Africa’s energy sector faces a persistent investment shortfall, with annual clean energy spending needing to grow more than six times by 2035 to achieve net zero emissions by 2050. Equity funds have become an important channel for mobilising capital into markets where project-level financing remains constrained by high costs of capital, currency risk and a shortage of scalable, investable project structures.

Against this backdrop, the Silk Road Fund (SRF) committed USD 50 million to the African Infrastructure Investment Fund IV (AIIF4) in 2023. The AIIF4 is a pan-African infrastructure fund managed by African Infrastructure Investment Managers (AIIM). It focuses on sustainable infrastructure and targets 75% of committed capital to be invested in Paris-aligned assets, while 20% is reserved for climate-related transactions through a dedicated climate-focused vehicle.

The AIIF4 invests across a portfolio of energy-transition, logistics and digital infrastructure companies, mainly in the private sector, in energy transition, digital infrastructure and logistics. The fund has invested in 12 companies to date. Key energy-related financing projects include the NOA Group, a renewable energy platform in South Africa focused on renewable generation and storage; the N+One Data Centers in Morocco and Senegal, which are expanding digital infrastructure in lower-carbon electricity and greater renewable energy sourcing; and the acquisition of the Logistics Group (TLG), which operates rail and port assets and is working to cut corridor emissions through improved operational efficiency.

Through its participation, the SRF gains exposure to a diversified portfolio of sustainable assets across multiple African markets rather than through single-asset project finance. It has also appointed a representative to AIIF’s ESG Advisory Committee, strengthening the fund’s environmental and governance approach.

AIIF4 reached financial close in August 2024 at USD 748 million, with an additional USD 206 million approved for co-investment. Its investor base comprises 29 institutions, including DFIs, pension funds, insurance companies, sovereign wealth funds, asset managers and family offices. DFIs account for around half of total the commitments.

The SRF’s USD 50 million contribution represents over 5% of the fund’s total size, positioning it as a sizeable sovereign investor among a largely commercial-developmental consortium. The SRF does not take operational control but participates as a limited partner, relying on AIIM’s regional expertise to select and manage assets. This structure reduces project-level concentration risk for the SRF while ensuring alignment with Africa’s growing infrastructure and climate priorities.

The model is emblematic of the SRF’s broader approach as a state-owned investment fund. Backed by the State Administration of Foreign Exchange (65%), China Investment Corporation (15%), the Export-Import Bank of China (15%), and China Development Bank (5%), the SRF deploys equity into overseas projects and funds rather than extending debt, enabling longer-term, risk-tolerant capital mobilisation. By 2023, the SRF had supported 86 projects in nearly 70 countries, with cumulative pledged investment of USD 23.6 billion and a green-asset portfolio of USD 1.5 billion.

The SRF’s participation in AIIF4 reflects the growing role of state-owned funds in China’s outbound clean energy and infrastructure financing. Unlike policy-bank lending or SOE-led project development, sovereign fund equity investment can be deployed flexibly across geographies and sectors, enabling China to contribute to Africa’s energy transition through diversified, market-based channels. This aligns with observed geographic shifts in Chinese outbound finance since 2020, where smaller but more targeted equity investments have become increasingly common.

The partnership also signals a broader trend towards China’s multilateral co-investment models. By investing alongside African and global DFIs, including IFC and several European development funds, the SRF positions Chinese capital within international governance. This reduces reputational risk, increases market confidence and demonstrates alignment with international sustainable finance principles.

For African markets, the AIIF4 provides a vehicle that can scale capital into segments that are often underserved: distributed renewables, digital infrastructure with lower emissions intensity and systems critical for regional growth. China’s participation through the SRF helps expand the pool of long-term capital available for such transactions. It also contributes indirectly to technology transfer and market creation, given that many AIIM portfolio companies integrate renewable generation, energy efficiency and low-carbon logistics solutions.

Overall, the case illustrates an increasingly institutional and partnership-oriented model of Chinese outbound finance that complements, rather than substitutes for, project-level lending and SOE-driven infrastructure delivery. This diversified ecosystem can support the development of sustainable infrastructure pipelines across Africa, where financing gaps remain significant and where equity participation plays a key role in unlocking follow-on capital.