In a significant move to empower local businesses driving climate solutions, the African Development Bank (AfDB) has approved a $10 million investment in the KawiSafi II Fund. This junior equity investment, channeled through the Bank’s Sustainable Energy Fund for Africa (SEFA), aims to bridge the funding gap for climate-focused ventures in sub-Saharan Africa.

The KawiSafi II Fund is a $200 million venture equity fund specifically designed to tackle investment shortfalls in four key sectors: energy transition, productivity, mobility, and logistics. Recognizing the importance of responsible development, the fund includes a dedicated $10 million technical assistance facility. This facility will play a crucial role in maximizing the fund’s climate impact and ensuring adherence to environmental, social, and governance (ESG) best practices.

The KawiSafi II Fund builds upon the success of its predecessor, the KawiSafi Fund I. Established in 2016 with a focus on off-grid energy, KawiSafi I raised $67 million and benefited from the expertise of its sponsor, the Acumen Fund. Acumen boasts over two decades of experience in backing transformative companies that address global poverty challenges, including those in the renewable energy space. KawiSafi I’s track record includes successful investments in renowned companies like D.light, Bboxx, and BioLite.

“The African Development Bank’s investment in KawiSafi II, our innovative climate fund, serves as a critical catalyst,” stated Amar Inamdar, Managing Director of KawiSafi Ventures. “This investment will significantly aid us in reaching a first close and attracting the substantial private capital urgently needed to support Africa’s climate innovators. As the continent’s leading development finance institution, the Bank’s commitment will leverage investments into groundbreaking African startups tackling climate change through renewable energy, clean mobility, and other vital sectors for achieving our climate goals.”

The KawiSafi Funds represent a model for the patient, risk-tolerant capital required by fledgling African climate businesses. These ventures are striving to penetrate new markets amidst a significant shortage of equity capital within the continent.

“The KawiSafi Fund II presents an opportune moment to provide much-needed venture and growth capital to emerging businesses linked to energy access and energy transition,” said João Duarte Cunha, Manager of the Bank Group’s Renewable Energy Funds Division, which oversees SEFA.

The AfDB’s investment through SEFA underscores its unwavering commitment to promoting a just energy transition and combating climate change. This commitment is realized through strategic partnerships with the private sector and investments in pioneering solutions.

SEFA, a multi-donor Special Fund, plays a pivotal role in unlocking private sector investments in renewable energy and energy efficiency. By offering technical assistance and concessional financing, SEFA tackles market barriers, fosters a robust pipeline of projects, and enhances the risk-reward profile of individual investments. Ultimately, SEFA aspires to contribute to universal access to affordable, reliable, sustainable, and modern energy services for all across Africa, aligning with the goals of the New Deal on Energy for Africa and Sustainable Development Goal 7.