4.5 mn People in Africa to Benefit With Off-Grid Power by 2025

AfDB has approved an innovative financing program for DESCOs, which would see 4.5 million people in sub-Saharan Africa gain access to solar power by 2025.

The Board of Directors of the African Development Bank (AfDB) Group has approved an innovative multinational financing program for Distributed Energy Service Companies (DESCOs), which would see 900,000 households in sub-Saharan Africa – about 4.5 million people –  gain access to solar power by 2025.

The DESCOs Financing Program promotes securitisation financing techniques to address barriers to accessing finance for DESCOs, while supporting their growth and expansion into existing and new markets. The program will also facilitate local currency financing for DESCOs and provide local lenders with risk mitigation instruments to support them.

Elaborating on the program, Wale Shonibare, the Bank’s Acting Vice-President for Power, Energy, Climate Change, and Green Growth said the Bank will provide critical technical guidance and credit enhancement to DESCOs and local financial intermediaries.

“Accelerating access to universal, affordable, reliable, sustainable and modern energy for underserved populations requires innovative financing solutions. Innovations such as receivables-backed financing structures provided by the program are vital in the Bank’s efforts to unlock private sector participation and local currency financing for the energy sector,” Shonibare said.

The program will contribute to the installation of an estimated 45 MW of distributed solar PV which will provide clean energy access for 900,000 households by 2025 (4.5 million people). It will also create approximately 6,000 new direct jobs, mainly for the youth, and contribute to the avoidance of nearly 37.08 kilotons of CO2 emissions per year.

Stefan Nalletamby, the Bank’s Director for Financial Sector Development, said the program would help build capacity within DESCOs and local financial intermediaries in executing securitisation structures and other innovative frameworks for accessing finance. “It will also promote financial inclusion by availing consumer financing to customers in rural areas, building a credit history, and encouraging the uptake of mobile payment solutions.”

The board approval follows the approval of a EUR 50 million guarantee facility and EUR 6 million technical assistance grant by the European Fund for Sustainable Development (part of the European External Investment Plan).