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African Guarantee Fund for Small and Medium-sized Enterprises (AGF) has signed an equity guarantee agreement with Norway-based renewable energy provider, Empower New Energy, (Empower) paving the way for long-term clean energy investments for C&I businesses across Africa.
The Norwegian Agency for Development Cooperation (NORAD) will provide partial support to the costs of the guarantee. This guarantee is the first of many which will help Empower to scale up its African clean energy investments. The current guarantee will cover part of Empower’s investment into Solarplast Project Company Limited in Ghana and a 700 kWp rooftop solar photovoltaic plant at the Miniplast Limited’s factory in Accra.
Jules Ngankam, CEO of AGF Group, explained the low level of capitalization of SMEs and excessive dependency on debt financing compared to equity imposes costs and increases the risk of bankruptcy. Diversified options for SME financing are required to support long-term investments, reducing the vulnerability of SMEs to the sudden changes in the credit market.
“Through this equity guarantee agreement with Empower New Energy, AGF is indeed broadening the range of financing instruments available to SMEs in Africa, to enable them to continue playing their role in growth, innovation, and job creation. We are also particularly glad that our equity guarantee has enabled the financing of renewable energy thereby contributing to meeting Africa’s fast-growing demand for power,” commented Ngankam.
Terje Osmundsen, Empower Founder and CEO, mentioned the potential of the C&I renewable energy market in Africa requires highly tailored solutions that reflect the specific needs of investors. Empower New Energy scales up its business in Africa this year. Its unique investment model with the support of AGF’s equity guarantees will reduce risks and help to provide cheaper, reliable, and sustainable energy for more businesses across Africa.
Empower New Energy has its business in Rwanda, Egypt, and Ghana. The company’s investment vehicle, Empower Invest, an $50 million alternative investment fund (AIF) is financed by private and public European development partners, including Norfund and Electrification Financing Initiative (ElectriFI).