By Ikenna Omeje
The Board of Directors of the African Development Bank has approved a $20 million concessional investment from the Sustainable Energy Fund for Africa (SEFA) to establish the COVID-19 Off-Grid Recovery Platform (CRP). The $50 million blended finance initiative, will provide relief and recovery capital to energy access businesses, supporting them through and beyond the pandemic.
According to a release by the bank, The platform is anchored on a partnership with three specialized energy access fund managers selected through a competitive process. The selected companies include: Triple Jump, Lion’s Head Global Partners, and Social Investment Managers and Advisors. “The $20 million concessional envelope will be blended with their own capital and instruments, leveraging $30-$40 million in complementary commercial funding and enabling more affordable debt products. Through these partners, the recovery platform will support energy access companies commercializing and deploying solar home systems, green mini-grids, clean cooking and other decentralized renewable energy solutions,” the release stated.
Speaking on the initiative, the release quoted the African Development Bank’s Vice President for Power, Energy, Climate and Green Growth, Dr. Kevin Kariuki, as saying: “This initiative underlines the African Development Bank’s commitment to the accelerated growth of Africa’s decentralized energy industry, based on renewables, as a key driver for universal energy access goals.”
Division Manager for Renewable Energy at the African Development Bank, Joao Duarte Cunha, said the platform would fill a gap in the market.
“Understanding that time is of essence, this platform will enable the provision of tailored financial solutions by leveraging existing resources, expertise and infrastructure within the sector,” he said. In addition to providing immediate relief and recovery support, the platform will lay the foundation for a green and inclusive economic recovery post-pandemic.
“We are pleased to be selected to co-manage the COVID-19 Off-Grid Recovery Platform, which will be blended with funding from the Energy Entrepreneurs Growth Fund. The combination of funding and operational support will stabilize businesses and allow for continued investments during the COVID-19 crisis, mitigating the impact of the pandemic on energy access companies and set a sustainable trajectory for growth,” said the Head of Sustainable Energy at Triple Jump, Jan-Henrik Kuhlmann.
Reflecting on the potential impact of the capital provided, CEO and Managing Partner of Social Investment Managers and Advisors, Asad Mahmood said: “CRP is a much-needed and appreciated innovative effort of the Bank to use multiple fund managers to assist with liquidity needs of good energy businesses in Africa, currently affected by the COVID-19 pandemic.”
The relief and recovery capital will support businesses in mitigating the impacts of the pandemic and ensuring a robust commercial recovery of the industry, and has been endorsed by leading industry associations, including the Alliance for Rural Electrification (ARE), Africa Mini-Grid Developers Association (AMDA) and the Global Off-Grid Lighting Association (GOGLA).
“The Bank’s new instrument is a game changer that will sustain and strengthen the African energy access sector. The platform’s innovative co-investment structure allows fund managers like Lion’s Head to focus on what we do best – mobilizing and deploying human and financial capital to unlock sustainable power for vulnerable communities while targeting critical post-pandemic issues such as local currency funding in a period of high uncertainty and volatility,” said the Managing Director of the Off-Grid Energy Access Fund, Harry Guinness, part of the wider Facility for Energy Inclusion.
