FSDAi commits $19.5m to bolster climate resilience in Africa

FSD Africa Investments (FSDAi), the investing arm of FSD Africa, announced a significant investment of US$19.5 million in climate adaptation and climate-aligned infrastructure projects across Africa. This initiative aims to strengthen the continent’s resilience to climate change while supporting innovative financing mechanisms for sustainable development.

The investments made by FSDAi in Acre Impact Capital’s Export Finance Fund I, Catalyst Fund, and Camco’s Spark Energy Services underscore the organisation’s commitment to collaborating with local asset managers and venture builders. The goal is to provide much-needed funding to climate-smart projects that might otherwise struggle to secure financing.

Here’s a breakdown of the new commitments:

$12 million in Acre Impact Capital’s Export Finance Fund I

This pioneering fund addresses the challenge of obtaining commercial debt financing for sustainable infrastructure projects guaranteed by official Export Credit Agencies (ECAs). FSDAi’s investment will facilitate the flow of ECA finance for social and green infrastructure, unlocking a total of $67 million in funding. This initiative is expected to improve access to essential services for over 500 000 people and generate more than 2 000 jobs.

$4.5 million in Catalyst Fund

This pre-seed venture capital fund and accelerator will focus on investing in and providing support to tech start-ups dedicated to enhancing the resilience of climate-vulnerable communities in Africa. The investment aims to demonstrate that venture building is a viable model to accelerate the growth of climate-smart businesses in Africa, with a target of creating or advancing 40 such businesses and assisting 5 million individuals and households in adapting to the effects of climate change.

$3 million in Spark Energy Services (Spark)

Managed by climate and impact fund manager Camco, Spark Energy Services seeks to provide financing to captive solar and energy efficiency developers in Sub-Saharan Africa. This platform aims to address the financing challenges faced by smaller-scale projects by aggregating them to reduce transaction costs and diversify risk.

FSDAi’s investment in Spark will support a just transition, reducing greenhouse gas emissions by 0.61 million metric tons of carbon dioxide equivalent (MtCO2e), creating 1 400 jobs, and providing affordable, reliable, and clean power to commercial and industrial SMEs.

FSDAi specialises in investments that support innovative financial instruments, facilities, and intermediaries, accelerating finance’s role in Africa’s green economic growth. It is funded through UK International Development from the Foreign, Commonwealth & Development Office (FCDO).

One distinctive feature of FSDAi is its willingness to assume significant investment risk, filling a critical funding gap by supporting novel financial solutions that neither development finance institutions nor private investors may be prepared to undertake.

These ground-breaking investments were announced by Andrew Mitchell, UK Minister for Development, during a joint event hosted by FSD Africa and PIDG at the Africa Climate Summit today.

The investments are part of a broader set of transactions and market-building initiatives by FSD Africa designed to create a more innovative financing environment, increasing the involvement of international and domestic private capital in Africa’s green economy.

In response to the investments, UK minister for development Andrew Mitchell emphasised the country’s commitment to Africa’s green future and the importance of global cooperation in addressing climate change. He stated, “Our ambitions can only be realised through partnership and cooperation, with Africa and the international community. We are stronger together – and we go far when we go.”

Anne-Marie Chidzero, chief investment officer of FSD Africa Investments, highlighted their mission to enable green finance to scale up in Africa by taking calculated risks and collaborating with local intermediaries. She expressed confidence in the three funds, stating that they provide innovative financing solutions that will significantly contribute to Africa’s green economy.

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