Norwegian financier to back green infrastructure projects

Boy drinking water. (Courtesy)

 

Norwegian development finance institution, Norfund will increasingly buy shareholding and advance loans to local manufacturing and agribusiness firms as it diversifies from clean energy and financial services that have been its mainstay in the region.

The firm also said it will invest in waste management, clean water and power transmission and storage as part of a new strategy to enhance the mix of firms it owns or lends to in the country.

The diversification comes even as the firm recovers from the failed Kinangop Wind Power project that faced resistance from the community.

Norfund had acquired a 19 per cent stake in the wind farm that would have produced 60.8 megawatts on completion. The other key investor in the project was the African Infrastructure Investment Fund 2.

Other than new investments in green infrastructure (waste management, clean water and power transmission), Norfund is scouting for opportunities in insurance and fintech sectors.

Chief Executive Tellef Thorleifsson said the green infrastructure pillar would complement its existing investment focus areas.

The fund expects to make between six and 10 new investments in firms dealing with solid and liquid waste management, clean water, electricity transmission lines and power storage.

“We want to address urbanisation challenges. The waste industry needs to professionalise and scale,” said Mr Thorleifsson when launching the strategy in Nairobi yesterday.

“We are one of the first development finance institutions to focus on waste management. We’ve started to see exciting new business models in the sector.”

The institution said it invested Sh9 billion in different companies across East Africa in 2019, and expected to match or increase the investments in 2020. Its investments in the region stand at $776 million (Sh78 billion) in over 520 companies.

Norfund last year said it was writing off Sh1 billion investment in Kinangop wind power which was cancelled in 2016 owing to differences with the community.

Kinangop Wind Park would later file a case at the London Court of International Arbitration seeking compensation from the government but the court ruled in favour of the state.

Norfund said as with any investment, there was an element of risk in the project.

“When you invest, you are aware of risks,” said William Nyaoke, Norfund’s regional director for East Africa. “Sometimes you scan the environment, look at the situation and decide whether it makes sense to stay or to cut your losses.”

Mortgages

Norfund has also advanced a loan of Sh1 billion to mortgage lender HF Group, which alongside other lenders have struggled to get buyers for their property and also faces high default rates for mortgage loans.

While he declined to speak on the challenges in the local housing sector that have affected HFC, Mr Nyaoke said Norfund is alive to different challenges that investee companies or borrowers are encountering and makes a point of working with management to take care of the interests of all stakeholders.