The Board of Directors of the African Development Bank Group has approved a $20 million concessional investment to support the second phase of the Covid-19 Off-Grid Recovery Platform (CRP).
Making the approval, the board said the CRP was a blended finance initiative to unlock private capital for energy access companies to mitigate the negative impacts of the pandemic while advancing access to clean electricity and ensuring a green economic recovery.
It also said that the Sustainable Energy Fund for Africa (SEFA) which also serves as a multi-donor fund under the management of the African Development Bank, would provide $7 million in financing for the expansion, as the remaining $13 million will come from the Global Environment Facility (GEF), a multilateral environmental fund.
According to a press statement issued by the bank and made available to Energy Window International through the African Petroleum Producers Organization (APPO), the second phase will help create an additional $70 million in funding for the energy access sector aimed at cushioning the pandemic’s persistent impacts on supply chains, inflation, the rising cost of capital, and the effects of the conflict in Ukraine.
Alix Graham, Fund Lead of the Off-Grid Energy Access Fund, said: “With the SEFA concessional funding under CRP, the Off-Grid Energy Access Fund was able to offer affordable financing solutions in markets such as Malawi and Sierra Leone that helped companies to reduce the impact of increased currency volatility and rising logistics costs.”
She described CRP as a partnership between the development and private sectors that offered innovative financing solutions without distorting the market or displacing private capital.
Off-Grid Energy Access Fund is managed by Lion’s Head Global Partners, one of three fund managers which jointly anchored Phase I of the Covid-19 Off-Grid Recovery Platform. The other two are Triple Jump and Social Investment Managers and Advisors. Mark van Doesburgh, deputy head of sustainable energy at Triple Jump, said: “We appreciate the continuous support provided by the African Development Bank to accelerate progress towards SDG 7. The concessional funding provided under CRP phase II comes at a critical moment for early-stage energy access companies that continue to be affected by Covid-19 and allows Energy Entrepreneurs Growth Fund to release flexible financing into the sector at a time when risk-capital is increasingly scarce.”
Adding that through CRP partners, energy access firms can access a broad range of flexible debt financing solutions on more affordable terms. Stating that over $50 million in soft financing had already been approved for 12 energy access companies that were commercializing and deploying solar home systems, mini-grids, and commercial and industrial solar irrigation solutions.
“Thanks to this strong partnership, we have been able to mobilize over $140 million of patient capital to mitigate the unprecedented challenges faced by the energy access industry in recent years and to protect progress towards universal access in Africa,” said João Duarte Cunha, Manager of the Renewable Energy Funds Division in charge of SEFA at the African Development Bank.