Op-Ed: Why the Africa Investment Forum matters for the continent’s energy transformation

By Wale Shonibare, Acting Vice-President, Power, Energy, Climate Change & Green Growth, African Development Bank

The African Development Bank’s New Deal on Energy for Africa underlines the urgency to power the continent in order to end energy poverty, catalyze industrialization, and stimulate socio-economic growth. The strategy is grounded in the recognition that access to reliable, affordable and sustainable energy is central to Africa’s development, and lifting populations out of poverty. 

Close to 600
million people in the continent still lack energy access, despite Africa’s abundant
energy resources, especially renewables such as wind, solar, hydro, and
geothermal. Bridging the energy access gap, and catalyzing economic growth, requires
substantial investments into Africa’s energy sector. The private sector sits on
the bulk of the capital.

Investors
recognize the opportunities in the energy sector, yet multiple barriers stand
in the way of transformational private sector participation – including
non-creditworthy utilities, the absence of cost-reflective tariffs, and capacity
constraints throughout the energy sector value chain. Unlocking private sector
capital, therefore, must be accompanied by resolving policy and regulatory
issues, and other systemic bottlenecks, in order to create the right conditions
for energy investments from outside and within Africa.

The impetus to
mobilize and scale up private investment into the energy sector is what makes
the Africa Investment Forum such a critical platform for the continent’s energy
future. By leveraging the Bank’s convening power to facilitate public-private
dialogue, we will move closer to our goal of universal energy access, primarily
through reforms and financial instruments to de-risk transactions, enhance
bankability, and fast-track project closure.

At this year’s
forum, the Bank’s energy team will engage sector stakeholders in extensive
consultations, knowledge exchange, networking, and peer-to-peer learning in
order to address barriers to mobilizing and
scaling up private investment into the energy sector. During various boardroom
sessions, we will focus on a range of projects, including the Inga Dam
in the DRC, the Baynes hydro plant in Angola and Namibia, and the Tulu Moye
geothermal development in Ethiopia.

We will also
continue discussions on the roll-out of the Bank’s transformative Desert to
Power Initiative following its endorsement at the G5 Sahel Heads of State
Summit on 13 September in Burkina Faso.

We will also
engage further on mobilizing climate finance through the Africa Financial
Alliance for Climate Change (AFAC) in order to shift portfolios of African
financial institutions towards climate-friendly projects across the continent.

Earlier this
year, the Board of the African Development Bank approved the Distributed Energy Service
Companies (DESCOs) programme to support the deployment of off-grid solutions in
Sub-Saharan Africa at scale. We will engage investors on our plans to innovate
through the use of securitization financing techniques, which address access to
finance barriers for DESCOs while supporting their growth and expansion into
existing and new countries. We
will also release the 2019 edition of the Electricity Regulatory Index (ERI),
which is a diagnostic tool that highlights key areas in regulatory design and
practice that require improvement.

Throughout the
discussions, investors and stakeholders will be better able to understand
market dynamics, policy, and regulatory frameworks, while learning first-hand
about the details and potential of bankable projects, and what needs to be done
to speed up financial close.

By facilitating
mutually beneficial dialogue amongst stakeholders who can dramatically affect our
energy landscape, the Africa Investment Forum is creating the requisite
foundation for accelerated private sector investments to ultimately assure Africa’s
energy transformation.

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