The Board of Directors of the African Development Bank (AfDB) Group has approved 20 million U.S. dollars concessional investment to support the second phase of the COVID-19 Off-Grid Recovery Platform (CRP).
This is contained in a statement issued by Olufemi Terry of Communication and External Relations Department of the AfDB on Thursday.
The CRP is a blended finance initiative to unlock private capital for companies to mitigate the negative impacts of the pandemic.
This would be done to advance access to clean electricity and ensure a green economic recovery.
According to the statement, the Sustainable Energy Fund for Africa (SEFA), a multi-donor fund managed by the bank, will provide seven million dollars in financing for the expansion.
The remaining 13 million dollars would come from the Global Environment Facility (GEF), a multilateral environmental fund.
The second phase would help create an additional 70 million dollars in funding for the energy access sector to cushion the pandemic’s impacts on supply chains and inflation.
It will also reduce the rising cost of capital, and the effects of the conflict in Ukraine.
Alix Graham, Fund Lead of the Off-Grid Energy Access Fund, said the fund was able to offer affordable financing in markets.
“With the SEFA concessional funding under CRP, the Off-Grid Energy Access Fund was able to offer affordable financing solutions in markets.
“Such as Malawi and Sierra Leone that helped companies to reduce the impact of increased currency volatility and rising logistics costs.”
Graham described CRP as a partnership between the development and the private sectors that offer innovative financing solutions without distorting the market or displacing private capital.
The fund is managed by Lion’s Head Global Partners, one of three fund managers which jointly anchored Phase I of the COVID-19 Off-Grid Recovery Platform.
The other two are: Triple Jump and Social Investment Managers and Advisors.
Mark van Doesburgh, Deputy Head of Sustainable Energy, Triple Jump, appreciated the bank’s support to the Sustainable Development Goals (SDGs).
“We appreciate the continuous support provided by the African Development Bank to accelerate progress towards SDG 7.
“The concessional funding provided under CRP phase II comes at a critical moment for early-stage energy access companies that continue to be affected by Covid-19 and allows Energy Entrepreneurs Growth Fund.
“To release flexible financing into the sector at a time when risk-capital is increasingly scarce,” Doesburgh said.
According to the statement, through the CRP partners, energy access firms can acquire a broad range of flexible debt financing solutions on more affordable terms.
To date, over 50 million dollars in soft financing has been approved for 12 energy access companies that are commercialising and deploying solar home systems, mini-grids, and commercial and industrial solar irrigation solutions.
João Duarte Cunha, Manager, Renewable Energy Funds Division in charge of SEFA, AfDB expressed gratitude for the partnership.
“Thanks to this strong partnership, we have been able to mobilise over 140 million dollars of patient capital to mitigate the unprecedented challenges faced by the energy access industry in recent years and to protect progress towards universal access in Africa.”
SEFA is a multi-donor special fund that aims to unlock private sector investments that help to provide universal access to affordable, reliable, sustainable, and modern energy services for all in Africa.
This is in line with the bank’s New Deal on Energy for Africa strategy and SDG 7.
SDG 7 is set to ensure universal access to affordable, reliable and modern energy services by 2030.
Also, the GEF is the largest funder of projects to improve the global environment.
It provides grants for projects related to biodiversity, climate change mitigation, land degradation, chemicals and waste, climate change adaptation and international waters.