Solar energy suppliers are once again the focus of the African Development Bank (AfDB). The board of directors of this pan-African financial institution has approved the implementation of a programme to encourage investment in companies that supply solar energy.
These are off-grid solar power suppliers or home solar kit distributors, a sector that is growing in number on the African continent. The programme aims to support them by encouraging securitisation financing techniques that remove certain obstacles, by pooling debts to scale up, which is essential to be able to finance such a wide range of territorially based actions. The AfDB programme also intends to support local investors with risk mitigation instruments. Local actors are expected to invest in off-grid companies or solar kit suppliers in local currency, which for the AfDB will facilitate their expansion.
The bank says it is willing to provide, “essential technical advice and credit enhancement for local businesses and financial intermediaries. Accelerating access to universal, affordable, reliable, sustainable and modern energy for underserved populations requires innovative financing solutions. Innovations such as the asset-backed financing structures provided by the programme are essential in the Bank’s efforts to unlock private sector participation and local currency financing for the energy sector,” said Wale Shonibare, AfDB Interim Vice President for Electricity, Energy, Climate Change and Green Growth.
The AfDB is not at its first initiative to mobilise financing for solar energy suppliers. A few weeks ago, the bank announced the opening of the Energy Inclusion Facility (FEI); a $500 million line of credit for independent power producers (IPPs). Under this line of credit, $100 million is earmarked for off-grid companies and home solar kit suppliers. According to the Foundation for International Development Studies and Research (FERDI), 600 million Africans do not have access to electricity. The AfDB wants to impact this figure by 2020.
Jean Marie Takouleu