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Africa Embraces ‘Green Growth’

Solar Energy Africa

Solar Energy Africa

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), approved this month its first grant of USD 825,000 to finance the concept phase of the Green Tech Financial Facility – a vehicle for investments in private-sector driven green technology projects .

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.

African countries are embracing the “green growth” development paradigm to address their economic, environmental and social challenges. There is, however, an absence of a coherent investment framework to support this agenda in Africa and elsewhere. Climate-oriented facilities designed to address this problem channel capital from predominantly public contributions.

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. Thus, 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.

This SEFA grant will therefore support the AfDB in structuring and launching an investment facility aimed at increasing private capital flow channelled 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.

The grant will also support the design of a Technical Assistance Facility to provide capacity and implementation support to the investee companies. This 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 small and medium enterprises along the clean energy value chain.

From: New Africa Analysis

Source: http://newafricaanalysis.co.uk/index.php/2012/08/africa-embraces-green-growth/