By Thuita Gatero,
In a bold step toward sustainable development in Africa, Scalar International and Mergence Investment Managers Ltd. have announced an ambitious plan to raise up to $150 million through a private equity fund.
The initiative aims to transform 30,000 buildings across the continent by enhancing energy efficiency and installing renewable-energy systems. This groundbreaking effort promises to address pressing environmental challenges, reduce energy costs, and foster economic growth in African communities, positioning the continent as a leader in the global transition to clean energy.
The partnership between Scalar International, a firm with expertise in sustainable investments, and Mergence Investment Managers Ltd., a Cape Town-based asset manager known for its impactful infrastructure projects, reflects a shared commitment to tackling Africa’s energy challenges.
With the continent facing rapid urbanization and growing energy demands, the need for innovative solutions to reduce carbon footprints and improve energy access has never been more urgent. This fund is poised to deliver tangible benefits, not only for the environment but also for the millions of people who live and work in the targeted buildings.
The $150 million fund will focus on retrofitting existing buildings with energy-efficient technologies and integrating renewable-energy systems such as solar panels, wind turbines, and energy storage solutions.
By targeting 30,000 buildings, the initiative spans a diverse range of structures, including commercial properties, residential complexes, and public facilities. The majority of the investments are expected to be concentrated in southern Africa, with approximately 30% allocated to South Africa, a country with significant potential for renewable energy adoption.
Semoli Mokhanoi, chief commercial officer at Mergence Investment Managers, emphasized the fund’s strategic focus. “Our goal is to invest in companies that provide cutting-edge energy efficiency and renewable-energy services,” Mokhanoi said. “This initiative will not only reduce energy consumption but also create scalable models for sustainable development across the region.”
By prioritizing southern Africa, the fund aims to leverage the region’s abundant renewable resources, including solar and wind, to drive meaningful change.
The project aligns with global efforts to combat climate change and achieve net-zero emissions. Africa, despite contributing a small fraction of global greenhouse gas emissions, is disproportionately affected by climate change, facing challenges such as extreme weather, food insecurity, and energy poverty.
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By retrofitting buildings to consume less energy and rely on renewable sources, the fund will contribute to reducing the continent’s carbon footprint while improving resilience to climate impacts.
Beyond its environmental goals, the initiative is expected to deliver significant economic and social benefits. The installation of renewable-energy systems and energy-efficient technologies will create thousands of jobs, particularly in the construction, engineering, and clean energy sectors.
These opportunities will empower local communities, providing skills training and employment in regions where unemployment rates remain high.
Moreover, the fund’s focus on energy efficiency will lower operational costs for businesses and residents. Buildings account for a substantial portion of energy consumption in Africa, and inefficient infrastructure often leads to high electricity bills.
By upgrading lighting, insulation, and HVAC systems, the initiative will reduce energy waste, enabling businesses to reinvest savings into growth and allowing households to allocate funds to other essential needs. This cost-saving potential is particularly critical in a region where energy access remains uneven, with millions still reliant on expensive and polluting fossil fuels.
The fund also has the potential to attract further investment into Africa’s green economy. By demonstrating the viability of large-scale energy efficiency projects, Scalar International and Mergence aim to inspire confidence among global investors.
Private equity funds like this one serve as a catalyst, proving that sustainable initiatives can deliver both financial returns and positive societal impact.
As Mokhanoi noted, “This is about creating a blueprint for how private capital can drive systemic change in Africa’s energy landscape.”
While the plan is ambitious, it is not without challenges. Africa’s energy sector has historically faced hurdles such as regulatory complexity, limited access to financing, and infrastructure gaps.
Scaling renewable-energy systems across 30,000 buildings will require coordination with governments, utilities, and local stakeholders to ensure smooth implementation.
Additionally, the upfront costs of retrofitting and installing renewable technologies can be significant, necessitating innovative financing models to make the transition affordable.
To address these challenges, Scalar International and Mergence are leveraging their expertise in structuring private equity investments. The fund will prioritize partnerships with companies that have proven track records in delivering energy solutions, ensuring that capital is deployed efficiently.
Furthermore, by focusing on southern Africa, where regulatory frameworks for renewable energy are relatively advanced, the fund can establish a strong foundation before expanding to other regions.
The $150 million private equity fund represents a significant milestone in Africa’s journey toward sustainability. It builds on the continent’s growing momentum in renewable energy, with countries like South Africa, Kenya, and Morocco already leading the way in solar and wind projects.
By targeting buildings—a critical yet often overlooked component of energy consumption—the initiative addresses a key piece of the puzzle in achieving a low-carbon future.
This project also underscores the power of collaboration between private firms and local expertise. Scalar International’s global perspective, combined with Mergence’s deep understanding of African markets, creates a synergy that maximizes impact.
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As the fund progresses, it will likely serve as a model for other regions, demonstrating how targeted investments can drive systemic change.
By 2030, the impact of this fund could extend far beyond the 30,000 buildings it directly targets. It has the potential to inspire a broader movement, encouraging governments, businesses, and communities to prioritize sustainability.
As Africa continues to urbanize and modernize, investments in energy efficiency and renewable energy will be critical to shaping a future that is both prosperous and sustainable.
In the words of Mokhanoi, “This is just the beginning. We’re laying the groundwork for a greener, more inclusive Africa—one building at a time.”
