Africa Finance Corporation (AFC) the leading infrastructure solutions provider on the continent, and Italian development finance institution Cassa Depositi e Prestiti SpA (CDP) have signed a EUR50 million loan facility agreement on the sidelines of COP28 in Dubai. The financing will play a crucial role in supporting AFC’s investments in renewable power, energy efficient projects and climate-resilient infrastructure.
The 10-year facility will enable AFC to accelerate its efforts in addressing Africa’s infrastructure deficit while financing projects that contribute to mitigating climate change, reducing greenhouse gas emissions, and promoting sustainable development. It marks a further step in AFC and CDP’s strategic relationship, which has already seen AFC receiving about US$150 million in bilateral loans.
The signing of the agreement at COP28 underscores the alignment of AFC and CDP with international efforts to combat climate change and progress in meeting the sustainable development goals. It builds the foundation for innovative financing solutions that leverage the strengths of both institutions, combining AFC’s expertise in infrastructure development and deep knowledge of Africa with CDP’s experience in financing sustainable projects. The partnership will accelerate the development of infrastructure projects that address Africa’s climate-related challenges, contribute to job creation, and enhance the livelihoods of local communities.
Commenting on the agreement, Sanjeev Gupta, Board Member and Executive Director of Financial Services, said: “Managing risks to deliver on the desired return and impact requires understanding of local realities for global capital to work effectively in developing markets. Our continued collaboration with CDP underpins the strategic cooperation essential between African and European institutions, to ensure the global agenda on economic development, climate justice and prosperity for all is achieved equitably. We look forward to leveraging this financing to boost our investments in resilient infrastructure that contributes to rapid industrialization, economic development, and sustainability on the African continent.”
“Through this collaboration with AFC we will be able to finance high impact projects in the fields of green infrastructure, a key element to contribute to Africa’s efforts towards climate change,” said Paolo Lombardo, Head of International Cooperation for Development at CDP. “As emerged here at COP, sustainability, climate mitigation and adaptation are global challenges that require joint efforts, and that’s why we’re glad to extend our partnership with AFC, which has proven to be a great catalyst for innovative projects”
AFC is evidence of the viability of Africa’s opportunity to both accelerate development impact and deliver returns. One example is Djibouti’s first Independent Power Project, the Red Sea Power wind farm, which was recently inaugurated by the country’s President. Financed by AFC and a consortium of international investors, the project will provide 60MW of clean energy, boosting overall capacity in Djibouti by 50% and averting 252,500 tonnes of CO2 emissions annually, equivalent to the pollution from over 55,000 buses.
AFC raises capital from a diverse range of international investors and lenders and leverages its A3 investment-grade credit (Moody’s) to work extensively with global institutions and capital markets. The current funders include Germany’s development bank KfW, the US Development Finance Corporation (DFC), DEG, FMO, Proparco, amongst others. This international backing demonstrates global investor confidence in AFC’s strong credit profile and ability to deliver de-risked, transformational infrastructure projects that propel Africa to its rightful place on the global stage.