By:Staff Writer
The Government Republic of Namibia today launched the SDG Namibia One, a new investment platform that will convene and coordinate activities related to the transition to, and exploitation of, green hydrogen industry in Namibia.
The use of green hydrogen as the centre pillar for the transition of the domestic energy mix, as well as being an export commodity has been prioritised by the Government of Namibia.
The SDG Namibia One is a partnership between Climate Fund Managers, Invest International, and the Environmental Investment Fund of Namibia.
Climate Fund Managers is owned by the Dutch Development Bankand Sanlam Infraworks, while Invest International is a financing institution owned by the Dutch Ministry of Finance.
A funding agreement for an initial development capital of EUR40 million was signed between the Namibian Government and the Dutch Government during the launch, while the strategy is to use the grant to catalyse additional development capital to the SDG Namibia One.
This will subsequently derisk private capital and facilitate further investments at scale to support the development of high-quality green hydrogen assets and associated value chains. Infrastructure development is faced with challenges such as scale, risk sharing, speed and competition.
SDG Namibia One is therefore a blended finance solution to address such challenges, and as such aims to mobilise up to EUR1 Billion of investment capacity over the next 10 months.
The Namibian Government has analysed this partnership in detail and concluded that this established offering presents massive opportunities in many aspects as opposed to direct investment in underlying assets.
These include enhanced share of net returns on investment as capital is accessed through grants and mixing high concessional with non-concessional one. Such structure amplifies equity return for the Government while achieving a money multiplier effect through long term capital recycling.
The platform is therefore designed as a programme, with a multiphase approach that includes a development fund, construction fund and operational fund.
Such design facilitates successful fundraising and investments in untested markets and projects, as well as able to attract sponsors with limited track record of operating in a market, or innovative schemes with limited proofs of concept.
Consequently, suited to enhance participation of domestic financing market and business entrepreneurs.
In addition to the above, one major attribute of this partnership relate to capacity building as the joint venture allows the unique international expertise and investor’s relationship of the Climate Fund Managers to be harnessed while connecting domestic expertise of the Environmental Investment Fund of Namibia and giving them exposure to sophisticated capital raising designs and deal structuring elements.
The Environmental Investment Fund of Namibia is expected to benefit from capacity building by being directly involved at the fund manager level from the outset, including development of fund management, investment, fund-raising and capital mobilization abilities.
Moreover, additional skilled bandwidth and bench strength is set to be created at the Environmental Investment Fund of Namibia and ultimately within the Government of Namibia.
The green hydrogen development is set to transform the economic structure of Namibia through forex earnings as an equity participant, but most importantly offering new government revenue streams through royalties, taxes, etc.
The industry also offers huge employment opportunities for Namibians, ultimately addressing poverty and other socio-economic challenges.
