BY EDMUND SMITH-ASANTE
The Sustainable Energy Fund for
Africa (SEFA), a joint initiative of the Danish government and the Energy,
Environment and Climate Change Department (ONEC) of the African Development
Bank (AfDB), has approved its first grant of US$ 825,000 to finance the concept
phase of the Green Tech Financial Facility.
The facility, which was launched on
August 17, 2012, is a vehicle for investments in private-sector driven green
technology projects – including market scoping and positioning studies, fund
conceptualisation and fund manager selection.
According to the African Development
Bank, the grant will be coordinated and monitored by a task team from the
Private Sector Department of the AfDB, working closely with the African Biofuel
and Renewable Energy Company (ABREC) and the SEFA Secretariat.
The AfDB says it is the absence of a
coherent investment framework to support the “green growth” development agenda
in Africa and elsewhere, and the fact that climate-oriented facilities designed
to address this problem channel capital from predominantly public contributions,
that informed approval of the grant.
In a
statement, the bank said “While
Multilateral Development Banks (MDBs) have achieved some success leveraging
private finance using a variety of instruments, mainly through Climate
Investment Funds, these initiatives lack sufficient scale to meet global
climate finance needs.”
In view of that it says there
remains untapped potential to design an appropriate financing mechanism that
systematically channels private capital into environmentally-sound technologies
that improve resource efficiency and economic competitiveness while reducing
carbon emissions.
AfDB disclosed that the SEFA grant
will therefore support it in structuring and launching an investment facility
aimed at increasing private capital flow, channeled to private sector-led
projects that implement carbon-reducing and clean technologies for Africa.
The optimal structure and fund
management protocol for the financial facility will be informed by thorough
market research and analysis, it says, adding, “The grant will also support the
design of a Technical Assistance Facility to provide capacity and implementation
support to the investee companies.”
According to AfDB, the grant aligns
with SEFA’s equity investment window and ABREC’s African Biofuel and Renewable
Energy Fund could thus become a vehicle for SEFA (as a co-investor) to direct
investments to SMEs along the clean energy value chain.
SEFA was established in 2011 with a
commitment from the Government of Denmark of DKK 300 million (approximately US$
56 million), and was open for business at the start of 2012.
It is currently operating under two
components named as the Project Preparation Grants (PPG) and Equity Investments
(EI).
The PPG will facilitate the
preparation of small and medium-scale renewable energy (RE) generation and
energy efficiency (EE) projects requiring total capital investments of US$ 30
-75 million, while Equity Investments will seek to address the lack of access
to start-up and growth capital for SMEs, as well as their limited managerial
and technical capability, and targeting of RE and EE projects in the US$ 10-30
million range.
SEFA is structured to be used as a
flexible multi-donor/multi-purpose platform to support the access to
sustainable energy agenda in Africa, and one of Africa’s potential instruments
under the UN’s Sustainable Energy for All Initiative.
No comments:
Post a Comment