INSTRUMENT ANALYSIS

The ARM-Harith Cities & Climate Transition Fund (The ACT Fund) is a mid-market greenfield infrastructure fund designed to expand sustainable infrastructure in West Africa. It utilizes a blended-currency mechanism to reduce financing friction at early project stages and mobilize local institutional investment through structured exit solutions.

• The ACT Fund employs a blended-currency mechanism (BCM) to accelerate project development and facilitate capital recycling. In BCM Stage 1, the fund draws from USD equity and local currency funds in tandem to cover development and construction costs. In BCM Stage 2, local senior debt is used to release the majority of the equity once the project is operational, allowing those funds to be redeployed into new projects.
• The fund addresses traditional investment barriers in the Global South, such as the low risk appetite of local investors and high transaction costs. It mitigates these by taking projects to the operational stage before seeking traditional institutional financing and by using its own proprietary fund of combined equity and mezzanine investors to avoid drawn-out negotiations during the construction phase.
• To overcome climate-specific investment barriers, the ACT Fund includes a technical assistance (TA) component. This facility is designed to ensure project bankability, help developers integrate climate reporting to meet international criteria, and strengthen the fund manager's internal measurement, reporting, and verification (MRV) processes.
• The ACT Fund targets a high mobilization multiple for private capital, estimated at 4.1x on initial funding. Quantitative modeling suggests that the equity recycling mechanism could allow the fund to build double the amount of projects and mobilize an additional USD 159 million in local funding compared to traditional models.
• The fund's initial focus is on climate mitigation projects, specifically renewable energy such as utility-scale and distributed solar generation and micro- or mini-grids. Future expansions are planned for adaptation and resilience projects, including sustainable urban mobility, water, and waste systems.
• The immediate financial targets for the fund's establishment include USD 150 million to capitalize the equity fund and USD 100 million for the subordinate debt fund, with a goal to begin deploying capital in January 2023.

APA

Climate Policy Initiative (2021). INSTRUMENT ANALYSIS. https://www.climatepolicyinitiative.org/wp-content/uploads/2021/10/ACT-Fund_Instrument-Analysis.pdf

Chicago

Climate Policy Initiative. INSTRUMENT ANALYSIS. 2021. https://www.climatepolicyinitiative.org/wp-content/uploads/2021/10/ACT-Fund_Instrument-Analysis.pdf.

Wikipedia

{{cite report |author=Climate Policy Initiative |title=INSTRUMENT ANALYSIS |date=September 2021 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2021/10/ACT-Fund_Instrument-Analysis.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatepolicyinitiative2021instrument, author = {{Climate Policy Initiative}}, title = {{INSTRUMENT ANALYSIS}}, institution = {Climate Policy Initiative}, year = {2021}, month = sep, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2021/10/ACT-Fund_Instrument-Analysis.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }