The investing arm of FSD Africa, FSD Africa Investments (FSDAi), has announced additional investments totaling $19.5 million to support infrastructure projects in Africa that are climate-aligned and climate-adaptive as well as to increase the resilience of the continent to climate change.
The investments made by FSDAi in the Export Finance Fund I of Acre Impact Capital, the Catalyst Fund, and Camco’s Spark Energy Services show the organization’s dedication to working with regional asset managers and venture capitalists to promote climate-smart companies that might otherwise find it difficult to obtain the funding they require.
The new commitments include:
US$12 million in Acre Impact Capital’s Export Finance Fund I, the first to address the lack of commercial debt financing for sustainable infrastructure projects guaranteed by official Export Credit Agencies (ECAs). Financing from ECAs reduces the cost of debt and makes infrastructure projects more affordable. However, in order to access ECA support, project sponsors have to make a down payment of ~15% of the project value using commercial debt which is increasingly scarce. FSDAi’s investment in Acre will facilitate the flow of ECA finance for social and green infrastructure, mobilizing US$ 67 million directly related to FSDAi’s investment, providing improved access to essential services for over 500,000 people, and generating over 2,000 jobs.
US$4.5 million in Catalyst Fund, a pre-seed venture capital fund, and accelerator that will invest in and 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 5m individuals and households to adapt to the effects of climate change.
US$3 million into Spark Energy Services (Spark), which is designed and managed by climate and impact fund manager Camco to provide financing to captive solar and energy efficiency developers in Sub-Saharan Africa. The platform seeks 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. FSDAi’s investment in Spark will support a just transition and achieve local development benefits by facilitating a 0.61m MtCO2e (million metric tons of carbon dioxide equivalent) net reduction in greenhouse gas emissions, working in partnership with local developers, creating 1,400 jobs and providing a lower cost, reliable and clean power supply to commercial and industrial SMEs.
With the goal of bolstering the role of finance in Africa’s green economic growth, FSDAi invests in ‘innovation’ financial instruments, infrastructures, and intermediaries.
The Foreign, Commonwealth & Development Office (FCDO) of the United Kingdom provides funding for it.
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