Private sector helping to fund green energy in Africa.
The UN shared a story on my Linkedin page today which I will reshare with readers of my regular letters in the Solomon Islands where there is a great need to break free of imported fossil fuels to boost the economy and move forward with green energy projects.
Pacific Investment Management Co. has agreed to lend a South African state development bank 3-billion rand ($210 million), the first deal in a United Nations program to fund green energy in Africa.
The debt securities from Pimco, which manages $2.2 trillion in assets, will be used to refinance debt that South Africa’s Development Bank of Southern Africa has in renewable projects, with the funding to go toward investing in additional capacity.
There is “ongoing interest from our stakeholders in well-structured products that also achieve tangible progress for sustainable energy development in Africa,” Scott Mather, Pimco’s chief investment officer, said in a statement on Tuesday.
The United Nations Economic Commission for Africa, or Uneca, is running the program, which aims to see the construction of 10,000 megawatts of green energy generation capacity. Leaders in Africa, the world’s poorest continent, are pushing for funding to transition away from the fossil fuels their economy’s already use and to build the clean energy they need to power industrialization plans.
The failure of rich nations to live up to their pledge to provide $100 billion a year to help poor countries combat climate change and transition to green energy has been an impetus for the program, said Vera Songwe, uneca’s executive director, said in an interview.
“What we thought of was, many years later are we still going to be running after the $100 billion or are we going to try a new and innovative approach,” to bring in the private sector, she said.
A number of other deals are under discussion that could follow South Africa and Pimco had an appetite for an amount four times the size of the initial deal, she said. “There are many more countries that I think now will come behind because everybody waits for the first mover.”
Standard Chartered Plc was the placement agent and structuring adviser in the transaction. Fieldstone Private Capital Group Ltd. acts as program advisor and was the transaction originating bank
Source. United Nations.