By Modupe Gbadeyanka
To boost climate resilience in Africa, the investing arm of FSD Africa, FSD Africa Investments (FSDAi), has promised to provide $19.5 million to bridge the financing gap for green projects on the continent.
The organisation announced its intention to invest in climate-aligned infrastructure projects in Africa at the Africa Climate Summit in Nairobi, Kenya.
FSD Africa is making the investment through Acre Impact Capital’s Export Finance Fund, Catalyst Fund and Camco’s Spark Energy Services.
Business Post gathered that the firm would give $12 million to Acre Impact Capital’s Export Finance Fund I to address the lack of commercial debt financing for sustainable infrastructure projects guaranteed by official Export Credit Agencies (ECAs).
It believes that financing from ECAs reduces the cost of debt, makes infrastructure projects more affordable, and provides improved access to essential services for over 500,000 people generating over 2,000 jobs.
FSD Africa will also give $4.5 million to Catalyst Fund, a pre-seed venture capital fund and accelerator to provide hands-on venture-building support to tech start-ups that aim to improve the resilience of climate-vulnerable communities across Africa.
The investment will help demonstrate venture building as an investible model that can accelerate the growth of climate-smart businesses in Africa with a target of creating or accelerating 40 businesses and helping 5 million individuals and households adapt to the effects of climate change.
In addition, $3 million would be sunk into Spark Energy Services to address the lack of financing available to developers of smaller-scale projects by innovatively aggregating small projects to reduce transaction costs and diversify risk.
“For Africa to achieve a green economic growth pathway, access to green finance needs to be scaled up.
“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 which will make a big contribution to Africa’s green economy,” the Chief Investment Officer of FSD Africa Investments, Anne-Marie Chidzero, said.
Also, the UK Minister for Development, Andrew Mitchell, said, “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 realised through partnership and cooperation with Africa and the international community. We are stronger together – and we go far when we go.”
