Financing solar energy projects in Central and West Africa
The Afrigreen Debt Impact Fund attracts a consortium of investors as part of its first closing.
The Afrigreen Debt Impact Fund investment fund was created jointly by the French asset manager Rgreen Invest and Echosys Advisory - specializing in renewable energy projects in emerging markets - to support commercial and industrial consumers in Africa in their energy transition by promoting the adoption of photovoltaic solutions. Afrigreen aims to support the financing of decentralized solar power generation projects in Central and West Africa, focusing primarily on Nigeria, Côte d'Ivoire, Senegal, Ghana, Mali and Cameroon, and targeting mainly countries where the grid is unreliable and electricity prices are high.
The Fund completed its first closing of 87.5 million euros. The deal was announced on 24 February and brought together several international investors: it includes a commitment from the European Investment Bank (EIB), the International Finance Corporation (IFC, World Bank group) including participation from the Finland-IFC Blended Finance for Climate Program, the Belgian Investment Company for Developing Countries (BIO) and Proparco (AFD group). The only private investors to join the consortium, Societe Generale and BNP Paribas, complete this funding round.
By displacing fossil fuel with solar power generation, commercial and industrial consumers will reduce electricity bills, increase reliability of power supply and lower greenhouse gas emissions and air pollution. The resulting expected impact is a reduction in greenhouse gas emissions of by 58,000 tons annually and a reduction in the consumption of fuel by 14 million liters per year.
Afrigreen Debt Impact Fund, which is aiming for a target size of €100 million at its final closing, will invest in a diversified portfolio comprising 20 to 30 investments. The fund will intervene to meet long-term debt financing needs between 10 and 15 million euros, with an average ticket of around 5 million euros over 8 to 10 years. Afrigreen will also offer longer term and local currency financing, specifically in Ghana and Nigeria to reduce foreign exchange risks.
For Societe Generale, this transaction perfectly fits into the Grow With Africa initiative and illustrates one of the four pillars: research & development for agribusiness, the blue economy and the financing of new access to renewable energy (mainly solar but also hydraulic, wind, biomass).
Afrigreen is classified article 9 under the SFDR. It will contribute to the achievement of the Sustainable Development Goals 7 (Clean and Affordable Energy), 9 (Industry and Infrastructure), 12 (Responsible Consumption and Production) and 13 (Action on Climate Change) set by the United Nations.