The African Development Bank (AfDB), the Nordic Development Fund, and other partners have committed $58 million to support the Off-Grid Energy Access Fund (OGEF). The fund is part of AfDB’s sponsored Facility for Energy Inclusion (FEI), a $500 million debt platform to mobilize capital market funds for innovative energy access strategies.
The first financial close, which took place on August 2, 2018, followed the official launch of FEI at the Africa Energy Market Place (AEMP). The initiative was presented to representatives of five African countries – Côte d’Ivoire, Ethiopia, Egypt, Nigeria, and Zambia – as well as leaders from the private sector and development partner communities.
FEI is a flagship program and part of AfDB’s “New Deal on Energy for Africa,” a “High5” priority to light up and power the continent.
OGEF has been designed to provide flexible debt instruments to companies in the household energy access sector, including distributors, manufacturers, and end-user credit providers. The fund promotes financially sustainable mechanisms to provide access to clean electricity for underserved households through local capital markets.
“FEI is part of a broader Bank strategy to unlock more financing in decentralized energy companies. We will keep pushing the ‘off-grid revolution’ in the African continent to achieve universal energy access by 2025,” said Amadou Hott, Vice-President for Power, Energy, Climate Change and Green Growth.
The OGEF has received significant technical and financial support from key Bank partners, like the United Kingdom Department for International Development (UK DFID), the Power Africa initiative of the United States Government and the Shell Foundation. LHGP Asset Management, a UK Financial Conduct Authority-regulated alternative fund manager, manages OGEF.
“OGEF is the result of a strong partnership between our institutions and a perfect case study for making blended finance work for climate, green growth, and the Sustainable Development Goals,” said Pasi Hellman, Managing Director at the Nordic Development Fund.
In its latest report, the Global Off-Grid Lighting Association (GOGLA), in association with Altai Consulting, has highlighted the impact and the benefits of off-grid solar home systems (SHS) in improving the quality of life. According to the research, over 90 percent of households that replaced toxic kerosene lamps with solar alternatives report that they had experienced improvements in both health and feelings of safety. OGEF will help extend this feeling of safety to an increasing number of Africans.
In June 2018, African Development Bank (AfDB) approved a ~$27.78 million proposal to secure a loan from Société Générale de Banque in Côte d’Ivoire (SGBCI), Crédit Agricole Corporate, and Investment Bank (Crédit Agricole CIB) to help Zola EDF Côte d’Ivoire (ZECI), an African solar power kit supplier. The loan will be available in the local currency and AfDB will act as a partial credit guarantor by covering part of the guaranteed loan facility.
Off-grid solar has a bright future in poor and underdeveloped parts of the world, while the funding for these emerging markets has also witnessed a significant increase over the years. According to Mercom’s Solar Funding and M&A Reports, the global off-grid solar market saw deals worth $97 million in 2015. While approximately $147 million was raised in 2016, the sector witnessed exponential growth in 2017 and raised a whopping $243 million.
Image credit: Off Grid Electric
Saumy is a senior staff reporter with MercomIndia.com covering business and energy news since 2016. Prior to Mercom, Saumy was a copy editor at Thomson Reuters. Saumy earned his Bachelors Degree in Journalism & Mass Communication from the Manipal Institute of Communication at Manipal University. More articles from Saumy Prateek.