African Guarantee Fund (AGF), a leading specialised guarantee provider, has introduced the Mission 300 Local Currency Guarantee Facility, a groundbreaking initiative aimed at mobilising $5 billion to bolster energy access projects throughout Africa. This facility will provide critical financing support to small and medium-sized enterprises (SMEs) operating in the Distributed Renewable Energy (DRE) sector across the continent.
AGF highlighted that the Mission 300 Local Currency Guarantee Facility is a key part of a major effort led by the African Development Bank Group and the World Bank Group to bring electricity to 300 million people in Africa by 2030.
Africa continues to grapple with a severe energy access crisis, with around 600 million people still without electricity as of 2023. To achieve universal energy access by the end of the decade, the continent is estimated to need annual investments of nearly $25 billion.
“The Mission 300 Local Currency Guarantee Facility will foster collaboration with African governments while leveraging concessional financing from the African Development Bank, the World Bank Group, and other development partners. This will enable local banks to scale up their involvement in financing Distributed Renewable Energy solutions,” said Wale Shonibare, Director for Energy Financial Solutions, Policy, and Regulations at the African Development Bank, who also serves as a non-Executive Director at the African Guarantee Fund.
AGF support for local currency financing
AGF has been at the forefront of bridging the financing gap facing green SMEs by steering the implementation of the Green Guarantee Facility, supported by the Nordic Development Fund and the Investment Fund for Developing Countries.
The Green Guarantee Facility mobilises finance for renewable energy projects and has helped position AGF as a leader in driving sustainable development in Africa. The Green Guarantee Facility mitigates risks within loan portfolios, lowering the exposure of financial institutions to defaults and enhancing their confidence in lending to distributed renewable energy SMEs. It has also accelerated electrification efforts, particularly in underserved rural and peri-urban communities.
By addressing systemic barriers such as high collateral requirements, currency mismatches, and the lack of long-term financing, AGF has been able to de-risk SME lending and mobilize significant private sector capital into Africa’s energy transition.
AGF recently provided a credit guarantee syndication for a 40 MW solar plant in Madagascar. The transaction demonstrated the viability of local currency financing for renewable energy projects in the country while enhancing power sector resilience through diversification away from thermal power. The project, which provides improved electricity access to approximately 285,000 people, supports both UN Sustainable Development Goal 7 (affordable and clean energy) and Goal 13 (climate action) by reducing emissions by 34,000 tonnes of CO2 through the displacement of thermal power.
“AGF’s leadership in driving financial innovation for SMEs aligns seamlessly with the goals of Mission 300. By addressing financing gaps and fostering public-private partnerships, AGF plays a crucial role in driving inclusive energy solutions, accelerating the energy transition, and reducing carbon emissions across the continent,” said Jules Ngankam, AGF Group CEO.
“We have successfully implemented the Green Guarantee, which has facilitated progress toward national commitments under the Africa Energy Declaration, the African Union’s Vision 2063, and the global Sustainable Development Goals, fostering inclusive growth and climate resilience,” Ngankam concluded.