The African Development Bank, (AFDB) recently approved a loan of $500 million for Africa’s electrification through renewable energy. The loan is expected to be distributed by the Energy Inclusion Facility (EIF) among major project promoters and off-grid suppliers across the continent.
North African Post reported that according to the pan-African financial institution, $100 million will go to off-grid providers to enable them to expand their services, especially in rural areas where people are often not connected to the national electricity grid.
In addition, the rest of the loan which is $400 million is intended to support major projects. Hence, it would benefit independent power producers (IPPs), who develop projects of less than 25 MW, and who require an investment of around $30 million.
Meanwhile, the European Union Commission has also pledged to add €40 million to the AfDB’s financing. Hugo Van Tilborg, Head of Infrastructure and Relations with the AFDB in the European Union explained saying that “the EIF is an excellent example of how the European Union has developed innovative financing initiatives with financial partners”.
Partners for the funding include the Global Environment Facility (GEF), All On, Calvert Impact Capital, Shell Foundation, the United States Agency for International Development (USAID), and the United Kingdom’s Department for International Development (DFID).
Interestingly, across 36 African countries, just 2 in 5 people have access to a reliable supply of energy throughout the day, according to a study by Afrobarometer. Also, the World Bank reported that marred by insufficient capacity, poor reliability and high costs, the energy infrastructure in Africa is still problematic with 25 nations in sub-Saharan Africa yet facing a crisis.