KfW inks US$55.3m financing deal to decentralize electricity supply in Sub-Saharan Africa

SUB-SHARAN AFRICA – German state-owned investment and development bank (KfW), on behalf of the Federal Ministry for Economic Cooperation and Development (BMZ),  signed a €49 million (US$55.3 million) financing agreement for the Clean Energy and Energy Inclusion for Africa (CEI Africa) foundation.

The aim of the foundation set up by KfW is to supply climate-friendly electricity to people in sparsely populated areas of sub-Saharan Africa.

The foundation supports privately operated small electricity grids, so-called mini-grids, which are separate from the public electricity distribution system. Grants from the foundation incentivize companies in Africa to invest in renewable energies.

The foundation will also work with digital lending platforms known as crowdlenders to finance mini-grids and small energy solutions such as solar lighting, home solar systems, solar-powered mills, pumps and cooling systems.

“In sparsely populated areas, decentralised, off-grid energy supply is only possible on a large scale using small-scale solutions independent of the public electricity grids. This is an innovative approach with a promising future”

Christiane Laibach, Member of the Executive Board at KfW Group Tweet

Christiane Laibach, Member of the Executive Board at KfW Group said: ”Around 550 million people – about half the population in Sub-Saharan Africa – have no access to electricity. Investing in the expansion of decentralized energy supply and mobilizing private and public financing to install renewable energy sources is therefore urgently needed. In sparsely populated areas, decentralized, off-grid energy supply is only possible on a large scale using small-scale solutions independent of the public electricity grids. This is an innovative approach with a promising future.”

The €49 million (US$55.3 million) will be used to create 187 off-grid, small-scale power networks and to install around 70,000 power connections and over 350,000 people will gain access to electricity.

By involving other public donors, the target is a ten-fold increase in ten years in the foundation’s funding and the number of electricity connections. Small savers and so-called diaspora investors, savers with a migration background who have a familial or personal connection to the investment countries in Sub-Saharan Africa, can also invest.

The measures will contribute to achieving the goals of the BMZ’s ”Green People’s Energy for Africa” initiative (Initiative grüne Bürgerenergie), which aims to enable, expand and secure the supply of sustainable energy in rural Africa. It is part of the Marshall Plan with Africa and focuses on broad participation of small and medium-sized enterprises, municipalities, cooperatives, public associations and citizens.

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