Funding Sustainable Energy in Africa

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Donald Kaberuka, AfDB president
Donald Kaberuka, AfDB president

African Development Bank intervenes to pave way for private investors to join in raising funds to finance a renewable energy project in Madagascar

|  By Maureen Chigbo  |  Feb. 18, 2013 @ 01:00 GMT

THE Sustainable Energy Fund for Africa, SEFA, has approved a $1 million grant to finance pre-investment activities for a hybrid renewable energy project in Nosy Be Island in Madagascar. The grant will be used to finance feasibility studies for a combination of hydro, wind and solar technologies, technical assistance to the national power utility, and the transactions advisory for a public private partnership. Through this intervention, the African Development Bank, AfDB, will play a catalytic role and pave the way for private investors and other financiers to work towards delivering a sustainable energy solution with huge socio-economic impacts on the island.

African Development Bank logo
African Development Bank logo

Nosy Be Island is one of the most appreciated tourist zones of the country, but is severely challenged in terms of access to reliable, affordable and clean energy. The project, estimated to cost $30 million, aims at constructing a more sustainable power generation complex with an initial capacity of 8 MW to partly substitute and complement the existing high-cost thermal electricity generation. Seventy new businesses and around 300 additional jobs per year mostly from the tourism and hospitality sector, will be created as a result of additional electricity supplied by the project.

The project will, as well reinforce the quality of services to the benefit of the existing customers of the utility and double the electricity access rate in Nosy Be to 70 per cent in five years from the operational start. As a result, around 50,000 people will benefit from more reliable energy services.

In addition, there will be significant carbon emissions reduction benefits. It is also in line with both the government of Madagascar and the AfDB strategies. From year 2012, the government of Madagascar has granted significant fiscal incentives on investments in renewable energy.

The SEFA is a joint initiative between the African Development Bank and the Government of Denmark comprising resources of up to $56 million. It operates through two components namely project preparation grants to facilitate the preparation of medium-scale renewable energy generation and energy efficiency projects; as well as equity investments to bridge the financing gap for small and medium-scale renewable energy generation projects. The SEFA is structured to be used as a flexible multi-donor facility to support the access to sustainable energy agenda in Africa, and one of Africa’s instruments under the UN-championed Sustainable Energy for All initiative.

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