Funding new models of green finance for the African continent creates channels for private finance to flow into previously neglected areas of climate action and conservation.
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Author: TIMOTHYRADIER
Sharm El Sheikh, Egypt: On the opening day of COP27, InfraCo Africa, part of the Private Infrastructure Development Group (PIDG) has announced that it will invest US$15m into a newly established guarantee company, alongside a US$5m commitment from Cardano Development. The announcement was made as part of a KES 500bn package of new investment from the UK to support Kenya’s leadership on climate change.i
Established by InfraCo Africa and Cardano Development with support from PIDG and FSD Africa, the new company is modelled on InfraCredit Nigeria and InfraZamin Pakistan, aiming to unlock local capital into sustainable infrastructure and projects that improve climate mitigation and adaptation and deliver on the SDGs. InfraCredit Nigeria is an infrastructure guarantee facility established in 2017 by PIDG company GuarantCo and the Nigeria Sovereign Investment Authority. InfraCo Africa became InfraCredit’s third investor in 2020. PIDG has sought opportunities to replicate this innovative model in other geographies, including establishing InfraZamin Pakistan. FSD Africa has also extended grant funding to Cardano Development valued at nearly US$297,000 for the establishment of the new company, and GuarantCo is exploring the possibility of providing a contingent capital facility to the company in the near future.
PIDG’s CEO Philippe Valahu said, “We are pleased to announce our anchor investment into this new guarantee company during the important COP27 summit. As well as addressing Kenya’s and East Africa’s infrastructure access gap, the new company will issue guarantees to projects that are Paris aligned, helping to link flows of finance with global efforts to mitigate and adapt to the climate crisis.” He continued, “This innovative model of local currency guarantees has proven to be successful in Nigeria – where InfraCredit Nigeria has issued circa NGN 114 bn worth of local currency guarantees in its first five years of operations – and also in Pakistan, where InfraZamin Pakistan recently issued its first guarantee.”
The initial focus of operations will be in Kenya. Kenya holds significant wealth in pension,ii life insurance and private wealth funds. However, Kenyan infrastructure projects and other cash-flow based investments are largely reliant on US dollar denominated bank loans, loans which seldom offer the length of tenor required for successful developments and which expose borrowers to currency exchange risk.
InfraCo Africa’s Chief Investment Officer, Claire Jarrett said, “The new guarantee company seeks to issue up to US$100m of local currency guarantees in its first few years of operations. Kenya’s capital markets are developing quickly and it is hoped that access to local currency guarantees will enable institutional investors such as pensions and insurance funds to invest into high-quality assets whilst also supporting businesses to secure the finance needed for them to deliver vital new infrastructure, underpinning economic development across the country.”
Joost Zuidberg, CEO Cardano Development added, “Cardano Development is proud to act as a catalyst for making emerging and frontier markets more investible, through our incubating activity and investment into the new guarantee company. With climate change at the top of the global agenda, our expertise, alongside our partners InfraCo Africa and PIDG, will help fast-track the flow of climate friendly finance into key sectors, through local currency guarantees.”
Mark Napier, CEO FSD Africa, and Board Member of the GFANZ Africa Advisory Board said, “The mandate of the new guarantee company is well aligned to critical climate finance initiatives such as the Glasgow Financial Alliance for Net Zero’s (GFANZ) objective of addressing sector-wide challenges associated with the net-zero transition helping to ensure high levels of ambition are met with credible action. FSD Africa is committed to supporting local currency bond markets in Africa as well as local currency credit enhancement facilities as they play an important de-risking role. This role is pivotal in the mobilisation of climate finance from both local and international owners of capital to African economies that require different sources of capital to fund their green growth.”
Nairobi, 24 October 2022 – We have recently announced the appointment of Arunma Oteh, a seasoned business leader, to our Board of Directors to support the organisation’s work to strengthen and deepen Africa’s financial markets, particularly in the area of green finance.
Arunma is passionate about the role of financial markets in catalysing Africa’s success. Her deep expertise in finance, capital markets, economic development and sustainability as well as her wealth of experience in management, corporate governance and regulation will be indispensable to FSD Africa.
Arunma Oteh is a scholar and a member of the Global Leadership Council of Saïd Business School, University of Oxford. She is also the Chairperson of Veritas Asset Management, a U.K. asset manager and sits on corporate boards such as the Afreximbank Pan-African Payment System and Settlements Initiative. She is a member of the London Stock Exchange Africa Advisory Group.
Before joining the University of Oxford, she was Treasurer and Vice President of the World Bank and, before that, Director General of the Securities and Exchange Commission (SEC) Nigeria. She previously held several senior leadership positions at the African Development Bank (AfDB), including Group Treasurer and Group Vice President, Corporate Services. Arunma commenced her career in 1984 as a Lecturer of Computer Science at the University of Benin and has held several important positions in consulting, capital markets, finance, and research.
