FSD Africa Investments (FSDAi), the investing arm of FSD Africa, said $19.5 million investment has been committed to supporting climate adaptation and climate-aligned infrastructure projects in Africa to promote the continent’s climate programmes.
According to the body, the new commitment includes $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, it said, reduces the cost of debt and makes infrastructure projects more affordable.
However, to access ECA support, project sponsors have to make a down payment of 15 per cent 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, mobilising $ 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.
FSDAi makes investments in support of ‘innovative’ financial instruments, facilities, and intermediaries that can accelerate the role of finance in Africa’s green economic growth. It is funded through UK International Development from the Foreign, Commonwealth & Development Office (FCDO).
One of FSDAi’s distinctive features is its mandate to take significant investment risk. FSDAi fills a vital funding gap by assuming the commercial risk of novel financial solutions that neither development finance institutions nor private investors are prepared to take.
Speaking on the development, at the just-concluded Africa Climate Week Summit held in Nairobi, Kenya, the Chief Investment Officer, FSD Africa Investments, Anne-Marie Chidzero, said: “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 risks 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 big contribution to Africa’s green economy.”
Also commenting on the investments, 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.
Source : TheGuardian