New fund to support small firms’ power projects for sub-Saharan Africa

The Energy Access Ventures Fund has secured commitments of €54.5 million to invest in five-year instruments for about 20 African small- and medium-sized enterprises, with the aim of expanding infrastructure to provide electricity for the first time to up to one million people in the region by 2020.

The private equity fund is jointly backed by Schneider Electric of France, the UK’s development finance institution CDC, the European Investment Bank, the French Development Finance Institution Proparco, through its investment and support fund for business in Africa FISEA, the Opec Fund for International Development and the French Global Environment Facility.

The fund will be managed by Aster Capital and advised by the Africa-based Energy Access Venture, which supports regional entrepreneurs and is sponsored by Schneider.

Schneider said: “The fund will target smaller businesses in Africa that specialise in promoting low-carbon and low-cost electricity access solutions in rural areas and close to main towns and that cannot access regular finance. It will focus in a first instance on Burundi, Ethiopia, Kenya, Malawi, Mozambique, Rwanda, Tanzania, Uganda, Zambia and Zimbabwe.”

In addition, Schneider said “a range of technical support will be provided to offer practical help and advice for local businesses concerning management, governance, energy efficiency, and environmental best practices”.

Other assistance to selected fund beneficiaries will include technical advice to help meet international compliance regulations.

According to Schneider, 625 million people living in sub-Saharan Africa lack access to electricity, which “holds back social progress, economic growth and environmental improvements”.

The objective of the fund “is to combine economic investment, innovation, and skill development”, Schneider said. “The fund will be backed by the experience acquired by the investment arm of the Schneider Electric Energy Access fund, to help develop entrepreneurial initiatives to improve access to energy… by strengthening local energy infrastructure.”

Earlier this month, state-owned development funds from Norway and Britain announced they were teaming up to build additional power plants in sub-Saharan Africa and increase electricity generating capacity in the region by “at least 5,000 megawatts” over the next 10 years.

Norfund, the Norwegian Investment Fund for Developing Countries, and the UK’s CDC said that through their new partnership, Norfund will acquire a “significant minority” stake in Globeleq Africa from the Actis infrastructure 2 fund for a cash consideration of around $225 million, “subject to completion adjustments and including capital to further fund two expansion projects”.

According to latest figures from the Infrastructure Consortium for Africa, total infrastructure funding commitments in Africa increased for the second year running in 2013, with the energy, transport, water and information and communications technology sectors the key beneficiaries.