Africa (Commonwealth) _The International Finance Corporation, IFC, a member of the World Bank Group, has contributed significantly to the Facility for power Inclusion (FEI), which has enhanced Africa’s access to power. This pan-African fund focuses on small-scale renewable energy projects in order to power economic sectors across the continent.
The $80 million in funding, which is a combination of loans and blended finance, would improve energy output in around 15 African nations, including the Democratic Republic of the Congo, Ghana, and Kenya, by 115 MW.
IFC agreed upon a funding package for the Facilities for Energy Inclusion (FEI), a pan-African fund which promotes small-scale decentralized renewable energy (DRE) projects in Africa, bringing power to the commercial and industrial sectors while fostering economic activity.
The IFC loan will assist support the installation of about 115 MW of generating capacity in around 15 African nations, including the Democratic Republic of the Congo, Ghana, and Kenya. FEI provides financial financing for small-scale renewable energy generating and storage projects to power commercial and industrial businesses, as well as communications infrastructure and tiny grids.
The $80 million financing package includes a $30 million loan from IFC, a $20 million loan from the Managed Co-Lending Portfolio Program (MCPP), which will allow longer-term financing not easily available in the market, and up to $30 million in blended finance.
The blended financing package comprises $15 million from the International Development Association’s Private Sector Gateway Blended financing Facility and $15 million from the Finland-IFC Climate Blended Finance Program.
This is a significant milestone for FEI, which is now acknowledged by key market participants as a leading lender in Africa’s DRE market, with $220 million committed across 23 countries to far, according to Orli Arav, Head of Debt Funds at Cygnum Capital Asset Management. The collaboration with IFC, which includes a $20 million tranche from institutional investors, is a vote of confidence in Cygnum Capital as a top fund manager.
Our collaboration with FEI will aid in the development of Africa’s DRE market and attract local and international private investment, enhancing the sector’s capacity to achieve commercial viability and scale, said Sarvesh Suri, IFC’s Regional Industry Director for Infrastructure and Natural Resources in Africa. With roughly 600 million people in Sub-Saharan Africa without access to power, the DRE market provides a potential answer for extending access to electricity across the continent by providing inexpensive and climate-friendly energy solutions.
Many African nations’ utilities are unable to continuously offer dependable or inexpensive energy, resulting in power outages and a dependency on fossil fuel backup generators. This initiative will assist in the displacement of these carbon-intensive power sources, as well as improving availability, cost, and the quality of energy delivery, while also assisting in the expansion of the fledgling DRE market.
The IFC’s participation in the Facility for Energy Inclusion fund is consistent with the World Bank Group’s aim to expedite electrification in Africa in order to achieve universal access by 2030.
Cygnum Capital Asset Management, an asset manager with a long track record of green investments in Africa, manages FEI, which was founded in 2019. IFC announced earlier this year an investment in Cygnum Capital’s AfricaGoGreen Fund to support climate-friendly initiatives in Africa.
IFC is the world’s largest development organization concentrating on the private sector in emerging nations. IFC works in over 100 countries, bringing finance, experience, and influence to developing countries in order to establish markets and opportunities. IFC pledged a record $43.7 billion to private enterprises and financial institutions in developing countries in fiscal year 2023, using the strength of the private sector to eradicate extreme poverty and increase shared prosperity as nations cope with the effects of global mounting crises.
