NDF - Financing for climate change and development projects

New Financing Commitment Scales up Green Guarantees for SMEs in Africa

Photo: AGF
Pasi Hellman, NDF, and Felix Bikpo, AGF, shake hands following the signing as Morten Christiansen, Senior Vice President for IFU looks on

NDF and AGF renew their joint commitment to SME-led green growth in Africa

Nairobi - 21 June 2018

During a combined signing event with NDF and the Danish Investment Fund for Developing Countries (IFU), the African Guarantee Fund (AGF) secured a fresh injection of shareholder capital of more than USD 25 million comprising EUR 9 million from NDF and USD 16 million from IFU.

The new financing commitment from NDF raises NDF’s total equity exposure to AGF to EUR 15 million and supports scale-up of the AGF Green Guarantee Facility (GGF) unlocking access to finance for SME-led green growth and climate resilient development in African economies.

“AGF has established itself as a leader in green finance Africa-wide since we first joined in 2016,” said Pasi Hellman, NDF Managing Director. “With this additional contribution to AGF, we are pleased to be strengthening our support to a proven and successful organization and its green finance instrument, for the benefit of African SMEs, green growth in Africa, focusing also strongly on improved job creation for women and the youth.”

In comments during the signing, AGF CEO Felix Bikpo said, “we are grateful and honoured by this renewed expression of support to AGF and Africa’s SME sector. The successful businesses of tomorrow will be the green businesses, and with this support we are putting in place the tools to enable Africa’s SMEs to grow green today.”

In 2015, NDF and AGF signed a Memorandum of Understanding (MoU) to explore joint development of green finance products combining NDF’s climate and green growth mandate and AGF’s reach with financial institutions and SMEs across Africa with a focus on private sector-led green growth. NDF became a shareholder in 2016 with an initial equity injection of EUR 6 million, and the two institutions launched GGF as a first-mover facility to test the appetite for a climate-focused green guarantee.

In less than 2 years, AGF leveraged NDF’s original share capital by a factor of 7:1, signing more than USD 22 million in green guarantees with partner financial institutions and unlocking almost USD 50 million in direct financing to SMEs in sectors including clean energy and climate smart agriculture. In parallel, a line of grant financing from NDF sponsored green finance capacity development and market awareness including roll out of a series of Green Finance Conferences and trainings in Zambia, Kenya and Ghana during the course of 2017. A 4th Green Finance Conference took place earlier this week in Cote d’Ivoire.

AGF today has a strong track record, a supportive Board of Directors, an AA- Fitch rating obtained in November 2017 and a promising pipeline across all activities including advancing SME green business. AGF is now actively involved in an ambitious round of fundraising, and the signing sends a strong signal from the group of existing shareholders on confidence overall in AGF’s growing role and relevance in delivering SME-led sustainable and green growth in Africa.