INTERVIEW: ARM-Harith: Mobilising Capital at Scale for Africa

With a new fund accelerate Africa’s transition to sustainable energy, EnergyNet spoke to Rachel Moré-Oshodi, CEO of ARM-Harith Infrastructure Investment, about de-risking investments, identifying opportunities, and catalyzing local capital at an unprecedented scale.  

 

Congratulations on the anchor investment from AfDB into your Fund for Sustainable Infrastructure announced in December! How did this come about and what’s next?   

Thank you! ARM-Harith is focused on building sustainable infrastructure across Africa, and the African Development Bank (AfDB) has been a partner and a supporter from the very beginning.

We were pioneers in mobilizing local pension funds for infrastructure investment, and over the past decade, AfDB has supported us as an anchor investor.

With this new fund, we aim to accelerate Africa’s transition to sustainable energy.

While we continue focusing on energy, transport, water, utilities, and ICT, we are now aligning with the Sustainable Energy Fund for Africa (SEFA) – an AfDB initiative promoting renewable energy projects.

Moving forward, we aim to deepen this partnership further by bringing more local investors into the fund, particularly local pension funds, de-risked through AfDB’s catalytic capital.

With a $200 million fundraising target, we are on track to mobilize nearly four times the local capital participation compared to our maiden fund a decade ago.

This is a clear testament that when properly structured, infrastructure can be an attractive asset class for local investors.  

This unique multi-currency blended finance fund will finance and operate transformative projects that foster economic growth while ensuring environmental sustainability and social inclusiveness.

Local capital support for unlocking infrastructure investment is crucial for several reasons.

First, local investors, and pension funds in particular, represent a largely untapped source of long-term capital. In Nigeria, for example, less than 1.5% of the ₦22.5 trillion in pension fund assets under management is allocated to infrastructure-related investments.

Yet, with their long-term investment horizons and the stable cash flows these projects generate, pension funds are naturally suited for infrastructure financing.

For us, the ability to scale their participation to this level is a game-changer, and we strongly believe it will further accelerate the drive for sustainable infrastructure development.  

Second, currency volatility – especially in markets like Nigeria – poses challenges when projects are funded in foreign currency but generate revenue in local currency.

Historically, financing in U.S. dollars or Euros has put pressure on projects due to currency depreciation.

By bringing in local currency capital, particularly from pension funds, we can better align funding with revenue streams, mitigating currency risks and enhancing project sustainability.
 

You are targeting $200 million for sustainable infrastructure and energy transition projects across West Africa – what are your timescales?

We are on track to reach our first close by Q2 this year, with AfDB as a key anchor investor.

Another Development Finance Institution (DFI) has also approved funding, joining AfDB as an anchor investor and further accelerating the mobilization of local currency capital. We look forward to formally announcing their involvement next month.

These DFIs are providing the fund with junior capital, which plays a crucial role in de-risking investments for local pension funds.

This catalytic capital serves two transformative purposes: first, it absorbs first-loss risk, safeguarding pension funds if a project underperforms; second – and this is truly groundbreaking – it provides liquidity to pension funds during the construction phase, a period traditionally marked by locked-in capital.

This innovative product we co-created with the DFIs removes a major barrier to pension fund participation in infrastructure, setting a new precedent and unlocking unprecedented opportunities for sustainable investment.

This is why we are seeing indicative local fund participation at four times the level of our first fund. In fact, local pension fund contributions could match or even exceed the total size of our first fund—a powerful validation of how DFI support is not just de-risking investments but actively catalyzing local capital at an unprecedented scale.
 

What do you see as the biggest challenge and opportunity in mobilizing capital?

The biggest challenge is scale.

In 2024, Africa attracted less than 2% of the global clean energy capital, despite contributing less than 5% of global emissions.

Meanwhile, most governments lack the fiscal capacity to fund the climate transition, and public-private partnerships (PPPs) becoming increasingly rare.

This leaves the private sector to bridge the gap – but without sufficient capital flowing to institutions like ours, this challenge remains a major roadblock to progress.

