IFC, a member of the World Bank Group, has teamed up with Social Investment Managers and Advisors LLC (SIMA Funds or SIMA) and other financiers to achieve the first close of a groundbreaking $150 million solar green bond. This initiative aims to finance productive-use solar projects across Africa, particularly targeting small and medium-sized enterprises (SMEs) in underserved areas.
The bond represents a significant milestone as it supports one of the largest impact-driven funds dedicated to advancing the rooftop solar sector in Africa. With a focus on SMEs, which often face challenges in accessing financing, the bond will offer short-term corporate financing and project financing of up to 10 years. It will cater to individual projects less than 5 megawatts (MW) in sectors such as manufacturing, services, education, healthcare, and agri-processing.
This landmark investment marks the first step under the IFC and Global Energy Alliance for People and Planet (GEAPP) partnership, which aims to strategically invest in distributed renewable energy (DRE) solutions, primarily in Sub-Saharan Africa. IFC’s $45 million financing package for the solar green bond includes its own-account loan, along with subordinated loans from the Finland-IFC Blended Finance for Climate Program and GEAPP.
Other lenders involved in the $131 million first close include the Shell Foundation, the US Development Finance Corporation, the Schmidt Family Foundation, FMO, DEG, BIO, and OeEB. A second close led by private sector investors is anticipated to raise an additional $25 to $30 million by April 2024.
The bond’s overarching goal is to enhance access to clean, reliable, and affordable energy in Africa, thereby contributing to the achievement of Sustainable Development Goals and bolstering climate resilience. It is expected to finance over 220 MW of on-site solar energy and energy storage projects, leading to energy savings, value chain enhancements, and significant reductions in fossil fuel consumption and carbon emissions.
Sérgio Pimenta, Regional Vice President for Africa at IFC, emphasized the importance of affordable financing for Africa’s smaller businesses in adopting solar solutions. Vinay Bandaru, Partner at SIMA Funds, highlighted the bond’s unique ESG scorecard and its potential to drive impact in environment, society, and governance.
Joseph Ng’ang’a, Interim CEO at GEAPP, underscored the importance of innovative financing models and cross-sector collaboration in advancing renewable energy systems. Finland’s support was also acknowledged as crucial in enabling sustainable growth and promoting economic prosperity in Africa.
Moody’s has assigned the highest sustainability grading to the bond, affirming its commitment to driving positive environmental and social impact.
