The United Kingdom (UK) has announced new funding to support more green projects in Africa.
UK Minister for Development and Africa Andrew Mitchell unveiled a Sh9 billion (£49 million) investment across Africa during his visit to Kenya to coincide with the inaugural Africa Climate Summit, which begins today.
Investments in Acre Impact Capital’s Export Finance Fund, Catalyst Fund and Camco’s Spark Energy Services will help bridge financing gap for green projects
Nairobi, 5th September 2023 – FSD Africa Investments (FSDAi), the investing arm of FSD Africa, today announces new investments totalling US$19.5 million to support climate adaptation and climate-aligned infrastructure projects in Africa and to promote the continent’s resilience to climate change.
The investments in Acre Impact Capital’s Export Finance Fund I, Catalyst Fund and Camco’s Spark Energy Services, demonstrate FSDAi’s commitment to partnering with local asset managers and venture builders to support climate-smart projects that would otherwise struggle to access the finance they need.
The new commitments include:
FSDAi makes investments in support of ‘innovative’ financial instruments, facilities and intermediaries that can accelerate the role of finance in Africa’s green economic growth. It is funded through UK International Development from the Foreign, Commonwealth & Development Office (FCDO).
One of FSDAi’s distinctive features is its mandate to take significant investment risk. FSDAi fills an important funding gap by assuming the commercial risk of novel financial solutions that neither development finance institutions nor private investors are prepared to take.
The new investments will be announced by Andrew Mitchell, UK Minister for Development, at a joint event being held by FSD Africa and PIDG during the Africa Climate Summit on September 5th. It is one of a number of transactions and market building initiatives being unveiled by FSD Africa during the Summit which are designed to create a more innovative financing environment and so boost the participation of international and domestic private capital in Africa’s green economy.
Commenting on the investments Andrew Mitchell, UK Minister for Development, said:
“The climate finance projects we announced demonstrate the strength of our commitment to Africa’s green future. UK leadership is determined to unlock the funding needed internationally to drive forward the green agenda. 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, Chief Investment Officer, FSD Africa Investments, said:
“For Africa to achieve a green economic growth pathway, access to green finance needs to be scaled up. Our mission is to enable investments to flow by taking more risk and working with local intermediaries to bridge the gaps in the current financing structures. We are backing these three funds, which provide innovative ways to finance businesses which will make a big contribution to Africa’s green economy.”
African and global leaders are gathering in Nairobi for the Africa Climate Summit which opens on 4 September.
Convened by President William Ruto of Kenya in conjunction with the African Union, the summit will address the urgency of marshalling resources to respond to the climate crisis, amid signs that we are entering unchartered territory.
This summit will also be about challenging the idea that African nations are solely victims suffering the impact of climate change, despite bearing little responsibility for it. Instead, the summit will aim to show all the ways that Africa can transform its economy by playing a major role in accelerating global decarbonisation.
Developing countries need access to energy, not access to fossil fuels
Underlying this is the growing realisation that we need to update our “vision” of growth and development, with its outdated assumption that economic growth must always depend on industries and practices which harm the planet.
As Ugandan climate justice advocate Vanessa Nakate has observed, “developing countries need access to energy, not access to fossil fuels”.
The possibilities for Africa and the world in an alternative, climate-positive growth path are immense. Africa is home to some of the world’s most potent renewable resources: its untapped renewable energy potential is over 50 times the world’s anticipated electricity demand by 2040. Importantly, in many African countries, solar energy can provide year-round electricity – making it a viable energy source even for industrial applications.
Moreover, because Africa contains relatively little in the way of established, highly-emitting industrial infrastructure, almost all newly generated renewable energy can be deployed directly towards greening local, regional and global economies. For example, Kenya already derives over 90% of its grid energy from green sources – and has only just begun to scratch the surface.
There is also a growing ecosystem of African start-ups using technology for green industries and processes across the economy, from clean cooking fuel to carbon capture and storage solutions. But these require risk capital and hands-on help to scale, attract further investment, and reach their potential. This was the thinking behind the partnership between FSD Africa Investments and Africa Climate Ventures – a new investment vehicle which aims to build Africa’s first “climate unicorns”.
