IFC, a member of the World Bank Group, today announced an agreement with Oesterreichische Entwicklungsbank (OeEB), the Development Bank of Austria to increase sustainable energy investment in Sub-Saharan Africa, starting with Kenya, Tanzania, Uganda and Rwanda. OeEB agreed to contribute EUR 2 million to support project development, capacity building and assistance to financial institutions under the Africa Sustainable Energy Facility.
The facility is a joint program by IFC and the European Investment Bank (EIB) to increase investments in renewable energy and energy efficiency. Both institutions are contributing equally to the EUR 60 million financing facility while OeEB alongside EIB is providing additional funds for a support unit that will identify and facilitate investments. The facility will also include a South-South technology exchange between private sector players which will be managed by the World Bank Institute.
The facility has already identified a preliminary number of investment opportunities, including in small hydro projects, solar photovoltaic installations, solar lanterns and local energy service companies that can provide a demonstration effect for further projects.
Michael Wancata, member of the executive board of OeEB, said, "Improving access to modern infrastructure and supporting the supply of clean energy are two key areas of our work. This facility will help to address various market barriers while providing a significant amount of financing."
The lack of access to modern and reliable forms of energy is impeding the development of economic opportunities, especially for low-income households. Energy prices in the region are relatively high which makes renewable energy and energy efficiency commercially viable. In addition, given that access to electricity is limited, renewable energy is an attractive option for providing energy to off-grid users.
However, economically viable sustainable energy projects are currently struggling to obtain adequate financing due to the lack of available financing for smaller projects, perceived risk by potential investors, lack of sufficient credit worthiness and the need for compliance with comprehensive technical and legal requirements.
David Crush, IFC Manager for Access to Finance Advisory Services in Sub-Saharan Africa, said, "Climate change is one of our key strategic priorities. By strengthening sustainable energy providers and developing projects, we aim to increase sustainable energy investments and demonstrate their viability to local financial institutions. This program is also an excellent example of cooperation between development finance institutions leveraging the expertise and resources of IFC, OeEB and EIB."
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About IFC (International Finance Corporation)
IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector. IFC helps developing countries achieve sustainable growth by financing investment, mobilising capital in international financial markets, and providing advisory services to businesses and governments. In FY12, IFC’s investments reached an all-time high of more than $20 billion, leveraging the power of the private sector to create jobs, spark innovation, and tackle the world’s most pressing development challenges. For more information, visit www.ifc.org
Oesterreichische Entwicklungsbank AG (OeEB) has been operating as the official Development Bank of Austria since March 2008. It specializes in the provision of long-term finance for the implementation of private sector projects in developing countries which create sustainable development. Additionally, OeEB provides technical assistance (which can be used to enhance the developmental impact of projects. For more information, please visit www.oe-eb.at