In a significant move to fortify climate resilience across Africa, FSD Africa Investments (FSDAi) pledges a substantial $19.5 million investment aimed at closing the financing gap for green projects on the continent. This announcement was made at the Africa Climate Summit held in Nairobi, Kenya.
FSD Africa is set to channel this investment through Acre Impact Capital’s Export Finance Fund, Catalyst Fund, and Camco’s Spark Energy Services. Notably, $12 million is allocated to Acre Impact Capital’s Export Finance Fund I, strategically focused on ameliorating the shortage of commercial debt financing for sustainable infrastructure projects, backed by official Export Credit Agencies (ECAs). This move is poised to lower debt costs, render infrastructure projects more financially accessible, and ensure improved access to crucial services for over 500,000 individuals, generating an estimated 2,000 jobs.
Additionally, FSD Africa commits $4.5 million to Catalyst Fund, a pre-seed venture capital fund and accelerator geared towards offering hands-on support for tech startups aimed at enhancing the resilience of climate-vulnerable communities throughout Africa. This investment is expected to demonstrate the viability of venture building as an investible model, expediting the growth of climate-smart businesses in Africa, with a goal to create or accelerate 40 enterprises and aid 5 million individuals and households in adapting to the impacts of climate change.
Furthermore, $3 million will be directed towards Spark Energy Services, addressing the scarcity of available financing for developers of smaller-scale projects by innovatively aggregating these endeavors. This approach is designed to diminish transaction costs and diversify risks, ultimately enhancing the viability of these projects.
To steer Africa towards a trajectory of sustainable economic growth, access to green finance must be substantially scaled up. Anne-Marie Chidzero, Chief Investment Officer of FSD Africa Investments, stated, “Our mission is to enable investments to flow by taking more risk and working with local intermediaries to bridge the gaps in the current financing structures. We are backing these three funds, which provide innovative ways to finance businesses that will make a substantial contribution to Africa’s green economy.”
Andrew Mitchell, UK Minister for Development, emphasized, “The climate finance projects we announced demonstrate the strength of our commitment to Africa’s green future. UK leadership is determined to unlock the funding needed internationally to drive forward the green agenda. Our ambitions can only be realized through partnership and cooperation with Africa and the international community. We are stronger together – and we go far when we go.”