More than 4.5M people in sub-Saharan Africa to benefit from off-grid power as AfDB approves new financing program for energy providers
The African Development Bank Group (AfDB), through its directors, has approved a new financing program for Distributed Energy Service Companies (DESCOs) which aims at benefiting more than 4.5 million people, or an equivalent of at least 900,000 households, in the sub-Saharan region.
The new program for energy providers is tailored to promote securitization of financing techniques to deal with the hiccups to accessing finance for DESCOs while, at the same time, seeking to promote not only their growth in the market but their expansion as well into both the existing and new markets. According to AfDB, the new program will also facilitate local currency financing for energy distributors and give them instruments of risk mitigation.
Wale Shonibare, African Development Bank Group’s Acting Vice President for Power, Energy, Climate Change, and Green Growth said the Bank will offer essential technical guidance and credit enhancement to DESCOs as well as local financial intermediaries.
“Accelerating access to universal, affordable, reliable, sustainable and modern energy for underserved populations requires innovative financing solutions. Innovations such as receivables-backed financing structures provided by the program are vital in the Bank’s efforts to unlock private sector participation and local currency financing for the energy sector,” Wale Shonibare said.
The program will see the actualization of the distribution of solar PV which will provide locals with clean energy and create an estimated 6,000 new direct job opportunities.
The program is designed to support the Bank’s Financial Sector Development Policy and Strategy and Industrialization Strategy Flagship program to promote growth of liquid and effective capital markets and supporting innovative financing mechanisms.
The approval of the program follows the approval of a EUR 50 million guarantee facility and a further EUR 6 million technical assistance grant by the European Fund for Sustainable Development (EFSD) which is part of the European External Investment Plan.
Recently, the African Development Bank facilitated the refurbishment of the old Saint Louis power station in Mauritius whose state was wanting. The renovations not only helped reduce the air pollution in and around the power station but also addressed the electricity supply shortages with the aim of turning around things in the country’s largest power generating plant.
