To boost access to clean and reliable energy across Africa, IFC today signed a financing package for the Facility for Energy Inclusion (FEI), a pan-African fund that supports small-scale decentralized renewable energy (DRE) projects, bringing power to Africa’s commercial and industrial sectors and supporting economic activity.
IFC’s financing will help fund the addition of about 115 MW of generation capacity in about 15 African countries, including the Democratic Republic of the Congo, Ghana, and Kenya. FEI provides debt financing for small-scale renewable energy generation and storage projects to power commercial and industrial companies, telecom infrastructure as well as mini grids.
The $80 million financing package comprises a loan of $30 million from IFC; a loan of $20 million mobilized from the Managed Co-Lending Portfolio Program (MCPP), which will enable longer-term financing that is not readily available in the market; and up to $30 million in blended finance.
The blended finance package includes $15 million from the International Development Association’s Private Sector Window Blended Finance Facility and $15 million from the Finland – IFC Blended Finance for Climate Program.
“This is a major milestone for FEI which is now recognized by key market players as a lead lender in the DRE market in Africa with $220 million commitments across 23 countries to date,” said Orli Arav, Head of Debt Funds at Cygnum Capital Asset Management. “The partnership with IFC including a $20 million tranche from institutional investors represents a vote of confidence to Cygnum Capital as a leading fund manager.”
“Our partnership with FEI will help support the development of Africa’s DRE market and attract local and international private investment, strengthening the sector’s capacity to reach commercial viability and scale,” said Sarvesh Suri, IFC’s Regional Industry Director for Infrastructure and Natural Resources in Africa. “With approximately 600 million people across sub–Saharan Africa without access to electricity, the DRE market offers a viable solution to expanding access to electricity across the continent by offering affordable and climate friendly energy solutions.”
In many countries across Africa, utilities are unable to provide consistently reliable or affordable electricity, resulting in power outages and a reliance on fossil fuel backup generators. This project will help displace these carbon-intensive power sources and improve access, affordability, and the quality of electricity supply, while also supporting the growth of the nascent DRE market.
IFC’s investment in the Facility for Energy Inclusion fund is aligned with the World Bank Group’s strategy to accelerate the pace of electrification in Africa to achieve universal access by 2030.
FEI was established in 2019 and is managed by Cygnum Capital Asset Management, an asset manager with an extensive track record of green investments in Africa. Earlier this year, IFC announced an investment in Cygnum Capital’s AfricaGoGreen Fund to finance climate-friendly projects in Africa.