One key issue is perceived risk. Data shows that African infrastructure projects have lower non-performing asset rates than in other regions because they are structured to mitigate risk. In fact, one could argue that they are overly structured.

Despite this, investment remains low, which raises questions.

It’s not due to poor returns – African infrastructure investments yield 12–18%, compared to under 10% elsewhere.

The combination of strong returns, low default rates, and high demand should attract more capital, yet the flow remains limited. That’s a concern.

As for the opportunity, our niche sets us apart. Unlike many funds – especially in Nigeria – we focus on equity investments.

Equity capital is critical because it steps in at the riskiest stage, when projects are still unbankable and require a hands-on approach to structuring, de-risking projects, and make them viable for further financing.

This requires deep expertise in managing and mitigating not only project-specific risks but also macroeconomic, regulatory, and political uncertainties – something our team, with over 80 years of combined experience in this space, excels at.

Many investors claim, "We have capital, but we don’t see bankable projects."

The reality, however, is that most of this capital comes with limited risk appetite and only becomes available after projects have been fully de-risked – at financial close.

This gap in early-stage funding remains one of the biggest barriers to unlocking a pipeline of transformative investments.

At ARM-Harith, this is where we step in.

Our role at ARM-Harith is to bridge the gap between early-stage uncertainty and full bankability – much like refining a diamond in the rough.

We bring governance, structuring expertise, and catalytic capital to make projects viable, ensuring they reach a stage where DFIs and debt providers are willing to participate.

This is truly our value add and our greatest opportunity: unlocking high-impact infrastructure projects that others overlook and transforming them into bankable investments.  

We identify these opportunities every day, and with our deep expertise, we are uniquely positioned to capitalize on them – accelerating the delivery of critical infrastructure across Africa.
 

What conversations are you most looking forward to having at PAS?

I’m particularly excited about discussions on innovative financing models – as we’ve done a lot of work in increasing local investor participation in infrastructure financing.  

I’m also very keen to talk about partnership opportunities, both in terms of projects where our expertise and capital can add value, and in broadening our regional focus.

While we have traditionally been very focused on West Africa, we are now looking at opportunities across the entire African continent and seeking new partners in other regions.

Lastly, I’m looking forward to engaging with public sector leaders.

Projects often remain small in scale due to persistent macroeconomic and regulatory uncertainties, as well as creditworthiness challenges along the value chain.

Whether it’s utilities lacking credit strength or transmission network bottlenecks, these barriers make it difficult to deliver projects at the scale Africa needs.  

For example, our first IPP project in Nigeria close to a decade ago now, was a 450 MW project in Edo State.

Today, however, regulatory constraints and financial limitations are increasingly pushing us toward off-grid projects.

While these are smaller in scale, they still require the same level of expertise, time, and resources – making the process far less efficient.

Addressing these challenges is essential to driving efficiency and enabling larger, more profitable investments.    

I hope the public sector participants attending PAS will provide clarity on how we can create the conditions necessary to develop projects at scale.
 

What are you most excited about for the coming year?

I’m thrilled to see local pension funds embracing infrastructure with renewed appetite.

Our collaboration with DFIs, has enabled us to attract four times the local capital we had in our first fund.

This is truly transformational – a game changer for infrastructure financing – paving the way for greater local ownership and increased pension fund participation in the country’s long-term development.

Together with pension funds, DFIs, and our team, we are determined to expand market access and truly open up local participation in infrastructure.  

There’s a good momentum now, and we want to see more of the local capital unlocked. There lies the opportunity.

With Africa’s infrastructure funding gap estimated at $100 billion annually, and the continent’s pension funds managing over $1.3 trillion in assets, imagine the transformation that could occur if just 5% of that capital were directed toward infrastructure.

The impact would be seismic – not just for economic growth, but for the very pension funds managing this capital creating generational wealth.

It’s exciting to be at the forefront of this movement. While there is still much work to be done, I’m encouraged to see key players and stakeholders stepping up, and I am truly excited about what the future holds.   

 

Rachel Moré-Oshodi will be speaking in two sessions at PAS25: How Can Strategic Energy Partnerships Support
West Africa’s Growth? and Democratizing Clean Energy Financing and De-Risking Projects.