Cleantech startups in Africa have a new Energy Inclusion fund in place to pitch to. The African Development Bank (AfDB), the European Commission, KfW, the Clean Technology Fund, Norfund, and other investors have committed nearly $160 million to the first close of the Facility for Energy Inclusion (FEI). Facility for Energy Inclusion Fund is a targeted $400 million fund to improve energy access across Africa through small-scale renewable energy and mini-grid projects.

“After three years of hard work, we are pleased to see the second and larger piece of our energy access debt funding platform — FEI — up and running on the back of very significant commitments from our partners. We look forward to seeing FEI catalyse financing for new energy sector business models and accelerate our efforts to electrify Africa,” said Wale Shonibare,Vice-President of power, energy, climate & green growth at African Development Bank.

Here Is All You Need To Know

• The project led by the AfDB, Facility for Energy Inclusion Fund serves as a financing platform to catalyze financial support for innovative energy access solutions and startups in Africa.
• The bank, as the Facility’s anchor sponsor, has put up $90 million in financing. 
• That sum includes $20 million that the Bank is providing in its capacity as the implementing agency of the Clean Technology Fund.
• In addition to the Bank’s commitment, the European Commission committed €25 million to the Fund, the Norwegian Investment Fund (Nofund) committed $23 million, and German Development Bank KfW committed €25 million.
• Facility for Energy Inclusion Fund will also include a $10 million Project Preparation Facility from the Global Environment Facility that will provide reimbursable grants for transaction advisory to facilitate financial close.

Read also: Solar Startups and Businesses In Burkina Faso To Get Up To $200k From UN-backed Fund 

Why The Investors Invested

“Norfund is pleased to participate in this new facility which makes debt financing available to smaller-scale renewable power projects in Africa. We anticipate that the facility will be successful in attracting private capital to this segment of the market”, said Mark Davis, Executive Vice President, Clean Energy at Norfund.

“With our investment in this flagship fund, KfW on behalf of the German Government emphasises its commitment to work with other development finance institutions to improve access to clean energy in Africa. Our junior equity investment aims at mobilising public equity and private debt investors to scale up the financial means available for innovative renewable energy projects like new mini-grids to electrify Africa” said Babette Stein von Kamienski, Head of Division Infrastructure, Southern Africa at KfW.

Cleantech Startups And Businesses The Fund Would Be Targeting 

• The debt financing Energy Inclusion Fund will support small-scale Independent Power Producers and startups delivering power to the grid, mini-grids and captive power projects across Africa. 
• Projects in sub-Saharan African countries where electricity access rates are comparatively lower receive priority.
• Other eligibility criteria include the requirement to use renewable energy technology, to have capital expenditure of less than $30 million and generation capacity below 25MW.
• Initial pipeline projects have been identified in Burundi, Cape Verde, Madagascar, Malawi and Mozambique.

Who Manages The Fund 

• The Facility for Energy Inclusion Fund is managed by LHGP Asset Management, part of Lion’s Head Group, a fund manager focused on bringing innovative financial solutions to emerging markets and selected through an internationally competitive process.

“As Fund Manager, we are excited that the limited partners have given us a flexible mandate to provide tailored financing solutions to this exciting industry which has the potential to make green growth a reality in Africa. By focusing on smaller renewable energy producers, FEI will contribute to the electrification of Africa, in particular in more remote and traditionally neglected parts of the continent,” said Clemens Calice, Co-CEO of LHGP Asset Management, the Fund Manager of FEI.

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer.
He could be contacted at udohrapulu@gmail.com