African Guarantee Fund Launches $5B Energy Access Initiative

AFRICAN STOCKS AND FINANCEJanuary 30, 2025 at 9:36 AM UTC

TLDR

AGF has introduced a $5B initiative to finance SMEs in Africa’s Distributed Renewable Energy sector
The facility aims to boost local bank involvement in energy access projects
Africa faces a severe energy deficit, with 600 million people lacking electricity as of 2023

The African Guarantee Fund (AGF) has introduced the Mission 300 Local Currency Guarantee Facility, a $5 billion initiative to expand financing for small and medium-sized enterprises (SMEs) in Africa’s Distributed Renewable Energy (DRE) sector. The facility aims to boost local bank involvement in energy access projects, supporting a broader effort led by the African Development Bank (AfDB) and the World Bank to provide electricity to 300 million Africans by 2030.

Africa faces a severe energy deficit, with 600 million people lacking electricity as of 2023. Achieving universal energy access requires nearly $25 billion in annual investment. The Mission 300 initiative will leverage concessional financing from global development institutions to de-risk SME lending and encourage private sector participation.

AGF has already played a key role in green finance, backing renewable projects through its Green Guarantee Facility. It recently participated in a 40MW solar plant credit guarantee in Madagascar, benefiting 285,000 people and cutting 34,000 tons of CO₂ emissions.

Daba is Africa's leading investment platform for private and public markets. Download here

Key Takeaways

Africa’s renewable energy sector faces two major challenges: high collateral requirements and currency mismatches that deter investment. AGF’s Mission 300 tackles these barriers by providing local currency guarantees, lowering financial risks for lenders, and mobilizing private capital for clean energy solutions. The facility supports Africa’s energy transition by improving SME access to capital, a key factor in electrifying rural and peri-urban communities. AGF’s model aligns with the African Union’s Vision 2063 and UN Sustainable Development Goals, emphasizing both climate resilience and inclusive growth. As demand for renewable energy financing rises, local banks and SMEs will play a pivotal role in expanding access. With Mission 300, AGF is setting the stage for long-term energy security while fostering economic growth through sustainable infrastructure investments.

Finance

Guarantee

Energy Access

African Guarantee Fund

Infrastructure Finance