Tag - Africa investor

Why Gender Is Key to African Off-Grid Solar Energy Sales

Gender equality could have a significant impact on rural electrification moves in sub-Saharan Africa, new data suggests.

Fenix International, which sells off-grid solar kits in Uganda and Zambia, has uncovered a gender difference: Although only 20 percent of its kits are purchased by women, they bring in more new clients than men.

In 2016, Fenix got about 60 percent of its sales through personal referrals, according to Erin Boehmer, a data scientist at Fenix. A third of these sales came via customers who had provided more than one referral, with eight out of 10 referrers being men.

Digging deeper into the data, though, it is clear the women are better ambassadors for rural electrification. On average, women can be expected to refer four new customers, compared to three for men. Fenix customers get a small commission for each referral.

Anecdotal evidence suggests women might have even greater influence in solar kit purchase decisions than the referral figures indicate. For example, once Fenix contracts are signed it is usually women who pay the bills, Boehmer said.

While the men like to be seen as the main decision-makers in many sub-Saharan African off-grid families, it is actually the women who are pulling the strings and spreading the word about the benefits of solar.

A report published a year ago by the African Development Bank Group said: “In rural and peri-urban areas, women and girls are mainly responsible for procuring and using cooking fuels; they are disproportionately affected by the negative effects of limited access to energy.”

The bank said it had “traditionally concentrated on large‑scale, capital‑intensive technology projects designed to provide energy for growth in the formal sectors of the economy, including cash crops and mechanized production, which tend to be the domain of men.”

Not only do women represent the biggest source of demand for rural electrification in sub-Saharan Africa, they also might be slightly better than men at keeping up payments to solar kit providers, based on Fenix’s data.

Although it is hard to generalize, said Boehmer: “As a general trend, what we see is that women can tend to be a bit more reliable, but they can also be more dramatically unreliable. If they have a shock, it might hit them harder.”

Underpinning Fenix’s experience is an implication that gender-sensitive companies might do better in the rural electrification market than those that are more male-oriented.

Boehmer noted that many cleantech and IT firms operating in Africa appear to have greater gender equality than their counterparts in the U.S.

It is unclear why this is the case, although “the green industry draws people who are idealists,” said Boehmer, including women who are motivated by making a social contribution as much as building a business.

At Fenix, for example, the entire data science team is made up of women. The company, which was bought by the French utility giant Engie in October, has a woman CEO and “has been very powered by women thus far,” Boehmer said.

Other rural electrification players might want to take note, although the need for a woman’s touch is not the only thing that sets this market apart from other energy sectors worldwide.

Take customer relations. Most customers in developed countries dread a call to a service provider. Fenix reports that 60 percent of its customers have contacted the company, often just to praise the service.


Digital Revolution Holds Bright Promises for Africa

Internet penetration is creeping up in Africa, bringing the prospect of digital dividends to a continent long marked by digital divides.

“Africa has reached a penetration which has broken the barrier of 15 %, and that’s important,” says Nii Quaynor, a scientist who has played a key role in the introduction and development of the internet throughout Africa. He is known as the “father of the Internet” on the continent.

However, Africans have not developed the ability to produce enough software, applications and tools to give economies the dividends they sorely need.

The shift to low-cost submarine connections from satellite connections is less than a decade old. The new undersea fibres have led to a remarkable increase in data transmission capacity that drastically reduces transmission time and cost.

Today 16 submarine cables connect Africa to America, Europe and Asia, and international connectivity no longer presents a significant problem, reports Steve Song, founder of Village Telco, an initiative to build low-cost telephone network hardware and software. This has allowed countries to share information, both within the continent and worldwide, more directly. It has created more space for innovation, research and education.

“Networks have ended the isolation of African scientists and researchers. You now have access to information from the more developed countries, and this is changing the way people think,” says Meoli Kashorda, director of the Kenya Education Network.

Internet penetration on the continent has not kept pace with mobile phone diffusion. In 2016 only 22% of the continent’s population used the Internet, compared to a global average of 44%, according to the International Telecommunication Union (ITU), the UN agency that deals with issues concerning information and communication technologies. And only 11% of Africans could access 3G internet, which allows mobile operators to offer a high data-processing speed.

Access to technology

The ITU notes that the people most likely to have access to digital technology in Africa are males living in urban areas or coastal cities where undersea fibres are available.

