In 2023 AEF contracted a total of EUR 47.7 million in new commitments. The financing will further help to provide access to renewable energy, to both on-grid projects and off-grid energy companies.

In 2023 the Ministry of Foreign Affairs transferred to FMO the last EUR 10 million that was available under the existing AEF-grant agreement. As the need to provide people with renewable energy, and the goal of SDG 7 is still of utmost importance, FMO requested for additional funding. We thank the Ministry of Foreign Affairs for approving a EUR 60 million top-up, to be disbursed between 2024 and 2028.

While 2023 was one of the best AEF years in terms of new commitments, it appeared also a difficult year for some of the existing clients. Due to interest increases and other macro-economic developments, some countries faced an increase of their sovereign debt and devaluations of their local currencies. Within the energy sector, for some of the utilities – which are most often state-owned entities – this resulted in liquidity constraints. For the AEF-portfolio these macro-economic events led to a decrease in the value of the AEF equity portfolio and to provisioning of some of the loans. This is next to the regular risks of financing renewable energy projects and companies in some of the most vulnerable countries.

One example of a new facility contracted in 2023: through AEF and Building Prospects, FMO provided a senior secured true Kenian Shilling loan, equivalent of USD 20 million, to Kenya’s largest Solar Home System company Sun King. The solar home systems are sold through both PAYGO and cash sales, to households without access to (reliable) electricity. The purpose of the facility is to finance the company’s existing and growing book of customer receivables, without constraining its on-balance sheet borrowing capacity. Due to the characteristics of the financing, the loan cannot be hedged. Using AEF (and BP) provides the flexibility to the financing structure, while preventing the company, and ultimately the households, bearing the currency risk.