Development finance institution (DFI) the African Development Bank (AfDB) and its Sustainable Energy Fund for Africa (SEFA) have approved a combined-equity investment of $20-million in the AfricaGoGreen Fund (AGGF) debt fund, which was established to promote private investments in energy-efficient technologies and business models, decarbonise African economies and accelerate the energy transition.

This is in addition to the $11.5-million equity contribution approved by DFI the Nordic Development Fund (NDF).

“This combined bank investment will lead to increased financing of emerging projects and businesses in the areas of industrial appliances, electric mobility and green buildings, which are key to the decarbonisation of African economies and to a just energy transition,” says AfDB power, energy, climate and green growth VP Dr Kevin Kariuki.

The NDF provides financing to climate change mitigation and adaptation activities within the nexus of climate change and development. It is also a donor to SEFA, thus reinforcing the close partnership to advance the transition to cleaner and greener solutions for the continent, while encouraging the participation of the private sector.

“Achieving the climate goals and universal access to clean and affordable energy will require vast investment in energy efficiency and, more broadly, in electrification and other sector-coupling trends. By targeting these emerging sectors in Africa, AGGF complements our climate and energy access portfolio and is aligned with our strategic role as an early-stage catalytic investor,” says NDF origination and management portfolio director Henrik Franklin.

The AGGF approved its first deal in August 2021 – a loan to telecommunications towers clean energy finance company AktivCo, which has assets in Burkina Faso, Cameroon, Chad, Côte d’Ivoire and Niger.

Further, in December 2021, it approved a $5.5-million loan to clean energy technology company BBOXX, which is exploring energy solutions that will provide electricity to millions and for the expansion of access to clean cooking solutions.

The AGGF provides flexible and tailored debt instruments to private businesses in green appliances for domestic and industrial processes, green buildings, e-mobility solutions and battery energy storage projects. It is managed by Lion’s Head Global Partners Asset Management, the AfDB points out.

“We are excited to welcome the [AfDB], SEFA and the NDF as investors to the AGGF. The fund will take efforts to transition to a lower-carbon economy a step further by offering financing to innovative African companies that embrace energy efficiency as a challenge and an opportunity,” says Lion’s Head Global Partners co-CEO and founding partner Clemens Calice.

Launched in early 2021 with €45-million in catalytic capital, the AGGF is a flagship project under the G20 Compact with Africa.

"These new investments are expected to trigger additional investments by commercial investors and financiers, either directly or through co-funding of projects,” notes development finance institution KfW Development Bank global equity and funds director Jan Martin Witte.