Kenyan firms producing off-grid power can now access capital from a new Sh10.3 billion fund that is being set up by the African Development Bank (AfDB) and a group of international financial investors.
The fund, known as the Facility for Energy Inclusion Off-Grid Energy Access Fund (FEI OGEF), is set to provide local and hard currency loans to off-grid energy companies that specialise in producing clean electricity, focusing initially on East and West Africa.
Power projects such as wind and solar in parts of northern Kenya, which are far from the national grid are the likely beneficiaries from the fund.
“The fund will be managed by Lion’s Head Global Partners operating out of offices in Nairobi, Lagos and London, with an initial focus on East Africa as well as Côte d’Ivoire, Ghana and Nigeria, and looking to build a strong pipeline of transactions throughout the region,” said the AfDB in a statement.
“The pioneering fund will unlock and catalyse financial sector and local currency participation in this growing green finance opportunity.”
AfDB added that the fund would provide for a blended capital structure, by making an equity investment in projects thus providing an assurance to early investors such as development finance institutions and other commercial investors.
Sh3 billion investment
The AfDB said in the statement that it had approved a Sh3 billion investment in the facility.
The fund has so far raised Sh5.5 billion from the consortium, with the FEI OGEF aiming to close out the full Sh10 billion financing by the end of March.
Other investors who have put in seed capital into the fund include non-profit investment firm Calvert Impact Capital (Sh1 billion), the Global Environment Facility (Sh850 million) and the Nordic Development Fund (Sh810 million).
There are an estimated 600 million people in the sub-Saharan Africa who do not have access to electricity. Kenya has an estimated 70 per cent connectivity rate to electricity, with the government aiming for universal access by 2020.
Small power producers have been identified as key in closing the access gap, being a combination of both off-grid and small scale producers who feed their power into the national grid.