AfDB commits US$164m to promote decentralized renewable energy in six African countries

AFRICA – The Board of Directors of the African Development Bank Group (AfDB) have approved the Leveraging Energy Access Finance Framework (LEAF), under which the Bank will commit up to US$164 million to promote decentralized renewable energy in six African countries.

The US$800 million program will help spur commercial and local currency investments to scale up the activities of decentralized renewable energy companies in Ghana, Guinea, Ethiopia, Kenya, Nigeria, and Tunisia.

Under LEAF, some 18 decentralized renewable energy projects are expected to be financed, providing access to six million people and businesses, resulting in 28.8 million tonnes CO2 eq. in greenhouse gas emission reductions over the lifetime of the systems.

Many African countries still face challenges in achieving universal access to sustainable, clean, affordable and reliable electricity. According to the latest Sustainable Development Goal (SDG) 7 tracking report, close to 600 million Africans lack access to electricity.

As a result of the Covid-19 crisis, the number of people without access to electricity increased again for the first time in recent years.

Scaling up decentralized renewable energy (solar home systems, green mini-grids, and solar solutions for commercial and industrial use) is crucial to achieving the SDG7 objectives and requires significant private sector and local currency financing.

The African Development Bank developed the LEAF program, in collaboration with the Green Climate Fund, which approved US$170.9 million in concessional financing for it in July 2021.

The framework forms part of the Bank’s broader off-grid strategy under the New Deal on Energy for Africa and complements existing initiatives, such as the Sustainable Energy Fund for Africa.

“The African Development Bank is delighted to partner with the Green Climate Fund on the Leveraging Energy Access Finance Framework,” the Bank’s Vice President in charge of Power, Energy, Climate Change and Green Growth, Dr. Kevin Kariuki, said.

“Which will not only accelerate access to electricity based on decentralized renewable energy solutions, hence reducing the respective countries’ carbon footprints, but will do so with the active participation of a private sector facilitated by local currency financing and commercial capital availed under the program.”

Over six years, LEAF will deploy concessional finance, credit enhancement instruments and technical assistance to crowd-in private sector investors, including local banks, to finance and accelerate efforts to power the continent.

“The approval of this program is very timely as it increases the Bank’s toolbox to support the fast-moving decentralized energy access market which complements conventional grid-connected solutions,” The Bank’s Acting Director in charge of Renewable Energy and Energy Efficiency Department, Dr. Daniel Schroth, added.

AfDB to fund Kenyan Highway

The AfDB has announced that it is part of a syndicate of financial institutions set to conclude talks to fund the construction of the KSh180 billion (US$1.58bn) upgrade of the Nairobi-Nakuru highway.

A consortium led by French infrastructural firm Vinci secured a 30-year concession contract in 2019 to build and operate the Nairobi-Nakuru highway that is being built under the public-private partnership (PPP) model.

Participation of the AfDB in the French-backed project signals the French firm building the road has cast its net wider in sourcing funds for the key mega project.

The deal to build the road by the French consortium was signed during President Emmanuel Macron’s two-day visit to Kenya in 2019, as Paris renewed its bid to deepen economic ties with Nairobi.

The project will also involve widening of the existing Rironi- Mai Mahiu–Naivasha road to becoming a seven-metre carriageway with two-metre shoulders on both sides, construction of a four-kilometre elevated highway through Nakuru town and building and improvement of interchanges along the highway.

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