By Wale Shonibare, Acting Vice-President, Power, Energy, Climate Change & Green Growth, African Development Bank
The African Development Bank’s New Deal on Energy for Africa underlines the urgency to power the continent in order to end energy poverty, catalyze industrialization, and stimulate socio-economic growth. The strategy is grounded in the recognition that access to reliable, affordable and sustainable energy is central to Africa’s development, and lifting populations out of poverty.
Close to 600 million people in the continent still lack energy access, despite Africa’s abundant energy resources, especially renewables such as wind, solar, hydro, and geothermal. Bridging the energy access gap, and catalyzing economic growth, requires substantial investments into Africa’s energy sector. The private sector sits on the bulk of the capital.
Investors recognize the opportunities in the energy sector, yet multiple barriers stand in the way of transformational private sector participation – including non-creditworthy utilities, the absence of cost-reflective tariffs, and capacity constraints throughout the energy sector value chain. Unlocking private sector capital, therefore, must be accompanied by resolving policy and regulatory issues, and other systemic bottlenecks, in order to create the right conditions for energy investments from outside and within Africa.
The impetus to mobilize and scale up private investment into the energy sector is what makes the Africa Investment Forum such a critical platform for the continent’s energy future. By leveraging the Bank’s convening power to facilitate public-private dialogue, we will move closer to our goal of universal energy access, primarily through reforms and financial instruments to de-risk transactions, enhance bankability, and fast-track project closure.
At this year’s forum, the Bank’s energy team will engage sector stakeholders in extensive consultations, knowledge exchange, networking, and peer-to-peer learning in order to address barriers to mobilizing and scaling up private investment into the energy sector. During various boardroom sessions, we will focus on a range of projects, including the Inga Dam in the DRC, the Baynes hydro plant in Angola and Namibia, and the Tulu Moye geothermal development in Ethiopia.
We will also continue discussions on the roll-out of the Bank’s transformative Desert to Power Initiative following its endorsement at the G5 Sahel Heads of State Summit on 13 September in Burkina Faso.
We will also engage further on mobilizing climate finance through the Africa Financial Alliance for Climate Change (AFAC) in order to shift portfolios of African financial institutions towards climate-friendly projects across the continent.
Earlier this year, the Board of the African Development Bank approved the Distributed Energy Service Companies (DESCOs) programme to support the deployment of off-grid solutions in Sub-Saharan Africa at scale. We will engage investors on our plans to innovate through the use of securitization financing techniques, which address access to finance barriers for DESCOs while supporting their growth and expansion into existing and new countries. We will also release the 2019 edition of the Electricity Regulatory Index (ERI), which is a diagnostic tool that highlights key areas in regulatory design and practice that require improvement.
Throughout the discussions, investors and stakeholders will be better able to understand market dynamics, policy, and regulatory frameworks, while learning first-hand about the details and potential of bankable projects, and what needs to be done to speed up financial close.