Africa boasts some of the world’s greatest biodiversity, with massive natural mature carbon sinks consisting of forests, peatlands, mangroves, and 60% of the world’s remaining unused arable land. To realise global net zero by 2050, we need to protect our planet’s natural carbon sinks, make our consumption greener, and remove carbon from the atmosphere at a massive rate. More than any other region, Africa can rapidly scale these activities, providing immediate, diverse, and lasting climate benefits.
Uniquely among global locations, scaling up many of these opportunities in Africa does not require complex trade-offs, or painful transformations. In fact, the process could provide much-needed jobs for the continent’s youth, as well as desperately needed energy access and sustainable economic growth.
Many of these opportunities will offer healthy financial returns, if there is fair and equitable access to financial markets. But realising this opportunity will demand unprecedented levels of investment. Indeed, by developing its renewable potential for on-continent use, Africa could generate reliable electricity access for all Africans – including the nearly 600 million currently without any energy access – by 2030 whilst reducing total emissions associated with energy production by 80% and with 30% lower costs. However, this will require 40% more upfront investment.
So the need for finance and investment will need to be front and centre of discussions at the Africa Climate Summit. That means ensuring reforms to the global financial architecture take account of the climate crisis and addressing the factors that are restricting the flow of green finance. It also means recognising that the perceived higher riskiness of investments into green assets in developing countries requires a big increase in the availability of concessional and smart capital as well as greater financial innovation to address systemic barriers.
Africa is ready to play its part and, as this summit will show, it offers many opportunities for green capital investment. The rest of the world can accelerate and amplify this by partnering with, and investing in, the continent as well as supporting market building initiatives to ensure it has the capacity to absorb the capital needed. If they do so, then Africa and her young, dynamic population can truly play their role as global climate leaders.
James Mwangi is CEO of Africa Climate Ventures and Anne-Marie Chidzero is CIO of FSD Africa Investments.
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In line with the UK Government’s commitment to supporting clean, green and sustainable economic growth in Africa, UK Foreign Secretary James Cleverly visited a Nigerian e-mobility platform and electric vehicle assembler, MAX Nigeria.
With support from the UK-funded Manufacturing Africa programme, MAX raised $31 million to ramp up the assembly of electric two- and three-wheelers. MAX is now gearing up for a third capital raise, to fund its expansion to become a regional e-mobility player. MAX Nigeria has empowered over 21,000 drivers operating in 8 cities within Nigeria and has contributed to cutting 52 metric tons of CO2 emissions from the environment.
Manufacturing Africa’s team of McKinsey consultants conducted a market assessment of the electric vehicle value chain for MAX, contributing to their electric vehicle (EV) scale-up strategy. UK-linked financiers including Novastar (backed by British International Investment) and Shell Foundation are some of the organisations financing MAX’s growth. MAX has also found a UK business partner in Field Ready, to support them on recruitment.
Work with MAX is part of the UK’s support for economic growth, job creation and value-addition in Africa that aligns with global climate priorities.
British funds continue to support game-changing entrepreneurs and companies in Africa. British International Investment manages a $4.7bn investment portfolio in Africa, including 86 companies and 43 funds in Nigeria alone. Other funding sources include:
Importantly, the UK also provides support for companies to access investment, whether from the UK or elsewhere. The Manufacturing Africa programme is supporting 22 manufacturers to land investments in Nigeria, with a pipeline of $664m+ foreign direct investment (FDI). The programme supports over 120 companies across 5 countries in Africa, which are mitigating 239,000 tonnes of carbon dioxide, while creating 14,000 new jobs.
British High Commissioner to Nigeria, Richard Montgomery said: “I am delighted to visit MAX Nigeria with our Foreign Secretary James Cleverly. MAX are truly innovative and entrepreneurial, solving a thousand problems at once to bring affordable electric vehicles to West African riders.”
It is fantastic that a combination of UK public and private sector support is helping MAX to create jobs, bring new skills into the market, and solve climate change challenges. We will continue to support companies doing this groundbreaking work on the continent.
