(Ecofin Agency) - The African Guarantee Fund (AGF) announced yesterday a new $5 billion local currency guarantee mechanism aimed at boosting financing for energy access projects across Africa. The announcement was made during the "Mission 300" African Energy Summit in Tanzania, which brought together African heads of state, donors, and key energy sector players. Led by the African Development Bank (AfDB) and the World Bank Group, the initiative’s goal is to connect 300 million Africans to electricity by 2030.

At the ongoing #AfricaEnergySummit2025, African Guarantee Fund has announced the launch of the #Mission300 Local Currency Guarantee Facility—an initiative that seeks to mobilize USD 5 billion for energy access projects across Africa. This facility aims to support small and… pic.twitter.com/aPjiaRbZiR

— AfricanGuaranteeFund (@AGF_Group) January 28, 2025

The AGF’s initiative focuses on increasing funding for small and medium-sized enterprises (SMEs) in the distributed renewable energy (DRE) sector in Africa. By facilitating public-private partnerships, the organization plans to mobilize governments, local banks, and development financial institutions to inject capital into this vital sector for the continent's future. "By addressing financing gaps and fostering public-private partnerships, AGF plays a crucial role in driving inclusive energy solutions, accelerating the energy transition, and reducing carbon emissions across the continent," said Jules Ngankam, CEO of AGF.

Building on the success of its green guarantee mechanism, which has supported the growth of green and renewable energy projects in Africa, AGF is focusing on innovative, locally tailored guarantee solutions to attract significant investments. These solutions will help mitigate risks in loan portfolios, encourage financial institutions to offer more credit to SMEs in the sector, and address financial barriers such as high collateral requirements, currency mismatch, and lack of long-term funding. The green guarantee has "facilitated progress toward national commitments under the Africa Energy Declaration, the African Union’s Vision 2063, and the global Sustainable Development Goals, fostering inclusive growth and climate resilience," Ngankam added.

With an estimated annual need of $25 billion to achieve universal energy access in Africa, this $5 billion guarantee mechanism opens the door for resource mobilization to sustainably transform Africa’s energy landscape.