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Swedfund, Sweden’s development finance institution, is providing a $20 million loan to the Africa Go Green Fund (AGG) to support companies reducing emissions and improving energy efficiency across the continent.
The investment will increase access to debt financing for businesses working in green buildings, clean cooking, clean transport, and industrial energy efficiency.
“Energy efficiency is one of the most practical ways to reduce emissions while lowering costs. Through this investment, Swedfund will support companies providing solutions that people use in everyday life, from cleaner cooking to more energy-efficient housing and transport,” said Gunilla Nilsson, investment director and head of energy and climate at Swedfund.
Africa Go Green Fund is a pan-African fund providing debt financing to businesses and projects that cut greenhouse gas emissions.
Established by KfW and managed by Cygnum Capital, an investment bank and asset manager with offices across Africa, Europe, and the Middle East, the fund has already financed close to 30 projects across 17 countries and is expanding its lending activities to reach more companies.
Last month, AGG provided a $10.7 million senior debt facility to BioLite to finance the purchase and distribution of at least 163,500 improved cookstoves across Zambia.
Energy demand in Africa is rising, but many energy efficiency companies struggle to find financing that meets their long-term needs.
This hinders their ability to expand solutions that can cut emissions, reduce costs, and enhance essential services.
Swedfund plans to invest in AGG to help boost its ability to lend to these companies that provide important climate benefits but find it hard to access the right type of funding.
Swedfund invests in developing countries with a focus on poverty reduction through sustainable business growth and job creation.
By investing alongside other public and private investors in AGG, Swedfund also helps mobilise additional capital for energy efficiency solutions across the continent.
Last month, Swedfund invested around $12 million in Acumen Resilient Agriculture Fund II (ARAF II) to support growing food and agriculture companies across Africa that strengthen agricultural value chains.
They also invested additional $5 million in TLG Africa Growth Impact Fund II (TLG II) earlier in July to further support the preservation and creation of decent jobs in small and medium sized companies that otherwise struggle to access financing.