Chief Executive Officer and Co-Founder of MAX Nigeria, Adetayo Bamiduro said: “Our mission at MAX is to continue scaling the impact of our vehicle subscription platform across Africa and to deliver on our commitment to provide sustainable income to millions of mobility entrepreneurs by enabling them to access income-generating, energy-efficient, and electric vehicles that meet the essential needs of Africans.”
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FSD Africa in collaboration with InfraCredit has invested £10 million in a first-of-its-kind risk-sharing facility, Risk-sharing Backstop Facility (RSBF). The credit line is designed to unlock funding for sustainable infrastructure development in Nigeria.
With the increased accessibility of finance for climate-aligned infrastructure projects, the facility seek to accelerate Nigeria’s economic and social development as well as deliver on its climate goals.
In a statement, RSBF plans to mobilise short and medium-term local institutional investment into critical and climate-aligned infrastructure projects that have a reliable business model and are ready to expand but struggle with a higher perception of risk without this form of credit enhancement.
According to the International Monetary Fund (IMF), an estimated $3 trillion is required by Nigeria to finance its infrastructure deficit over the next 30 years. Despite the large amount of liquidity in the local market to fund a significant portion of this, infrastructure receives relatively little.
According to the statement, “The RSBF will address this perception of high risk by providing backstop support to investors alongside InfraCredit’s guarantees, thereby providing early-stage greenfield climate-aligned infrastructure ventures which are at a construction stage and too early for additional capital to be secured via a bond issue, with more time in which to start generating stable predictable cash flow and demonstrate their status as being long-term bankable.
“The current pipeline demonstrates the breadth and variety of projects this facility will support, with projects ranging from distributed renewable energy services for urban residences to commercial and industrial renewable projects, edge-certified green housing and e-mobility infrastructure. As part of any funding application all projects will be rigorously assessed on their environmental credentials.”
FSD Africa Invest (FSDAi) has disclosed that it is pleased to be undertaking this investment in partnership with an established player in the sustainable infrastructure financing space, InfraCredit – a business with a capitalisation of $209 million, and a series of AAA ratings from local rating agencies.
“Indeed, since its inception in 2017, InfraCredit has built an exemplary record supporting strategic Nigerian infrastructure projects, having written ₦145 billion (approximately $315 million) of guarantees underwriting bond issuances by eleven companies distributed across the power, transportation and logistics, ICT/telecommunications, gas to power, LPG clean cooking and input to infrastructure sectors. All of these issues have been fully subscribed, some by more than 160 per cent by domestic pension funds and insurance companies.”
FSDAi, which is backed by UK aid through the Foreign, Commonwealth and Development Office (FCDO) with a total capital base of $131 million, has a track record of backing innovation and being prepared to take risks to address financial market failures to bring about sustainable economic growth.
According to the statement, FSDAi’s £10 million investment in the RSBF is intended to galvanise finance and direct it to landmark infrastructure projects that will help create exponential economic, social and environmental benefits for Nigeria. This investment, therefore, aligns with one of FSD Africa’s primary objectives – developing capital markets by tackling blockages in the system.
It stated, “The facility has been carefully designed to support sustainable infrastructure initiatives which boast a reliable business model and are ready to expand but lack the necessary capital to do so. This delay or deferral of expansion projects due to unavailable capital creates a bottleneck that slows Nigeria’s progress towards solutions for some of the country’s most pressing, and transformational, infrastructure needs.
“The RSBF will raise funding in series, initially from FSDAi, but eventually from other funders, aiming to reach a total capital base of up to $50 million.”
Also, CIO of FSD Africa Investments, FSD Africa, Anne-Marie, stated that, “FSDAi’s partnership with InfraCredit on the bridge-to-bond facility introduces a de risking financing solution to mobilise short and medium-term local institutional investment into critically needed infrastructure projects that are currently considered un-bankable without alternative credit enhancement. Moreover, as Africa’s economies struggle to mobilise capital to develop key climate mitigation and sustainable power generation projects, this facility comes as a timely and much-needed intervention for Nigeria’s infrastructure landscape.’’
