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The World Bank has extended a facility of close to $300 million to the Eastern and Southern African Trade and Development Bank (TDB), to support distributed renewable energy (DRE) and clean cooking private sector projects in eligible countries of the World Bank’s International Development Association (IDA) that are TDB member states.
This new facility follows TDB’s successful financing of innovative off-grid solar projects in the region it serves which were financed under a groundbreaking $415 million World Bank Regional Infrastructure Financing Facility (RIFF) facility that was extended to TDB in 2020.
It is part of a first wave of phases of IDA’s $5 billion Accelerating Sustainable and Clean Energy Access Transformation (ASCENT) program, which is expected to provide access to electricity to up to 100 million people in Africa over the next seven years and contribute to achieving SDG 7. Other phases under this stage of the program also include the ASCENT COMESA Regional Acceleration Platform to be implemented by the COMESA Secretariat, and programs in four initial countries, which were selected as ASCENT champions representing different energy access stages and contexts found in the region.
The facility is financed through International Development Association (IDA) financing and a grant from the Energy Sector Management Assistance Programme (ESMAP). Under the facility extended to TDB, the ASCENT Regional Energy Access Financing Platform (REAF) will be established and implemented. The ASCENT REAF is estimated to have the potential to facilitate access to electricity for up to 5 million people, access to clean cooking for up to 1 million people and add up to 35MW in terms energy capacity to the region.
Through direct lending to private sector, co-financing or on-lending via financial intermediaries, loans under this facility will be provided to DRE and clean cooking companies, with smaller loans to SMEs to be extended through TDB Group’s Trade and Development Fund (TDF).
Furthermore, performance-based catalytic grants will be made available to support companies entering new markets in order to pilot promising innovations and help the private sector grow. This is in addition to technical assistance, capacity building and the development and piloting of financial innovations for TDB, TDF and clients, to enhance the sustainability of their interventions in the DRE and clean cooking space. This support will particularly focus on pipeline development, implementation tools and technologies, E&S aspects, climate resilience, gender, and innovative financing instruments.
Progress on many human development indicators and improvements in electrification rates in Africa have been stifled by recent global crises and macroeconomic woes. Electricity is fundamental to the region’s efforts to reduce extreme poverty and to its sustainable growth. It provides the lighting needed for children to study and become agents of change, promotes inclusion, and yields the power needed to enable the private sector – MSMEs and big corporates alike – to generate jobs and economic output, and drive innovation and industrial development. Access to clean energy, including for cooking, is paramount to reducing indoor air pollution and improving productivity and health outcomes, especially for women.
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Admassu Tadesse, TDB Group President and Managing Director said: “With African energy demand projected to grow rapidly alongside growth in population and incomes, there is an acute need to boost the intermediation of financing, including of concessional finance which can be leveraged to crowd-in more private capital, and make a substantial difference towards greater access to sustainable and clean energy in Africa. Together with several other strategic engagements with World Bank Group institutions, TDB Group is delighted to further elevate its partnership with the World Bank’s IDA through ASCENT which stands to bolster the efforts the Group has been deploying towards a just energy transition, including by adding low-carbon energy capacity in its markets, thereby enhancing their energy security and sustainable growth, while reducing GHG emissions.”
Boutheina Guermazi, World Bank Director for Regional Integration in Africa and the Middle East said: “Access to sustainable, reliable, and affordable energy is at the crux of Africa’s development and poverty reduction efforts. The World Bank is pleased to build on our strong partnership with TDB Group, and we look forward to leveraging our combined efforts to unlock even more sources of financing for a host of private sector actors through the new ASCENT Regional Energy Access Financing Platform (REAF).”