Under the partnership between the African Guarantee Fund (AGF) and the Clean Cooking Alliance (CCA), several financial institutions will expand their clean energy portfolios. This support will strengthen the financing of small and medium-sized enterprises (SMEs) specialising in the provision of clean cooking solutions in Africa, as well as carbon project developers.
Financial institutions in East, Southern and West Africa will benefit from new funding to support clean cooking in these different sub-regions. The funds were pledged by the African Guarantee Fund (AGF) as part of a recently signed partnership with the Clean Cooking Alliance (CCA), an initiative that aims to build a vibrant, inclusive and financially sustainable industry for universal access to clean cooking by 2030.
The financial institutions, beneficiaries of this guarantee facility, will use it to “address the capacity building gaps and risks associated with lending to green small and medium-sized enterprises (SMEs) in Africa, while preparing these SMEs to become credit and investment ready, enabling them to play their full role in promoting sustainability and growth of the green economy on the continent,” says AGF.
Reducing GHG emissions
The AGF will also support the creation of a pipeline of carbon project developers ready to obtain credits. The CCA’s knowledge of the clean cooking and carbon markets will be essential for the selection of financial institutions in East, Southern and West Africa.
Partners also commit to providing banks with insights into the clean fuel and cooking appliance markets, to enable them to understand the value of investing in clean energy markets; providing targeted technical assistance prior to board decisions and subsequently supporting activities such as staff training and business process preparation; and engaging potential donors and investors and partnering with associations, alliances and other partners to promote the clean cooking and energy sectors more widely.
To date, AGF has already unlocked nearly $3 billion in financing for SMEs in 40 African countries through over 150 financial institutions. By supporting innovation for clean cooking on the continent, AGF and CCA aim to help reduce greenhouse gas (GHG) emissions. “An estimated 2.4 billion people worldwide use polluting open fires and inefficient stoves for cooking, contributing to 3.2 million premature deaths and harming livelihoods, climate and the environment,” says AGF. It also aims to reduce the misuse of wood energy, one of the main causes of deforestation and natural forest degradation on the continent.