CEO of InfraCredit, Chinua Azubike, also expressed delight saying: “I am delighted to work with FSD Africa on an innovative facility which will support much needed but underfinanced projects realising their ultimate goals and purpose. Smart use of catalytic capital can dramatically increase the role of private capital and local intermediaries in investing in Nigeria’s sustainable infrastructure space and help the country develop responses to the significant challenges which confront it from the deteriorating environment and ecology to an unstable energy mix and severe social inequality.”
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1st August 2023, Lagos – FSD Africa Investments (FSDAi), in collaboration with InfraCredit, have invested £10m into a first-of-its-kind risk-sharing backstop facility, designed to unlock local currency funding for sustainable infrastructure development in Nigeria.
The Risk Sharing Backstop Facility (RSBF) will address the challenge of low credit enhancement by mobilising local institutional investment via bonds into viable early-stage or green-field climate-aligned infrastructure projects.
By increasing the accessibility of finance for the “climate-aligned” infrastructure projects, the facility will help Nigeria accelerate her social and economic development, green economic transition as well as deliver on its climate goals.
Backed by the UK International Development through the Foreign, Commonwealth and Development Office (FCDO), FSDAi is pleased to be undertaking this £10m investment in partnership with InfraCredit – an established player in the sustainable infrastructure financing space.
InfraCredit’s current investments and project pipeline demonstrates the breadth and variety of projects this facility will support, with projects ranging from distributed renewable energy services for urban residences, to commercial and industrial renewable projects, edge-certified green housing and e-mobility infrastructure.
The RSBF will raise funding in series, initially from FSDAi, and eventually from other funders – aiming to reach a total capital base of up to US$50m.This investment therefore aligns with one of FSD Africa’s primary objectives – developing capital markets by tackling blockages in the system
UK Foreign Secretary, James Cleverly MP said:
“This investment further demonstrates the UK’s commitment and contribution to Nigeria’s transition to clean energy and builds on decades of UK leadership in mobilising support for climate-related infrastructure challenges.”
“Just like the successes of British International Investment (BII) and our Private Infrastructure Development Group (PIDG), I am optimistic that InfraCredit will continue to grow and mobilise even more private sector capital to invest in better, greener infrastructure.”
Chief Investment Officer, FSD Africa Investments, FSD Africa, Anne-Marie, said:
“FSDAi’s partnership with InfraCredit on the bridge-to-bond facility introduces a derisking financing solution to mobilize short and medium-term local institutional investment into critically needed infrastructure projects that are currently considered un-bankable without alternative credit enhancement.
“Moreover, as Africa’s economies struggle to mobilise capital to develop key climate mitigation and sustainable power generation projects, this facility comes as a timely and much-needed intervention for Nigeria’s infrastructure landscape.’’
Chief Executive Officer, InfraCredit, Chinua Azubike, said:
“I am delighted to work with FSD Africa Investments on an innovative facility which will support much needed but underfinanced projects realise their ultimate goals and purpose.
“Smart use of catalytic capital can dramatically increase the role of private capital and local intermediaries in investing in Nigeria’s sustainable infrastructure space and help the country develop responses to the significant challenges which confront it from the deteriorating environment and ecology to an unstable energy mix and severe social inequality.”
The UK-SA Tech Hub, an initiative of the British High Commission (Embassy) in South Africa, has announced that it will provide a second round of funding for South Africa’s Startup Act Movement (SUA). “Our role is to support South Africa’s high-growth startups – whether in the tech industry or by enabling SMEs [small and medium-sized enterprises] in rural and township communities to become tech-enabled businesses – to maximise the value and impact they have on the South African economy and job creation,” explains UK-SA Tech Hub director Milisa Mabinza.
The SUA is a grouping of South African startup incubators, accelerators, founders and investors, founded in 2020. Led by a steering committee composed of leading members of the South African entrepreneurship development sector, its objective is the relaxation of governmental red tape and other policies that hinder the growth of emerging businesses. It has succeeded in winning the support of the World Bank and Financial Sector Deepening Africa (better known simply as FSD Africa), as well as the UK-SA Tech Hub.
