France-based fund manager Rgreen Invest and investment advisor Echosys Invest have raised €87.5 million (~$92.2 million) as part of their Afrigreen Debt Impact Fund to finance on and off-grid solar power projects for small and medium-sized commercial and industrial (C&I) consumers in Africa.

The first closing includes commitments from the European Investment Bank (EIB), the International Finance Corporation (IFC), the Belgian Investment Company for Developing Countries, and PROPARCO, a subsidiary of Agence française de développement Group. Private banks Societe Generale and BNP Paribas also participated in the funding round.

Afrigreen targets raising €100 million (~$105.4 million) from development finance institutions and private investors.

The fund will also provide long-term financing in local currency for solar projects in Ghana and Nigeria. This financing will be backed by the International Development Association’s Private Sector Window Local Currency Facility to significantly reduce foreign exchange risk and enhance the fund’s competitiveness.

“Africa boasts 39% of the world’s total renewable potential, and yet investment in renewable energy has been lagging behind for a set of reasons that include the lack of suitable financial instruments, which especially affects the most dynamic segment of the market, C&I solar users”, said Olivier Leruste, President of Echosys Invest.

Nicolas Rochon, CEO of Rgreen Invest, highlighted that small and medium-sized enterprises and industries constitute 90% of all businesses in Central and West Africa but often struggle to obtain financing.

He said the fund will provide long-term debt financing to these businesses, ranging from €10 million (~$10.5 million) to €15 million (~$15.8 million), with an average investment size of €5 million (~$5.3 million) over an 8-to-10-year period.

The fund’s impact will be measured across several metrics, including the total megawatts installed, megawatt-hours produced, tons of CO2 emissions reduced, and liters of fuel saved. Additionally, the fund aims to increase the number of companies with access to new financing channels and to support C&I companies in upgrading their power generation facilities and improving efficiency.

The fund will also apply IFC Performance Standards and EIB Environmental and Social Standards that require the fund to monitor its environmental and social impact by screening, categorizing, and conducting environmental and social due diligence on its investments.

According to a report by Africa Solar Industry Association, the continent added 989 MW of solar capacity in 2022, a 14% year-over-over growth.

In a report last year, International Renewable Energy Agency and African Development Bank said a calibrated policy framework centered on renewable energy could help resolve many of Africa’s social, economic, health, and environmental challenges.