The Facility for Energy Inclusion (“FEI”) signed financing agreements with the German development finance institution DEG, who will be providing EUR 50 million to support FEI’s mission of scaling up small-scale decentralized renewable energy (“DRE”) projects in Africa. This collaboration will provide much-needed financing to support renewable energy projects, addressing energy deficits and promoting sustainable economic growth across the continent.

With DEG’s investment, FEI will be better positioned to scale its impact by financing projects that expand energy access, reduce reliance on fossil fuels, and contribute to Africa’s energy transition. DEG’s involvement underscores its commitment to sustainable development by supporting private-sector-led initiatives that drive economic growth while mitigating climate change.

“This collaboration with DEG demonstrates strong trust in Cygnum Capital’s expertise as a leading fund manager. This is a significant achievement for FEI cementing its position as a leading lender in the DRE market in Africa with over USD 370 million cumulative commitments across 23 countries to date,” said Carmen de Castro, Managing Director at Cygnum Capital Asset Management.

Monika Beck, Member of the DEG-Management Board added: “DEG is delighted to strengthen its relationship with Cygnum Capital, an experienced impact manager. This is our second cooperation within a year. We both share the commitment to foster high development and climate impact. By providing long term capital for the Facility for Energy Inclusion, DEG will support the expansion of renewable energies in Africa - an investment fitting in very well with DEG’s strategy.”

Across many African countries, unreliable and costly electricity has led to frequent power outages and dependence on fossil fuel backup generators. This project aims to reduce reliance on these high-emission energy sources, enhancing access, affordability, and reliability of electricity supply while fostering the development of the emerging DRE market.

FEI was established in2019 and is managed by Cygnum Capital Asset Management, an asset manager with an extensive track record of green investments in Africa. Last year, DEG announced an investment in Cygnum Capital’s Africa Local Currency Bond Fund (“ALCBF”),to increase private-capital mobilisation.

 About Cygnum Capital

Cygnum Capital is an investment bank and asset manager, operating across frontier and emerging markets. Cygnum Capital Asset Management manages five pioneering funds: four debt funds including: (i) ALCBF, a ground-breaking investment vehicle established to support local currency capital markets, (ii) Off-Grid Energy Access Fund (“OGEF”) which supports companies in off grid energy such as SHS and small- medium mini-grids,(iii) FEI which support companies that provide a range of renewable energy solutions such as medium - large mini- grids, commercial and industrial and IPPs with a maximum capacity of 25 MW, (iv) Africa GoGreen (“AGG”) Fund which supports companies combating climate change by reducing the use of fossil fuels through new technologies and that increase energy efficiency, (v) Africa Agricultural Trade Investment Fund (“AATIF”) which invests in the African agricultural sector promoting primary agricultural production, value addition through local processing and increased international trade integration, and a VC private equity fund, (vi) E3 Low Carbon Economy Fund for Africa (“E3 LCEF”) which invests in climate-smart services, digital connectivity & applications, low-carbon productivity enablers. Cygnum Capital Asset Management has over USD 1.15bn million of assets under management with investments in more than 30 African countries.

https://www.cygnumcapital.com/ 

About the Facility for Energy Inclusion

FEI is designed to support small-scale independent power producers delivering power to the grid, mini-grids, C&I, and captive power projects. FEI was set up by the African Development Bank as part of its New Deal for Africa initiative. In addition to the investment by the AfDB, FEI received equity funding from the German Federal Ministry for Economic Cooperation and Development through KfW and Norfund, and loan commitments from the Austrian Development Bank and the International Finance Corporation (“IFC”).The AfDB also invested on behalf of the Clean Technology Fund and the European Commission.

Additionally, FEI is supported by the Project Preparation Facility (“PPF”), funded by the Global Environment Facility, through the African Development Bank. The PPF through its due diligence costs window provides returnable grant funding for last-mile processes that are crucial to closing transactions and to fund due diligence, preparatory costs incurred in establishing innovative structures or transactions that FEI is seeking to lend to. The PPF’s blended finance window provides concessional reimbursable grants to support (i) renewable energy projects in transition states and fragile contexts and (ii) mini-grids projects.

https://www.feiafrica.com/

About DEG‍

For more than 60 years, DEG has been financing and advising private enterprises operating in developing and emerging-market countries. With a portfolio of around EUR 11.6billion we’re one of the largest private-sector development financiers. As an impact and climate investor we accompany companies that are addressing transformation and aiming to seize their opportunities. Our customers not only receive financing and advisory solutions tailored to their needs: they can build on our market knowledge, our impact and climate expertise and our international network. In this way, DEG, a subsidiary of KfW, contributes to creating more skilled jobs and local income and to improving value creation on the ground in line with the SDGs.

Learn more: www.deginvest.de