How IFC and SIMA’s Solar Bond is Slashing Energy Costs and Boosting SME Growth in Africa

The International Finance Corporation (IFC), a member of the World Bank Group, and Social Investment Managers and Advisors LLC (SIMA) have launched a $150 million solar green bond to expand rooftop solar energy across Africa.

With backing from Finland, the Global Energy Alliance for People and Planet (GEAPP), and other lenders, the initiative aims to provide clean, affordable, and reliable power to small and medium-sized enterprises (SMEs).

Addressing Africa’s Solar Financing Gap

Access to affordable financing remains a major challenge for Africa’s solar market. While demand for solar solutions is rising, SMEs struggle to secure capital due to high upfront costs compared to fossil fuel alternatives.

The bond tackles this issue by offering short-term corporate financing and project funding for up to 10 years, enabling local developers to scale operations and implement projects under 5 megawatts (MW).

Supporting Key Sectors

The initiative prioritizes energy access for industries such as manufacturing, services, education, healthcare, and agri-processing.

It is expected to finance over 220 MW of on-site solar and energy storage projects, leading to significant energy savings, stronger value chains, and reduced reliance on fossil fuels. Over the projects’ lifetime, the bond is projected to cut carbon emissions by 4 million tons.

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Investment Structure and Contributions

The IFC is providing $45 million, comprising a $25 million IFC own-account loan, an $11 million subordinated loan from the Finland-IFC Blended Finance for Climate Program, and a $9 million subordinated loan from GEAPP.

Additional lenders—including the Shell Foundation, the US Development Finance Corporation, the Schmidt Family Foundation, FMO, DEG, BIO, and OeEB—have contributed to the bond’s $131 million first close.

A second close, led by private sector investors, aims to raise an additional $25–30 million by April 2024.

Leaders Weigh In

Sérgio Pimenta, IFC’s Regional Vice President for Africa, highlighted that despite growing demand for solar solutions, financing hurdles persist, keeping SMEs dependent on fossil fuel backup generators.

Vinay Bandaru, Partner at SIMA Funds, emphasized the bond’s focus on solarizing critical sectors such as hospitals and schools while partnering with developers for projects under 5 MW.

He also noted the introduction of an ESG numeric scorecard to ensure measurable environmental and social impact.

Finland’s Ministry for Foreign Affairs stressed that sustainable energy access is vital for economic growth, job creation, and innovation in Africa. The bond’s credibility has been further validated by Moody’s, which assigned it the highest sustainability grading.

A Step Toward a Sustainable Future

Through this financing mechanism, the IFC and SIMA are empowering local businesses, driving economic growth, and accelerating Africa’s transition to clean energy. The $150 million solar green bond is set to illuminate a brighter and more sustainable future—one rooftop at a time.