Swedfund has committed a $20 million loan to the Africa Go Green Fund to expand debt financing for businesses and projects focused on energy efficiency and emissions reduction across Africa.

The investment will support companies operating in areas including green buildings, clean cooking, green transport, green appliances and industrial energy efficiency.

The Africa Go Green Fund is a pan-African debt fund established by German development bank KfW and managed by Cygnum Capital. It has financed close to 30 projects across 17 African countries and is seeking to expand its lending activities.

Swedfund said its commitment will increase the fund’s capacity to provide longer-term debt to businesses that can deliver climate benefits but may struggle to secure financing on suitable terms.

“Energy efficiency is one of the most practical ways to reduce emissions while lowering costs,” said Gunilla Nilsson, Investment Director and Head of Energy and Climate at Swedfund.

“Through this investment, Swedfund will support companies providing solutions that people use in everyday life, from cleaner cooking to more energy efficient housing and transport,” she added.

The investment comes as growing energy demand across Africa increases the need for capital to finance energy-efficient infrastructure and technologies. Companies operating in the sector can face difficulties accessing financing that matches the longer investment periods required for their projects.

Africa Go Green provides debt financing to businesses and projects designed to reduce greenhouse gas emissions, including industrial energy efficiency, green buildings, clean transportation and appliances.

Swedfund said its participation alongside other public and private investors is also intended to help mobilise additional capital into energy-efficiency investments across the continent.

Cygnum Capital, which manages the fund, is an investment bank and asset manager with operations across Africa, Europe and the Middle East.