Globalize Local Capital
Sustainable Finance for Sustainable Energy
In today’s paradigm, financing energy infrastructure in developing countries is a major challenge in most cases. Since building out the energy infrastructure enables economic growth and prosperity, and those projects provide an economic engine for many years to come, it is critical that the sustainability aspects of both finance and energy solutions are considered. Investing in traditional power generation and infrastructure, as the western world has traditionally done, just does not make sense when tomorrow’s renewable clean energy technologies are available already today at rapidly falling prices.
Workstream “Globalize local capital”
The workstream is focusing on the idea of globalizing local capital to enable the much-needed investments into clean and sustainable energy infrastructure in developing countries. By utilizing local pension fund capital that is not open today for these classes of investments in most cases, the vision is to open a new source of capital for these types of projects. Under this scenario, the host countries get more infrastructure built more quickly, put more of their pension funds to work and get lower risk since they access international expertise and best practice due diligence. At the same time, international investors get lower political risk since local pensions are being invested. They also get to co-invest with local partners who are close to the project and this investment gives them options to exit and to manage FX risk if needed. Lastly, there is also an opportunity to leverage debt and equity more efficiently from locally anchored investors.
This GFC Energy Globalize Local Capital workstream is planning to:
- Frame up and work through a pilot project, probably led out of Nigeria, with backing from Sovereign Wealth Fund, pension funds and local banks
- Run a round table discussion at WEF Africa to enable cross-learning and also broaden the community of knowledge bearers and influencing to make this pilot happen.
- Reach out to credible local strategic investment funds (Like FONSIS) to help develop bankable power projects and attract private sector co-developers and other investors subsequently.
- Publish and reach out to get content visibility on the forum platform and in other places by highlighting the commitments, describing the project and reporting during and after the pilot through a series of video interviews with key stakeholders.
This workstream strives to achieve a level of alignment, focused agendas and deepen existing cooperation on the Forums platform. It aspires to catalyze local capital and systematize the process of doing so. It hopes to inspire local state-owned developers to proactively help in the development process.
Working Leads: David Giordano, Jon Moore, Amadou Hott, Andrew Herscowitz, Christina Lampe-Onnerud