“The UK-SA Tech Hub is committed to supporting the development of SA’s tech entrepreneurship ecosystem and actively looks for gaps in the market where support is needed,” affirms SUA chairperson Matsi Modise. “The organisation identified a need in the local tech landscape to help us drive policy reform and enable the growth and expansion of emerging businesses. Taking into consideration the policy framework in the country, the structure of the economy, as well as issues with the energy crisis, the SUA recognises that policy reform is at the core of creating a thriving SME ecosystem – but that this is dependent on a framework being implemented that supports high-growth startups in South Africa.”
South Africa’s policy framework lags behind those of, for example, Kenya, Nigeria and Tunisia. There are four main areas which create challenges for local startups.
One of these is that currently, the country’s intellectual property (IP) legislation places restrictions on the overseas transfer of IP that are both onerous and expensive. Yet being able to transfer IP offshore is a necessity for local startups, if they are to access investment from the global venture capital market.
Another challenge is imposed, when a startup sets up its global head office, by exchange control restrictions which are cumbersome and, again, expensive. Setting up a global head office is another necessity if a South African startup is to attract global venture capital investors.
Further, in South Africa, capital gains tax is triggered well before a startup reaches its potential “future liquidity event”. This makes developing a startup in South Africa yet again more expensive than in other countries.
And there is a need for South Africa to create a Startup and Remote Worker visa, which would allow the country to attract founders of high-growth startups and permit local entrepreneurs to employ very small numbers of highly experienced foreigners, to share their expertise and knowledge and so drive the growth of South African enterprises.
The need for such visa reform has been advocated since 2014, and in April this year President Cyril Ramaphosa stated that new visa categories would be introduced, for startups and remote workers.
“Startup visas are firmly on the President’s radar, the Deputy Finance Minister has adopted some of the business case studies that have been shared, and the SUA has also garnered support from the World Bank,” highlights Mabinza. “We believe the country has the potential to cultivate the emergence of the next unicorn on the continent, and through this second round of funding, look forward to being part of these important efforts.”
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7th June 2023, NAIROBI – FSD Africa Investments, AfricInvest, Malaria No More, and Health Finance Coalition (HFC) have announced the establishment of the Transform Health Fund (THF), a blended-finance fund for scaling proven and innovative healthcare models in Africa. THF has received commitments of $50 million reaching its target size for its first close.
The fund aims to respond to the critical healthcare financing gap in Africa while building a resilient healthcare ecosystem that improves access, affordability, resilience, and quality of healthcare for low-income patients. It will target three critical areas serving low-income patients: supply chain transformation, innovative care delivery, and digital innovation.
THF’s investments will target countries across sub-Saharan Africa, with a focus on East, Southern, and Francophone West Africa. This investment is designed to contribute to addressing the acute need for quality and affordable healthcare across the continent.
THF’s investment strategy explicitly targets health services for women as one of its main investment objectives. Some of its investments are constructed with a strong gender lens, targeting women-led businesses and serving increasing numbers of women.
Anne Marie Chidzero, Chief Investment Officer, FSD Africa Investments said: “FSDAi is excited to announce its catalytic capital investment in the innovative THF fund. We are proud that our capital contribution to this tranche of the fund facilitated the participation of other commercial and corporate private sector investors. Partnering with AfricInvest, HFC and the additional fund participants to strengthen the African healthcare system, particularly in a time of environmental stress and unpredictable climate events, is a high priority for FSDAi.”
Louise Walker, Head of Private Sector and Capital Markets Department, FCDO said: “The UK is excited with FSDAi to be a catalytic investor in the Transform Health Fund. This is an innovative partnership that brings together concessional and private finance which will in turn mobilise more capital, critical to making healthcare more accessible to and more affordable for low-income patients across the continent. I’m particularly pleased to see that investments will target women-led businesses and services will also focus on women, where we know maternal and infant mortality in Sub-Saharan Africa is well above SDG goals.”
AfricInvest, with its three decades of expertise and insight, will play a critical role in leveraging a wide range of support throughout many regions of the continent, providing financing for companies in the health sector, helping African local markets to both scale up their own healthcare systems as well as creating regional champions.
