Bank chief calls for ‘innovative financing’ to boost Africa’s energy sector

AfDB president Akinwumi Adesina said the ‘Transformative Partnership on Energy for Africa’ (TPEA) will act as a “platform to encourage public-private partnerships” and support the bank’s goal of attracting some $40-$50 billion of investments for infrastructure and other energy-related projects over the next five years.

Adesina said the AfDB “will put our money where our mouth is” with plans to invest $12bn through TPEA up to 2021.

TPEA will “support African countries on much needed energy sector reforms, regulations, reforms of the utilities and implementation of cost-reflective tariffs”, Adesina said. “These are critical for leveraging private sector capital investments.”

TPEA forms part of the AfDB’s ‘New Deal for Energy in Africa’, launched towards the end of last year. Adesina told the World Economic Forum in Davos earlier this month that the programme’s goal was to “accelerate universal access to electricity in Africa by 2025”, drawing on Africa’s “enormous energy potential” especially in renewable energy sources such as solar, hydropower, wind and geothermal.

Adesina said the ‘new deal’ would focus on power sector infrastructure targets including boosting on-grid electricity generating capacity for industrial, commercial and residential use by 160 gigawatts (GW). “This is equivalent to 800 power plants with a capacity of 200 megawatts (MW) each,” he said.

In addition, the AfDB aims to support 130 million new grid connections across the continent. The bank also wants to help establish 75 million off-grid connections. Adesina said: “This will be equivalent to creating 300 companies with the similar scale to that of M-Kopa in Kenya, the most successful African off-grid ‘pay-as-you-go’ solar system.”

Adesina said: “The bank has already worked with the African Ministerial Conference on the Environment and the African Union and the G7 (especially Germany and France) to develop and launch the Africa Renewable Energy Initiative at the COP 21 in Paris. The Africa Renewable Energy Initiative expects to deliver 10 GW of electricity by 2020 and 300 GW by 2030, with a commitment of $10 billion from G7 countries. The AfDB and the World Bank plan to work together, at scale, to help towards ending Africa's energy deficit.”

Adesina, who took over as the president of the AfDB last year, pledged then to “prioritise the development of the private sector” over the next 10 years to drive the industrialisation of Africa. Adesina said the development finance landscape was “changing rapidly and the bank must change with the times” (12-page / 233 KB PDF).

Adesina said: “We must remain competitive and we must lead. To do so, we must develop and deploy business processes that make us much faster in delivering financial and non-financial products and services to our clients.”

In 2014, the AfDB launched an infrastructure fund aimed at supporting “high-impact national and regional projects and to cut the time taken between project ideas and financial close by more than half”. The bank said the ‘Africa50’ fund would attract “non-traditional funders” such as institutional investors and “mobilise private financing to accelerate infrastructure delivery” on the continent.

Last year, the AfDB approved a $50m investment to become an “anchor investor” in a multinational power company with bases in Nigeria and Zambia. The bank said it was backing CEC Africa Investments Limited, which “seeks to acquire and develop distribution and transmission assets and complementary greenfield generation projects throughout sub-Saharan Africa”.