “committed to building a sustainable and more climate-resilient future by catalysing private investment in low carbon infrastructure as a means to create green jobs, diversify national energy sectors, accelerate green growth, and increase the climate resilience of rural communities”.
SEFA is an African Development Bank-managed special fund providing catalytic finance for renewable energy.
It was established in 2011 in partnership with the Government of Denmark and has since received contributions from the governments of the US, UK, Italy, Norway, Spain, Sweden, the Nordic Development Fund and Germany.
SEFA seeks to contribute to universal access to affordable, reliable, sustainable, and modern energy services for all in Africa, in line with the New Deal on Energy for Africa and Sustainable Development Goal 7.