“As health financing needs continue to grow and healthcare demands increase, it is a critical we work toward closing Africa’s massive health financing gap,” said Martin Edlund, CEO, Malaria No More and Executive Director of the Health Finance Coalition. “The Transform Health Fund serves a vital role in catalyzing capital to scale healthcare solutions.”
THF’s partners include Royal Philips, Merck & Co., Inc., known as MSD outside of the United States and Canada, the U.S. International Development Finance Corporation (DFC), U.S. Agency for International Development (USAID), International Finance Corporation (IFC), Swedfund, FSD Africa Investments, Netri Foundation, Anesvad Foundation, Grand Challenges Canada (with funding from Global Affairs Canada), Chemonics International, and MCJ Amelior Foundation. The fund is expected to attract additional investors who share the goal of improving healthcare in Africa.
FSD Africa Investments (FSDAi) has invested £1 million in Africa Climate Ventures (ACV), a pioneering venture builder working to build a US$45 million portfolio by the end of 2024.
ACV will catalyse the carbon asset class in Africa by building innovative businesses focused on solving our generation’s greatest challenge and at the same time capturing a significant share of global carbon markets in Africa.
The venture represents a series of “firsts” in Africa: from its entirely Africa-based founder team and its permanent capital structure based in Kigali International Financial Centre, to its exclusive focus on carbon mitigation, capture and removal, the continent’s fastest evolving sector.
ACV represents a historic evolution in Africa’s carbon ecosystem and will contribute directly to capital mobilisation in climate action. Indeed, by 2030 ACV aims to eliminate one million tonnes of carbon every year while improving the lives of 50 million Africans and creating at least 5,000 jobs on the continent.
The venture builder features a peerless bench of experienced Africa-based founders with a record of pioneering innovation on the continent and championing disruptive enterprises.
James Mwangi is a 2022 Climate Breakthrough Award Winner and the founder of the Climate Action Platform for Africa, a non-profit organization that aims to help Africa achieve broad-based economic growth through climate action leadership.
James is best known as a co-founder of Dalberg Advisors, the firm’s first elected Global Managing Partner and then Dalberg Group’s Executive Director.
Mohamed Cassim is a South African investor best known as an angel investor, the Chair of MFS Africa Board, and the Founder of Abacus Advisory. CJ Fonzi was also a Partner at Dalberg Advisors, with the firm for over a decade he served as the Group Director of Innovation and then founded Dalberg’s Rwanda business in 2017.
This team is working to build a portfolio of climate positive businesses across Africa, with the ultimate aim of launching and scaling 15 ventures in the next four years.
ACV is seeking to build this portfolio by investing to:
ACV has adopted a structure more in-line with a global north venture studio in which the vehicle is structured as a permanent capital vehicle which sells equity rather than securing fund management mandates.
This has allowed ACV to begin building ventures in parallel with fund raising, which the founders believe is paramount given the urgency of climate change, and the need for Africa to quickly establish itself as part of the solution.
There are already two ventures in the portfolio:
KOKO Networks Rwanda, a co-venture between ACV and KOKO Networks which already provides sustainable bioethanol cooking fuel to over 900,000 Kenyan families and aims to reach a million Rwandan families by 2027, and Great Carbon Valley, a Kenya based developer of direct-use clean energy applications currently focused on developing a direct air capture and permanent carbon storage site in Kenya.
ACV’s pipeline of further opportunities demonstrates the breadth and versatility of the venture builder. They range from biochar and enhanced rock weathering technologies, to biodigester and e-mobility businesses, to harvesting carbon revenue for green growth across the portfolio of a well-established continental private equity fund.
These are businesses and technologies which have the capacity to transform African economies and make a meaningful difference in climate change but they require risk capital and hands on venture builders to scale, attract further investment, and reach their potential.
FSDAi’s investment in ACV takes the form of a convertible loan of £1 million to support the venture builder’s formalisation and build additional ventures as demonstrations to attract investment from larger funds.
On top of this investment, FSD Africa will provide £75,000 in grant funding to support the development of premium carbon credits and the marketing of portfolio and pipeline companies. Moving forward, FSDAi has secured the right to invest up to £8 million in ACV’s planned 2024 close.
