Theory of Change

There is insufficient private finance flowing into low carbon and climate resilient projects and businesses in developing countries.

The deployment of climate mitigation and adaption solutions is hindered, which impedes progress towards climate and developmental objectives. The problem is well documented in the literature and recognised by the international community, and was a main reason for the establishing PFAN.

PFAN addresses this problem in targeting market imperfections on both the supply (e.g. SMEs in frontier markets that do not have the capacity to develop bankable projects or businesses) and the demand sides (e.g. investors that are not aware of projects or businesses in frontier markets or have confidence in them). There also are shortcomings at the ecosystem level as well as the capacity and expertise for financing advisory services in those markets.

PFAN’s main objective is to facilitate financing for low carbon, climate-resilient projects and businesses in developing countries. It pursues this objective by deploying targeted and highly specialized technical assistance and by creating a more conducive environment in the target markets. PFAN works to influence the knowledge, attitude, skills and aspirations of key stakeholders, notably entrepreneurs, investors and local financial advisory experts.

This leads to a facilitated access to finance, which in turn accelerates the deployment of climate solutions, increases investment in climate mitigation and adaptation and unlocks frontier markets. The anticipated impact is – aligned with global priorities – a reduction of greenhouse gases, increased climate resilience and socio-economic development.

Spotlight on PFAN’s transformational impact

PFAN’s strong track record shows clear evidence of creating long-lasting transformational change and structural alterations. In particular:

• Subsequent rounds of financing raised – thanks to the capacity originally built by PFAN – funding without, or to a lesser extent, further PFAN investment facilitation services;
• PFAN’s Advisors becoming independent market players, having gained confidence to offer their services on market terms to entrepreneurs and businesses not associated with PFAN;
• Investors, after having acquired relevant knowledge about emerging markets and low carbon climate resilient technologies, as well as having gained enough confidence in them as a result of deals successfully closed;
• PFAN’s projects having successfully raised financing create a demonstration effect. This enables a paradigm shift towards low and climate resilient development by making business models around the deployment of such solutions viable and mainstream;
• The demonstration and market intelligence generated helps to informing other undertakings.