The Board of Directors of the African Development Bank Group (AfDB) has approved a $20 million concessional investment to support the second phase of the Covid-19 Off-Grid Recovery Platform (CRP).
The CRP is a blended finance initiative to unlock private capital for energy access companies to mitigate the negative impacts of the pandemic while advancing access to clean electricity and ensuring a green economic recovery.
The Sustainable Energy Fund for Africa (SEFA), a multi-donor fund managed by the African Development Bank, will provide $7 million in financing for the expansion; the remaining $13 million will come from the Global Environment Facility (GEF), a multilateral environmental fund.
A news report on the funding intervention from African Press Organization (APO) Group circulated on behalf of the funding partners indicated that the second phase would help create an additional $70 million in funding for the energy access sector to cushion the pandemic’s persistent impacts on supply chains, inflation, the rising cost of capital, and the effects of the conflict in Ukraine.
The Fund Lead of the Off-Grid Energy Access Fund, Alix Graham, said: “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 the CRP as a partnership between the development and private sectors that offered innovative financing solutions without distorting the market or displacing private capital.
Off-Grid Energy Access 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.
Commenting on the intervention, deputy head of sustainable energy at Triple Jump, Mark van Doesburgh, said: “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.”
Through CRP partners, energy access firms can access a broad range of flexible debt financing solutions on more affordable terms. To date, over $50 million in soft financing has been approved for 12 energy access companies that are commercializing and deploying solar home systems, mini-grids, and commercial and industrial solar irrigation solutions.
Also speaking on the initiative, Manager of the Renewable Energy Funds Division in charge of AfDB’s SEFA, João Duarte Cunha, said: “Thanks to this strong partnership, we have been able to mobilize over $140 million 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.