FSDAi is the investment arm of specialist financial development agency FSD Africa which receives funding from the UK government and provides tools and resources to drive large-scale change in financial markets and support sustainable economic development.
ACV is the latest in a series of investments by FSDAi in innovative green investment vehicles including Persistent Energy, a leader and pioneer investor in the off-grid energy and e-mobility sectors in Sub-Saharan Africa, and Nithio, which invests in renewable off-grid energy.
FSDAi has committed to support ACV on the basis that its activities will actively contribute to Africa’s transition to net-zero, the promotion and acceleration of the continent’s green sector, and the creation of quality, skilled jobs (around 600 will be created via this initial £1 million investment) in a strategically vital sector.
Ultimately, FSD Africa believes that ACV can help the continent’s businesses participate in global carbon markets and capitalise on the continent’s unrivalled capacity for profitable climate-smart businesses.
Moreover, FSDAi’s investment aligns with the emerging priorities of African policymakers who will gather in Kenya in September at the Africa Climate Summit to co-ordinate a unified, collective pan-African approach to the discussions at the next COP in Dubai.
Anne-Marie Chidzero, CIO of FSD Africa Investments, said:
“In backing the ACV partners, FSDAi sees a tremendous opportunity to galvanise global investment and finance to promote Africa’s status as the pre-eminent climate investment destination.’’
James Mwangi, CEO of Africa Climate Ventures, said: “We are thrilled that FSDAi has joined us in building ACV. The involvement of FSDAi has already been invaluable in refining the ACV model. As we work towards ambitious objectives, we believe FSDAi will be a key partner in ensuring our success.”
Rachel Turner, Director, International Finance, Foreign, Commonwealth & Development Office, said:
“We are excited to be supporting this enterprising partnership between FSD Africa and ACV. The need to mobilise climate finance for Africa has never been greater, and this can’t happen without innovations that can build the pipeline of opportunities to absorb and deploy capital into productive, sustainable and inclusive uses. Tapping into the developing carbon market ecosystem represents a significant opportunity for Africa to raise capital at affordable terms whilst contributing directly to the climate challenge. This partnership with an impressive African team is pioneering in its approach.”
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Venture fund startup Africa Climate Ventures (ACV) has raised £1 million (Sh171.1 million) for investing in companies focused on environment-friendly projects in the continent.
The capital raised from FSD Africa Investments (FSDAi) is in the form of a convertible loan to support the venture builder’s formalisation and develop its capacity to attract investments from larger funds.
ACV is working to build a $45 million (Sh6.2 billion) portfolio by the end of 2024.
“We are thrilled that FSDAi has joined us in building ACV, and has already been invaluable in refining the ACV model,” said ACV chief executive and founder James Mwangi who is best known as a co-founder of Dalberg Advisors, the firm’s first elected global managing partner and then Dalberg Group’s executive director.
FSDAi is the investing arm of FSD Africa, a UK International Development-funded regional programme operating in more than 30 countries from its Kenya base.
On top of the capital investment in ACV, FSD Africa will provide £75,000 in grant funding to support the development of premium carbon credits and the marketing of portfolio and pipeline companies.
Moving forward, FSDAi has secured the right to invest up to £8 million in ACV’s planned 2024 close.
The venture builder’s team is working to build a portfolio of climate-positive businesses across Africa, with the ultimate aim of launching and scaling 15 ventures in the next four years.
ACV is seeking to build this portfolio by investing to add carbon revenue streams to existing African businesses, bring proven global climate technology to Africa and accelerate and de-risk the continental expansion of technologies and business models.
ACV is the latest in a series of investments by FSDAi in innovative green investment vehicles including Persistent Energy — a pioneer investor in the off-grid energy and e-mobility sectors in sub-Saharan Africa— and Nithio, which invests in renewable off-grid energy.
“In backing the ACV partners, FSDAi sees a tremendous opportunity to galvanise global investment and finance to promote Africa’s status as the pre-eminent climate investment destination,” said Anne-Marie Chidzero, the chief investment officer at FSDAi.
Ultimately, FSD Africa believes that ACV can help the continent’s businesses participate in global carbon markets and capitalise on the continent’s unrivalled capacity for profitable climate-smart businesses.
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