AfDB invests $600m in Africa for renewable energy

The President, African Development Bank, Dr Akinwumi Adesina, recently said that the bank has approved about $600 for investment in renewable energy in Africa.

He disclosed this in his keynote speech at the UK-Africa Investment Summit. According to Adesina, “Huge opportunities exist for investment in renewable energy, especially for hydropower, wind, solar, thermal and geothermal.

“But many of these opportunities can’t be realised unless we invest a lot more in project preparation to make the projects bankable. The African Development Bank through its NEPAD infrastructure project preparation facility has helped to mobilise financing for $8.5bn of infrastructure projects.”

The AfDB said the Sustainable Energy Fund for Africa, based at the bank, had supported investments in excess of $800m in renewable energy.

He said, “With global climate change, and increasing frequency and intensity of extreme weather events, there is an urgent need to climate proof infrastructure investments.

“The devastating cyclones in Mozambique, Malawi and Zimbabwe led to massive destruction of critical infrastructure. The same applies to coastal states, which are more vulnerable to coastal erosion and floods. Infrastructure investment must now be climate-resilient.”

According to Adesina, the bank used a partial risk guarantee to support the Lake Turkana wind power project in Kenya, the largest wind power generation project in Africa, which will produce 300 megawatts of electricity.

“The African Development Bank’s €20m Partial Risk Guarantee essentially backstopped the government of Kenya’s obligations to developers against delays in the construction of transmission lines,” he said.

He noted that the bank launched a $1bn synthetic securitisation that it used to transfer risks on its private sector portfolio assets to the private sector.

Adesina said, “We are currently exploring with the DFID the use of synthetic securitisation for the sovereign portfolio of the African Development Bank. This will be used to transfer sovereign risk to the market, working with insurers and reinsurers in the UK. This could be a huge game changer for how governments can transfer their sovereign risks on infrastructure to the market.

 

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