According to the Bank’s website, African Frontier Capital (“AFC”) is establishing a multi-originator warehouse facility (“WHF”) to provide off-balance-sheet financing to distributed energy service companies (“DESCOs”) across eligible Sub-Saharan African countries operating under the pay-as-you-go (“PAYGo”) model. The WHF is expected to raise up to US$125 million from a group of lenders, comprising up to US$100 million in senior debt and up to US$25 million in subordinated debt, providing a credit enhancement to senior lenders. By addressing a critical financing bottleneck in the off-grid solar PAYGo sector, the Project is intended to enable DESCOs to scale affordable clean energy solutions for low-income households, crowd in private capital, and accelerate the transition away from polluting fuels through a scalable and replicable financing platform.

The Project has been categorized as FI 2 under IFC’s Policy on Environmental and Social Sustainability because the WHF will finance a portfolio of underlying DESCO exposures that are expected to entail generally moderate E&S risks, while AFC’s current E&S management capacity and systems are still being strengthened to ensure consistent screening, due diligence, monitoring, and corrective action across the pipeline and portfolio. Key E&S risks relate to implementation of E&S requirements during DESCO onboarding and operations (including for DESCOs operating in FCV contexts), as well as labor and working conditions and GBV/SEAH risk management gaps (notably where field based agents may operate in remote or isolated locations, and where training and formal processes to implement/operate relevant policies and grievance channels are limited). Applicable E&S requirements for the Project include the IFC Exclusion List and applicable host country E&S laws and regulations. The Project will not support activities on the IFC Exclusion List (AFC has reported no exposure to excluded activities in the submitted excluded activities form).

The WHF is expected to raise up to US$125 million from a group of lenders, comprising up to US$100 million in senior debt and up to US$25 million in subordinated debt, providing a credit enhancement to senior lenders.
IFC’s proposed investment in the WHF comprises a senior loan of up to US$30 million for IFC’s own account.

The WHF will be managed by African Frontier Capital LLC, a data-driven investment firm specializing in receivables financing and securitization solutions for energy-access companies operating under PAYGo business models. AFC structures off-balance-sheet financing that enables companies to convert future customer payments into upfront liquidity, supporting business growth and expanded access to energy. Since 2020, AFC has successfully launched and scaled five facilities in Kenya, Tanzania, and Nigeria, as well as a multi-country facility, financing over US$400 million of receivables.

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