Two concessional loans are supporting businesses and innovations in clean and renewable energy in sub-Saharan Africa. Significant support in times of credit crunch, intended to encourage private financing.
The AfDB (African Development Bank) approves concessional loans (at low interest rates), totaling $25 million, from two clean energy funds. The first, worth $15 million, comes from the Sustainable Energy Fund for Africa (SEFA).
The second, endowed with $10 million, comes from the Clean Technology Fund (CTF). Their objective is to advance the implementation of FAER II (African Renewable Energy Fund) projects, intended to support low-carbon energy production.
This funding will help SMEs increase their production by more than 800 megawatts of electricity from hydropower, solar and wind power and battery storage in sub-Saharan African countries.
“We are very excited to support the FAER II at a time when, due to competitive funding needs, due to the impacts of the pandemic and economic stimulus measures for the post Covid-19 period”, a said Kevin Kariuki, vice president of AfDB.
“There is a real risk of underinvestment in the African energy sector, especially in that of renewable energies”, in charge of these questions for the development bank. The AfDB manages the SEFA, a special fund, and also acts as the implementing agency of the CFT.
Beyond the amounts involved, the ADB hopes, the financing of the catalytic tranche of the fund should attract private investment. Which seem essential in this period of uncertainty for investments and economic difficulties caused by the health crisis.
This funding should also ensure the flow of capital flows necessary to support the achievement of sustainable energy infrastructure to meet the continent’s growing electricity needs. The FAER II project support mechanism will strive to bring projects up to the required standards of project preparation and financial feasibility.
Fostering resilience to climate change!
The FAER II, which is the second generation of the Pan-African Renewable Energy Fund, aims to achieve a market capitalization of $300 million. It will be managed by Berkeley Energy, a recognized fund manager with extensive experience investing in renewable energy projects in the Asian and African markets.
“We are proud to be able to continue our company’s mission of providing reliable renewable energy to African countries and people,” said TC Kundi, CEO of Berkeley Energy. According to whom “the stake is clearly, for us, to support economic and social development while meeting the needs of our investors”.
SEFA provides leveraged financial loans to the renewable energy sector to boost universal access to cheap, reliable, sustainable and modern energy services in Africa. The Fund was created in 2011 in partnership with the Government of Denmark, and counts among its donors Germany, the United States, Spain, the Nordic Development Fund, Italy, the United Kingdom, Norway, Sweden.
The CFT is an international fund valued at $5.4 billion. Since 2010, when the ADB became the implementing agency of the CFT, it has approved the allocation of more than $588 million in CTF resources to finance more than ten projects in Africa.
For Anthony Nyong is director of the fight against climate change and green growth at the AfDB. “We welcome the participation of CFT in this project,” he said. He explains: “These concessional resources will be essential to maximize the participation of private investors in the Fund, in order to support development in Africa that is low carbon and resilient to the effects of climate change”.
Reference: https://www.un.org/africarenewal/web-features/africa%E2%80%99s-bumpy-road-sustainable-energy