During her time as Director General of SEC Nigeria, she led the rebuilding of the Nigerian capital markets after the global financial crisis. She was also a member of Nigeria’s Economic Management Team, chaired by the President of Nigeria. She also served on the Board of the International Organisation of Securities Commissions (IOSCO) and chaired the Africa Middle East Regional Committee, during the same period.
As Treasurer of the World Bank, she led a global team that managed $200 billion multi-product asset portfolios for the World Bank Group, 65 central banks and other official institutions. They also raised over US$50 billion from the global capital markets, annually, for the World Bank’s lending activities. During this time, she led several ground-breaking green finance and thematic transactions and oversaw an extensive public sector financial advisory business that covered debt management, risk management and green finance.
Arunma Oteh graduated from the University of Nigeria, Nsukka in 1984 with a first-class honours degree in Computer Science. She received an MBA from Harvard Business School in 1990 and holds honorary doctorate degrees. She has received several awards, notably Nigeria’s Officer of the Order of the Niger (OON) in 2011, Power List’s 2020 top 100 people in the U.K. of African heritage and Forbes Africa’s 50 most influential African women in March 2020. She is the co-editor of the book African Voices African Visions, the Chairperson of the 120-year-old Royal African Society and a member of the Board of Trustees of the Prince’s Trust International, among other important charitable causes.
FSD Africa is extremely fortunate to have Arunma join its Board of Directors. Her experience as Treasurer of the World Bank and as Director-General of SEC Nigeria gives her a unique insight into the state of global and African financial markets. This will be immensely helpful to FSD Africa as it continues developing ambitious programmes that grow and improve these markets.
Mark Napier, CEO – FSD Africa
Amsterdam, 11 October 2022 Diago Dièye has today joined Nyala Venture as Managing Director. She combines robust finance and investment experience with a strong network in the SGB (small and growing businesses) and LCP (Local Capital Providers) ecosystem. Diago’s previous position was Chief Operating Officer and Program Director of an impact investment fund that finances SGBs. She most recently co-structured and deployed a USD 30 million Access to Finance Program, which led to the financing of more than 600 SGBs and 11,000 micro-entrepreneurs through 15 LCPs.
Diago is a seasoned professional with over 15 years of experience spent between the US, the UK and Senegal in the financial services industry. As a specialist in Corporate Finance, particularly for SGBs in frontier markets, she has been focusing on delivering capital to SGBs for the past 10 years.
FSDAi hopes to accelerate capital flows into SGBs especially those focused on closing the gender gap. We are excited to have Diago join Nyala Venture team to drive this important work and look forward to seeing this nascent asset class grow.
Anne-Marie Chidzero, Chief Investment Officer, FSD Africa Investments
04 October 2022, CAIRO – Today, the British Embassy in Egypt hosted an event marking “One Month to Go to COP27”, celebrating the UK and Egypt’s growing green partnership.
The event marked the launch of the UK’s Climate Finance Accelerator in Egypt, a new programme which will help low-carbon projects access the funding they need. Attendees also witnessed the signing of a Memorandum of Understanding (MoU) between FSD Africa and the Egyptian Financial Regulatory Authority (FRA), to help make the financial sector in Egypt more sustainable.
The event began with opening remarks from British Ambassador to Egypt Gareth Bayley, followed by a keynote speech via phone conference from Minister of Environment Dr Yasmine Fouad, who said that the Climate Finance Accelerator is essential and critical mechanism for financing climate change.
The event also included a panel discussion on climate finance moderated by the CFA team. Panellists included Dr. Dalia Abdel Kader, Chief Sustainability Officer CIB, as well as other experts in the field.
The Climate Finance Accelerator is already making a difference elsewhere in Africa and around the world. It is great news that Egypt will now feature as part of this innovative approach to help low-carbon projects secure investment. Climate financing is one of the key demands for COP27, and with the introduction of such a programme in Egypt, we show that we are not only listening, but also taking action. I am also particularly proud to witness today the signing of the Memorandum of Understanding between FSD Africa and the Financial Regulatory Authority to help make the Egyptian financial sector more sustainable. Such achievements showcase the real strength of the UK and Egypt’s growing green partnership.”
Gareth Bayley, British Ambassador to Egypt
21 September 2022 – Research released today from Climate Policy Initiative finds that total annual climate finance flows in Africa for 2020, domestic and international, were only USD 30 billion, just 11% of the USD 277 billion needed annually. While the financing gap is significant, Africa’s rapid urbanization, expanding infrastructure, and energy-access needs offer significant investment opportunities.
Commissioned by FSD Africa, the Children’s Investment Fund Foundation, and UK Aid, the Landscape of Climate Finance in Africa is a first-of-its-kind analysis to map climate finance flows in Africa by region, by sector, and by source. It aims to establish a baseline of public and private climate finance flows in Africa to help investors and climate negotiators scale up climate finance by improving the understanding of the volume, sources, thematic uses, and sectoral allocation of these flows to identify entry points, financing gaps, and opportunities for new investments.
https://www.youtube.com/watch?v=EVkzGtgvyh4