To bridge the vast infrastructure financing gap in Africa, Acre Impact Capital, founded by two former BNP Paribas bankers, has successfully raised nearly $100 million for a new fund dedicated to climate-aligned infrastructure projects across the continent. This initiative marks a pivotal step towards mobilizing substantial private sector investment in critical sectors such as renewable energy, health, food, and water systems.
Africa faces an immense challenge with an estimated annual infrastructure financing shortfall of $100 billion. Acre Impact Capital aims to alleviate this by focusing on providing the crucial unsecured portion of funding necessary for export finance projects. Export credit agencies typically cover up to 85% of such loans, leaving a significant portion that needs to be sourced from private financiers. However, the willingness of banks to fund these projects has been waning due to higher capital charges and the complexities involved in reinsurance.
Hussein Sefian, CEO of Acre Impact Capital, explained the unique role his firm plays in this ecosystem. “We enable transactions that would otherwise not occur due to a lack of insurance capacity and banks’ reluctance to engage without such security. By stepping in to provide the remaining 15%, we facilitate the closure of deals, adding substantial value to the market,” Sefian said in an interview with Reuters.
The fund’s strategy is to leverage every dollar invested to mobilize an additional $5.60 from the private sector, aiming to unlock billions of dollars in funding. To manage this ambitious endeavor, Acre will charge a management fee, though specifics on the rate were not disclosed.
Significantly, the fund has attracted a diverse group of backers, including major financial institutions such as the European Investment Bank, Standard Bank, and Rand Merchant Bank, alongside specialist impact investors focused on achieving both social and financial returns. This blend of support underscores the broad confidence in Acre Impact Capital’s approach and the growing recognition of the importance of sustainable investment in Africa’s future.
Export credit agencies, which support roughly $250 billion of annual financing to emerging markets, play a crucial role in this landscape. They are instrumental in facilitating international trade and investment in developing countries, according to the United Nations Environment Programme Finance Initiative (UNEP FI). In comparison, multilateral development banks like the World Bank contribute approximately $260 billion annually, highlighting the significant scale of global financial flows aimed at fostering economic development in less affluent regions.
