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Africa Development Bank Makes USD 100 Million Investment on Energy

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African Development Bank (AfDB) approves USD 50 million equity investment and USD 50 million convertible loan to seed the establishment of the multi-investor USD 500 million Facility for Energy Inclusion (FEI).

The financing package of USD 100 million by the Board of Directors of the African Development Bank (AfDB) is a result of the Bank’s New Deal on Energy for Africa, which is a strategy built on five principles: (i) raising aspirations to solve Africa’s energy challenges; ii) establishing a Transformative Partnership on Energy for Africa; (iii) mobilizing domestic and international capital for innovative financing in Africa’s energy sector; (iv) supporting African governments in strengthening energy policy, regulation and sector governance; and (v) increasing African Development Bank’s investments in energy and climate financing.

The board approved a full package of USD 100 million, which consists of USD 50 million convertible senior loan and USD 50 million equity, to support the Facility for Energy Inclusion (FEI), a pan-African renewable energy debt fund. The investment is expected to provide energy access for an estimated 3 million people.
FEI’s focus will be providing senior and mezzanine debt to off-grid, mini-grid and small scale Independent Power Producers (IPP), i.e. projects with total costs under USD 30 million. The Fund will provide hard and local currency financing.

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The bank’s contribution is simply a part sum of the full amount USD 500 million, and FEI seeks to raise up to USD 400 million in additional investment from like-minded DFIs, impact investors and commercial banks. In preparation for this, AfDB has held informal discussions with potential investors from the UK, US, Germany, Japan, and South Africa. A first closing is expected by mid-2017.

FEI aims to improve the quality of life downgraded by the lack of energy resources in underserved areas across Africa. As such, this will also result into creating a significant number of jobs, new connections, and new opportunities for broader energy access, thus benefiting millions of citizens.

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