Africa50 to unveil $500 million fund for green projects

From the newsletter

Moroccan-based pan-African infrastructure investment platform, Africa50, is establishing the first continent-wide investment vehicle dedicated to off-grid power companies, with plans for a $500 million fund to support green infrastructure projects. Africa50 CEO Alain Ebobissé shared this information in an interview with Bloomberg.

• Africa50 was formed in 2012 by African heads of state to bring innovative solutions to accelerate infrastructure development in line with the African Union's Agenda 2063. It mobilises public and private sector finance and invests in medium- to large-scale projects.

• In the last seven years, it has invested in 28 projects across 27 African countries and now manages $1.1 billion in assets. The number of shareholding countries has grown to 32 from the initial 20 that joined at the inception of the platform

More details

• The race to electrify 300 million Africans by 2030 is gaining momentum. The recent Africa Energy Summit in Tanzania showcased this interest, drawing commitments from banks, private companies, and governments. However, achieving this ambitious goal requires multi-billion dollar investments, a scale that is beyond the capacity of African governments.

• International institutions like the World Bank, African Development Bank (AfDB), and International Finance Corporation (IFC) have long been crucial in financing Africa's renewable energy transition. At the Dar es Salaam summit, the World Bank and AfDB pledged a combined $50 billion towards this electrification effort.

• To accelerate progress, private sector participation is essential. A key development at the summit was the announcement of the Alliance for Green Infrastructure in Africa (AGIA) fund by Africa50's CEO. This $500 million fund will focus on project development and preparation in sectors like renewable energy and sustainable transport, with the potential to catalyse $10 billion in investments. 

• Last December, Africa50 signed an agreement with the International Solar Alliance (ISA) to manage and implement the $200 million Africa Solar Facility (ASF). (In the picture above, Dr Ajay Mathur, Director General of ISA handing documents to an Africa50 representative). The facility aims to address the low investment in African solar energy, with only 3% of global solar investment reaching the continent. The percentage is even smaller for Decentralized Renewable Energy (DRE). It will provide confidence to investors, encouraging them to invest in DRE applications across the continent.

• Additionally, in collaboration with the Nigerian Sovereign Investment Authority and Sustainable Energy for All, Africa50 is developing a Nigeria-focused fund for distributed renewable energy. The Nigerian market is one of the largest in Africa with about 100 million without access to electricity.

• Africa50 is also nearing financial close on a landmark public-private partnership for electricity transmission lines between Power Grid Corp. of India and the Kenyan government. Similar projects are being explored in Mozambique, Tanzania, and Gabon, with signed memorandums of understanding in place.

• There are several energy investments done by Africa50 including the 360 MW Nachtigal hydro power plant in Cameroon and Egypt’s 1.6 GW Benban solar park. Its investments target also emerging green technologies like electric vehicles. Last year it led a $42 million funding round for BasiGo, an e-bus company in Kenya.

Our take

• The recently concluded Africa Energy Summit, with its ambitious goal of electrifying 300 million Africans by 2030, generated enthusiasm among various stakeholders. Banks and private investors expressed optimism, with Standard Chartered Bank even committing $300 billion for global energy investments.

• While this positive momentum is encouraging, translating announcements into concrete action is crucial. Too often, such initiatives lack structured implementation plans, resulting in delays and project failures. Given the urgent need for electricity access across Africa, time is of the essence.

• Africa's electricity deficit presents a significant investment opportunity. However, successfully penetrating this market requires addressing affordability. Governments play a vital role in creating an attractive investment environment. This includes offering financial incentives like tax breaks, subsidies, and grants to attract private-sector investment. Furthermore, streamlining regulatory processes and ensuring transparent policies can reduce barriers for investors. Governments can also explore public-private partnerships to leverage private-sector expertise and resources