The Africa Finance Corporation (AFC) has signed an Accreditation Master Agreement (AMA) with the Green Climate Fund (GCF) in Seoul, South Korea. Having received its accreditation in 2015, AFC is one of the first African development finance institutions to sign such an agreement.
Established in 2010 by the 194 countries founder members of the United National Framework Convention on Climate Change (UNFCCC), the GCF launched its initial resource mobilization in 2014, which rapidly gathered pledges worth US$10.3 billion.
Following the signing of the AMA, AFC will have access to direct funding from GCF, rather than through intermediaries or third parties. Over time, the GCF is expected to become the main multilateral financing mechanism to support climate action in developing countries.
AFC intends to leverage this partnership by mobilizing GCF’s capital to further its low carbon emission investments in 4 of its 5 focus sectors: power, transport, heavy industries and telecoms. To date, AFC has demonstrated a longstanding commitment to financing green energy in Africa through its early investment in the 26MW award winning Cabeolica wind farm in Cape Verde, the first commercial wind farm in sub-Saharan Africa. AFC is also currently developing more than 500MW of renewable power projects across the continent.
Oliver Andrews, Chief Investment Officer of AFC, commented: “The consequences of climate change impact may have serious implications for the successful development of Africa’s economy. AFC is therefore highly committed to this partnership with GFC. Not only does AFC and the GCF have shared goals, we also have shared values. “
For example, AFC is committed to investing in post-conflict countries and those that face structural developmental challenges. Equally, the GCF also priorities societies that are highly vulnerable, in particular the Least Developed Countries (LDCs). As AFC is also driven by a belief in sustainable economic growth, in every sense this synergy is an excellent recipe for success.”
Pa Ousman Jarju, Director of GCF’s Country Programming Division, commented on the announcement: “AFC is well placed to support African entrepreneurs and explore the vast potential for economic growth across the continent in ways that do not harm the global environment. “
GCF activities are therefore aligned with the priorities of developing countries through the principle of country ownership. With the strategic injection of capital, African companies could one day lead the way in generating non-polluting energy for industry and local communities”
AFC is committed to proactively financing and managing the development of key infrastructure projects which will have a positive impact on the lives of Africans all over the continent. To date the Corporation has invested approximately US$4 billion in projects across 28 countries and in a wide range of sectors including power, telecommunications, transport and logistics, natural resources and heavy industries.
AFC, an investment grade multilateral finance institution, was established in 2007 with an equity capital base of US$1 billion, to be the catalyst for private sector infrastructure investment acros Africa. With a current balance sheet size of approximately US$3.5billion, AFC is the second highest investment grade rated multilateral financial institution in Africa with an A3/P2 (Stable outlook) rating from Moody’s Investors Service. AFC successfully raised US$750 million in 2015 and US$500 million in 2017; out of its Board-approved US$3 Billion Global Medium Term Note (MTN) Programme. Both offerings were oversubscribed and attracted investors from Asia, Europe and the USA.
AFC’s investment approach combines specialist industry expertise with a focus on financial and technical advisory, project structuring, project development and risk capital to address Africa’s infrastructure development needs and drive sustainable economic growth. AFC invests in high quality infrastructure assets that provide essential services in the core infrastructure sectors of power, natural resources, heavy industry, transport, and telecommunications.
The Green Climate Fund (GCF) supports the efforts of developing countries to respond to the challenge of climate change. It was set up by the 194 countries which are parties to the United Nations Framework Convention on Climate Change (UNFCCC) in 2010, as part of the Convention’s financial mechanism. It aims to deliver equal amounts of funding to mitigation and adaptation, while being guided by the Convention’s principles and provisions.