African Guarantee Fund and Clean Cooking Alliance Partner to Promote Financial Investments in Clean Cooking Markets in Africa
NAIROBI, April 11, 2023 — The African Guarantee Fund (AGF) and the Clean Cooking Alliance (CCA) have launched a partnership to promote financial innovation, access to responsible carbon finance, and investments in clean cooking companies and programs. In line with its mission, AGF will work through selected financial institutions to carry out the goals of the partnership. Both organizations will focus on markets in eastern, southern, and western Africa, where there is significant need and opportunity to expand investments in green projects through clean cooking.
An estimated 2.4 billion people worldwide rely on polluting open fires and inefficient stoves for cooking, contributing to 3.2 million premature deaths and harming livelihoods, the climate, and the environment. However, current levels of investment in clean cooking – estimated at around US $130 million each year – fall far short of the US $10 billion needed to reach universal access. Through their partnership, AGF and CCA aim to increase financial investments to grow clean cooking markets and expand access to modern fuels and technologies in Africa.
“This partnership brings together two organizations with distinct and complementary areas of expertise,” said Feisal Hussain, CCA’s Senior Director of Innovative Finance. “AGF’s deep knowledge of financial institutions and small- and medium-sized enterprises (SMEs) in Africa, combined with CCA’s unique understanding and connections across the clean cooking and carbon markets, present exciting opportunities. The partnership will enable carbon project developers to access pre-financing, thus helping to speed up both customers’ access to clean cooking and the flow of carbon revenue to clean cooking value chains, generating the volumes of carbon credits that buyers need. And for commercial banks, this presents a low-risk strategy for entering the carbon market before taking advantage of market growth. Importantly, we aim to lower the entry barrier for smaller clean cooking companies, helping to build carbon markets that are accessible to many.”
AGF Group CEO Jules Ngankam said, “Our partnership with the Clean Cooking Alliance targets financial institutions to enable them to grow their clean energy portfolios by developing innovative financial solutions that promote clean cooking and use of clean fuels. Through AGF’s Green Guarantee Facility and Technical Assistance, financial institutions will be able to address capacity building gaps and risks associated with lending to green SMEs across Africa, while preparing these SMEs to become credit- and investment-ready, to allow them to fully play their role of promoting sustainability and growing Africa’s green economy.”
Through this new partnership, AGF and CCA will collaborate in the following ways:
- Generating interest and demand from banks – Providing banks with direction on markets for clean fuels and cooking appliances, enabling them to understand the value of investing in clean energy markets.
- Building the capacity of private finance initiatives – Providing targeted technical assistance prior to board decisions and, afterwards, supporting activities such as staff training and preparing business processes.
- Creating a pipeline of credit-ready, clean energy SME projects and carbon project developers – Providing technical assistance to SMEs in clean fuel and appliance markets to make them credit ready.
- Guarantee, re-guarantee, and co-guarantee partnerships – Exploring opportunities to facilitate enhanced financing for clean energy projects.
- Partnerships and advocacy – Engaging potential donors and investors and partnering with associations, alliances, and other partners to promote clean cooking and energy sectors more broadly.
About the Clean Cooking Alliance (CCA)
CCA works with a global network of partners to build an inclusive industry that can make clean cooking accessible to all. Established in 2010, CCA is driving consumer demand, mobilizing investment, and supporting policies that allow the clean cooking sector to thrive.
For more information, visit: https://cleancooking.org/
About the African Guarantee Fund (AGF)
The African Guarantee Fund is a specialised guarantee provider whose mission is to facilitate economic development, sustainable job creation and poverty reduction in Africa. To achieve this, AGF increases access to finance for Small and Medium-sized Enterprises across key economic sectors through its guarantee products and capacity development assistance. With an AA- Fitch rating, AGF’s guarantees provide significant risk mitigation and capital relief to partner financial institutions on their SME loan portfolios. AGF also provides capacity development assistance to its Partner Financial Institutions to help them improve their SME lending capabilities.
Since inception, AGF has issued a guarantee portfolio of c. USD 1.8 billion unlocking more than USD 3 billion SME financing, through partnerships with 200 partner financial institutions across 40 African countries.
As a 2X Challenge qualified institution, AGF is committed to support women-owned and women-led businesses through the AFAWA Guarantee for Growth program which aims to unlock up to USD 5 billion for African women businesses by 2026.
AGF also fosters sustainable growth by offering a Green Guarantee Facility to lending institutions to enable them ease access to finance for SMEs investing in climate and green growth-oriented economy.
AGF is backed by the following shareholders and sponsors: The Government of Denmark through the Danish International Development Agency (DANIDA), the Government of Spain through the Spanish Agency for International Cooperation (AECID), the African Development Bank (AfDB), French Development Agency (AFD), Nordic Development Fund (NDF), Investment Fund for Developing Countries (IFU), German Development Bank (KfW), French Agency for Private Sector (PROPARCO), West African Development Bank (BOAD) Global Affairs Canada (GAC), and USAID’s West Africa Trade & Investment Hub (WATIH).
For more information, visit: www.agf.africa
