AFRICA – The World Bank has extended a facility of nearly US$300 million to the Eastern and Southern African Trade and Development Bank (TDB) to support distributed renewable energy (DRE) and clean cooking private sector initiatives in eligible countries of the World Bank’s International Development Association (IDA) that are TDB member states.
This new financing follows TDB’s successful backing of pioneering off-grid solar projects in the region under a groundbreaking US$415 million World Bank Regional Infrastructure Financing Facility (RIFF) provided in 2020.
It forms part of the initial phase of IDA’s US$5 billion Accelerating Sustainable and Clean Energy Access Transformation (ASCENT) program.
This program aims to provide electricity access to up to 100 million people in Africa over the next seven years and contribute to achieving SDG 7.
Other phases under this program’s current stage include the ASCENT COMESA Regional Acceleration Platform to be implemented by the COMESA Secretariat, along with initiatives in four initial countries.
These countries were selected as ASCENT champions, representing different energy access phases and contexts found in the region.
The facility is financed through International Development Association (IDA) resources and a grant from the Energy Sector Management Assistance Programme (ESMAP).
Under the facility extended to TDB, the ASCENT Regional Energy Access Financing Platform (REAF) will be established and implemented.
It is estimated that the ASCENT REAF could facilitate electricity access for up to 5 million people, provide clean cooking access for up to 1 million people, and add up to 35MW in energy capacity to the region.
Loans under this facility will be provided to DRE and clean cooking companies through direct lending to the private sector, co-financing, or on-lending via financial intermediaries. Smaller loans to SMEs will be extended through TDB Group’s Trade and Development Fund (TDF).
Additionally, performance-based catalytic grants will be available to support companies entering new markets to pilot promising innovations and foster private sector growth.
This complements technical assistance, capacity building, and the development and testing of financial innovations for TDB, TDF, and clients, aimed at enhancing the sustainability of their interventions in the DRE and clean cooking domain.
This support will particularly focus on pipeline development, implementation tools and technologies, environmental and social aspects, climate resilience, gender, and innovative financing instruments.
Recent global crises and macroeconomic challenges have impeded progress on numerous human development indicators and improvements in electrification rates in Africa.
Electricity is fundamental to the region’s efforts to alleviate extreme poverty and foster sustainable growth.
It provides the illumination necessary for children’s education and empowerment, fosters inclusivity, and generates the energy required to enable the private sector – including MSMEs and large corporations – to create employment, economic output, innovation, and industrial progress.
Access to clean energy, including for cooking, is crucial for reducing indoor air pollution and enhancing productivity and health outcomes, particularly for women.
Admassu Tadesse, TDB Group President and Managing Director, stated: “With African energy demand anticipated to surge alongside population and income growth, there exists a pressing need to bolster financing intermediation, inclusive of concessional finance, which can be leveraged to attract additional private capital, thereby making a substantial impact towards greater access to sustainable and clean energy in Africa.
“In conjunction with various other strategic collaborations with World Bank Group entities, TDB Group is pleased to further enhance its partnership with the World Bank’s IDA through ASCENT, which promises to fortify the efforts the Group has been channeling towards an equitable energy transition, including by augmenting low-carbon energy capacity in its markets, thereby reinforcing their energy security and sustainable growth, while mitigating greenhouse gas emissions.”
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