AfDB maintains steady renewables funding in Africa

From the newsletter

The African Development Bank maintained its investment flows in the energy sector, providing over $416 million in funding for renewables in April. In March, it contributed at least $331 million. Mauritania was the largest single beneficiary in April, receiving $289 million. Other funders like the World Bank and the European Union provided just over $65 million.

• Femi Adeyemo, founder and CEO of the Nigerian renewable energy startup Arnergy, secured $18 million in Series B funding. The company has so far received at least $27 million since its inception in 2013.

• The chairman and CEO of UK-based firm Genesis Energy Holding, Akinwole Omoboriowo, sealed a $500 million energy investment with the Katsina state government in Nigeria.

More details

• April saw a dip in overall energy investments, with a significant portion of the funding originating from common organisations that have consistently invested in Africa, such as Norfund, British International Investment (BII), the African Development Bank, the World Bank, and the European Union.

• British International Investment (BII), Norfund, and Breakthrough Energy Ventures were the lead investors in the $18 million funding for Arnergy Energy. The company plans to use these funds to roll out 12,000 solar home systems by 2029 using a lease-to-own business model. Arnergy is also targeting expansion into other West African countries.

• Norfund also invested $40 million in Communication and Renewable Energy Infrastructure (CREI) to provide stable solar energy for 2,876 mobile towers in Mali. This investment aims to improve mobile network stability and digital inclusion. Last month, Norfund invested $45 million in CrossBoundary Energy to support its expansion to commercial and industrial customers.

• RMB Ventures Limited, the private equity arm of Rand Merchant Bank, invested $120 million in Airnergize Capital Fund I. This fund aims to drive and advance sustainable clean technology investments across Southern and broader Africa and plans to reach $200 million in the coming months. Private equity funds seem to be angling for a share of the renewable energy revenue. Last month, Evolution Fund III secured $238 million for African renewable energy investments.

• LeapFrog Investments, a private equity firm dedicated to sustainable development, has received a $60 million pledge from the European Investment Bank (EIB) to accelerate the use of green technologies. LeapFrog plans to invest $500 million in its Climate Investment Strategy to expand green tools and technology for African and Asian consumers. Its founder and CEO, Andrew Kuper, who holds a PhD in political science, has led the company since 2007. The company reported revenues of $7.1 billion in its 2024/25 financial year.

Our take

• African governments need to make the renewables market attractive by designing favourable policies. Moreover, they need to look internally for financing sources, as countries like the USA have proven to be unreliable partners. It is encouraging that the AfDB is taking on this role by funding green projects across Africa.

• Numerous emerging investment opportunities exist for renewables, particularly as sectors like telecommunications, mining, schools, and healthcare facilities seek reliable, sustainable, and affordable power. The fact that over 200,000 African schools and 70,000 healthcare facilities lack electricity presents a billion-dollar market for investment.

• Private equity funds should strategically explore access to relatively cheap capital offered by Development Finance Institutions like the IFC and the European Investment Bank. This way, they can enhance their capacity to finance renewable energy projects and compete effectively.