The fund and its technical assistance facility are launched by KfW on behalf of BMZ and will provide medium- and long-term financing and capacity building to financial and non-financial institutions with the aim of demonstrating the commercial viability of green finance while increasing energy efficiency and renewable energy production in West Africa.
The AfricaGoGreen Fund for renewable energy and energy efficiency S.A., SICAV-RAIF ("AfricaGoGreen") was set up on 9 December 2020 by KfW (German state-owned development bank) on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ), with an initial investment of EUR 32 million in Junior Shares and an additional contribution of EUR 3 million for the Technical Assistance Facility. AfricaGoGreen was incorporated in Luxembourg as a reserved alternative investment fund (SICAV-RAIF) with the aim to spur greenhouse gas reductions by backing financial and non-financial institutions developing and/or investing in eligible energy efficiency (EE) and renewable energy (RE) projects in Africa.
According to the International Renewable Energy Agency (IRENA) and its Global Renewables Outlook, Sub-Saharan Africa could meet 67% of its power generation from indigenous and clean renewable energy by 2030. This would significantly boost GDP, improve welfare and result in employment gains of up to 2 million additional green jobs by 2050. Scaling up energy efficiency and renewable energy investments in West Africa will also be a catalyst for a green recovery from the current pandemic crisis.
‘’The current context of COVID-19 pandemic is reinforcing the scope of AfricaGoGreen to boost reliable, sustainable and affordable green energy production in Africa, following the ambition of reaching a just and green recovery in line with the Paris Agreement’’ says Mr. Jan Martin Witte, Chair of the Board of Directors of AfricaGoGreen.
AfricaGoGreen will in fact play an active role in the energy transition of the African continent by providing medium and long-term financing, guarantees and specific technical assistance.
The Fund’s investments will initially target West Africa and is expected to expand further in Africa, including to the other G20 Compact with Africa Countries on a demand and opportunity-based approach. AfricaGoGreen will focus on working with financial institutions committed to finance private sector investments in EE and RE projects and with non-financial institutions that are developing EE and/or RE projects within the target Countries.
The Fund launched concurrently its Technical Assistance (TA) Facility aimed at maximising learning-by-doing opportunities, facilitating deals and encouraging the long-term sustainability of the EE and RE markets in the region.
The objective of the TA is to support the selected countries’ internal capacity to attract green funds in a sustainable manner and to improve the capacity of financial institutions to finance the identified sub-segments in a sustainable, market-oriented approach. The TA should enable long-term internal capacity building especially for the financial institutions helping them to identify, understand and properly serve a market they still perceive as risky and small.
‘’The Technical Assistance alongside the financial institutions’ gradual but continuous activity in the energy efficiency and renewable energy market will be critical to reduce their perceived risk of the market and broaden their horizon with respect to financing green projects’’ says Mr. Ron Rother, Member of the Board of Directors of AfricaGoGreen.
While in an initial phase Innpact Fund Management S.A. will act as interim Alternative Fund Manager (AIFM), the Fund will be managed by Lion’s Head Group (LHGP). A leading investment bank, LHGP provides financial advisory and asset management services across emerging and frontier markets with offices in London, Nairobi, Lagos, New York and Dubai.
“We are excited to partner with KfW that, like no other development finance institution, has pushed the African financial markets above and beyond business as usual – this has been a key driver for market innovation and ultimately tangible positive impact. We really look forward to this next challenge with AfricaGoGreen, in particular against the backdrop of new business models and technologies creating new opportunities to combat climate change in Africa,’’ says Clemens Calice, Co-Chief Executive Officer at Lion's Head Global Partners LLP.
AfricaGoGreen has been designed with the support of Innpact S.A., a consulting firm specialised in the setup of impact finance funds, that will continue its support as General Secretary to the fund.