HomeIndustry SectorsFinance and PolicyAfDB to contribute US$3 billion to energy sector over five years

AfDB to contribute US$3 billion to energy sector over five years

11 July 2013 – Already a major investor in the energy sector, the African Development Bank (AfDB) says it will scale up funding for energy production, transmission and distribution infrastructure, cross-border power pools, as well as government policy and regulatory reforms in Africa. The bank will particularly emphasise reforms for national power utilities, many of which are in need of better business models and financial reinforcement.

“We expect to allocate as much as US$3 billion over the next five years. This will leverage at least four times more investments in the energy sector. Our interventions will include investment loans, reforms, advisory, and guarantees,” AfDB president Donald Kaberuka said in Dar es Salaam, in reference to Tanzania, Kenya, Ethiopia, Ghana, Liberia, and Nigeria, the priority countries in the USA’s Power Africa initiative.

“Reforms are the key,” Kaberuka says. “The billions of dollars available for investment in the energy sector will translate into actual bulbs in people’s homes and electricity necessary to grow small businesses if state utilities run efficiently and effectively. The policy reforms will facilitate and enhance cross-border energy markets.”

The main financial source for the bank’s assistance to the energy sector in the Power Africa countries is the African Development Fund (ADF), which is its concessional window. The ADF contributed US$1.4 billion out of the bank’s US$1.6 billion over the last five years in the six priority countries’ energy investments.

US president Barack Obama says he sees Africa as the next major success story and with Power Africa he wanted the US to be part of that success. "So that’s why I announced Power Africa − our initiative to double access to electricity in sub-Saharan Africa. And I have to say, those who are involved in this process, they continually tell us the problem is not going to be private-sector financing. The problem is going to be getting the rules right, creating the framework whereby we can build to scale rapidly. That’s what we’re committed to doing."