The CDC Group who is plans to increase early stage venture capital investment in Africa, specifically in early-stage technology-based companies that have the potential to play a significant role in fighting climate change. The organisation will invest more than £ 3 billion to help emerging economies in Africa and Asia cope with the climate emergency. The CDC is the UK’s development finance institution supporting entrepreneurs across Africa and Asia for the past 70 years.
Yesterday’s announcement at COP26 in Glasgow will make CDC one of the world’s largest climate finance investors in Africa and select South Asian markets and be a shot in the arm for entrepreneurs seeking venture capital in South Africa. The announcement contributes to the “Clean Green Initiative” announced by the Prime Minister this week to help developing countries take advantage of green technologies and grow their economies sustainably.
Part of this will be UK government’s £ 200 million Climate Innovation Fund specifically focussed at venture capital for early stage businesses who provide innovation in the way we fight climate change.
World leaders and investors are meeting at the COP26 climate emergency summit in Glasgow this week and the conference has already meant a number of other funding promises being made. Jeff Bezos, the now retired founder of Amazon committed to giving £1.47bn for land restoration in Africa , while Bill Gates announced that the Bill and Melinda Gates foundation will provide an additional $315 million over the next three years supports climate-smart agricultural research to help smallholder farmers in the developing world.
Why early stage venture capital investment in Africa?
The new fund was created to finance the most pioneering climate solutions in developing countries.
By testing, and then scaling, the most effective solutions, CDC aims to open up new markets for investment.
The first beneficiary of the new fund is Pula, an agricultural technology company based in Kenya.
The purpose of the capital is to test a new insurance product “PayatHarvest” that has hardly been tested in Africa, but has the potential to significantly increase the acceptance of insurance by small farmers and have impacts on both the development as in climate.
In addition, the CDC announced new climate-related investments in Africa: $ 37 million in the Africa Renewable Energy Fund II, a fund that invests in small hydroelectric, wind, geothermal and solar projects in sub-Saharan Africa; and a $ 10 million follow-up investment in MKopa, Kenya’s off-grid solar company that provides vital energy to homes and communities in rural areas.
The CDC Group also announced that it will support more than £ 3 billion to help emerging economies in Africa and Asia cope with the climate emergency.
The commitment makes the CDC one of the world’s largest climate finance investors in Africa and selected markets in South Asia.
The announcement contributes to the Clean Green Initiative announced this week by the Prime Minister to help developing countries take advantage of green technologies and grow their economies sustainably.
CDC’s £ 3 billion climate funds will be invested in a variety of sectors, including renewable energy, infrastructure and agriculture, including forestry, over the next five years.
Used to help emerging economies achieve their Paris Agreement goals and adapt to the already noticeable effects of the climate emergency and become more resilient.
CDC expects the power generated from its growing renewable energy investment portfolio to double over the next five years. The share of renewables in CDC’s total energy portfolio will increase from 32% to around 70% over the same period as new investments come online.
Nick O’Donohoe, CDC Executive Director, recently said: “The financial commitment announced today means that CDC will become a global leader in climate finance in Africa and South Asia. The COP tries to make concrete commitments for action, and this is reflected in a doubling of our financial support to the countries most affected by the devastation of the climate emergency. ”Billions of US dollars invested in climate finance in Africa and South Asia.
The organization’s portfolio with more than 1000 investments will be net zero by 2050 at the latest.
Early stage venture capital investment in Africa, is one of the areas which have increased in focus in recent years. Entrepreneurs focussing in technology and innovation across Sub-Saharan Africa have had a fair amount of success in raising funding, with 2021 seen as another milestone in the volume of investment going into Africa. This announcement of early stage venture capital investment in Africa by the CDC at COP26 this week will be another boost for early stage businesses across te continent.