McKinsey & Company, a global management consulting firm, estimates that if Internet access reaches the same level of penetration as mobile phones, Africa’s GDP could get a boost of up to $300 billion. Other experts concur that better access to technology could be a game changer for development and the closing of the income inequality gap in Africa.

In sub-Saharan Africa, the richest 60% are almost three times more likely to have internet access than the bottom 40%, and those in urban areas are more than twice as likely to have access as those in rural areas, according to the World Bank’s World Development Report 2016.

The World Bank’s development report of 2016 notes that digital dividends, which it describes as “broader development benefits from using these technologies” have not been evenly distributed. “For digital technologies to benefit everyone everywhere requires closing the remaining digital divide, especially in internet access,” maintains the Bank.

Businesses that incorporate digital technologies into their practices will create jobs and boost earnings, according to the African Development Bank (AfDB). The bank reported in 2016 that two million jobs will be created in the ICT sector in Africa by 2021. Analyst programmers, computer network professionals, and database and system administrators will find jobs in the sector.

Although the World Bank paints a less rosy picture for digital dividends in Africa, the potential for millions of jobs in the sector is encouraging news for the continent’s youths, who make up 60% of Africa’s unemployed and are jobless at a rate double that of adults. Youths can easily take advantage of the jobs that digital revolution brings, says Bitange Ndemo, a former permanent secretary in Kenya’s ministry of information and Communication.

Technology can also help bridge inequalities caused by the education gap. According to the UN UN Educational, Scientific and Cultural Organization, over one-fifth of children between the ages of six and about 11 are out of school, along with one-third of youth between the ages of about 12 and about 14. Almost 60% of youth between the ages of about 15 and about 17 are not in school.

On the bright side, as mobile Internet access expands, so will the Internet’s potential to narrow the continent’s education gap. E-learning continues to grow due to its affordability and accessibility. In fact, IMARC Group, a market research company with offices in India, the UK and the US, reported earlier in 2017 that the e-learning market in Africa will be worth $1.4 billion by 2022. It will improve the education level of Africa’s workforce that will contribute positively to the continent’s economies.

Eneza Education, for example, a Kenya-based learning platform, surpassed one million users in 2016. The platform allows users to access learning materials using various devices. They can access courses and quizzes via text messages for only 10 Kenyan shillings ($.10) per week. Eneza caters to students and teachers in rural areas where opportunities are limited.

Also, Samsung’s Smart Schools initiative equips schools around the world with tablets, PCs and other devices, and builds solar-powered schools in rural areas. Currently 78 Smart Schools are operating in 10 African nations, including Ethiopia, Ghana, Kenya and Uganda. The company’s strategy is to encourage underprivileged students to use digital devices.

With women 50% less likely to use the internet than men, some organisations are now making efforts to attract women to the digital world. Digital technologies can provide opportunities for women in the informal job market by connecting them to employment opportunities.

Analogue complements

High digital penetration is good, but good governance, a healthy business climate, education and health, also known as “analogue complements,” will ensure a solid foundation for adopting digital technologies and more effectively addressing inequalities, advises the World Bank. Even with increased digital adoption, the Bank says, countries neglecting analogue complements will not experience a boost in productivity or a reduction in inequality.

“Not making the necessary reforms means falling farther behind those that do, while investing in both technology and its complements is the key to digital transformation,” notes Bouthenia Guermazi, ICT practice manager at the World Bank.

Yet digital migration is receiving pushback from obsolete analogue operators who are concerned about the risks of digitizing. Automation poses a threat to those whose jobs can be done by cheaper and more efficient machines, a phenomenon that primarily affects already disadvantaged groups. For example, many banks and insurance companies have automated customer services.

The United Nations has set the goal of connecting all the world’s inhabitants with affordable, high-speed internet by 2020. Likewise, the African Union launched a 10-year mission in 2014 to encourage countries to transition to innovation-led, knowledge-based economies. This mission is part of its ambitious Agenda 2063, aimed at transforming the continent’s socioeconomic and political fortunes.

Rwanda is leading the charge via its Vision 2020 programme, which aims at developing the country into a knowledge-based middle-income country by 2020. Earlier this year, Rwanda rolled out its Digital Ambassadors Programme, which will hire and train about 5,000 youths to teach digital skills to five million people in the rural areas.

Unfortunately, digitization ranks low on the priority lists of many developing countries. And according to a recent report by the UN Conference on Trade and Development (UNCTAD), productivity gains from digitalization may accrue mainly to those already wealthy and skilled, which is typical in internet platform-based economies, where network effects (additional value for service as more people use it) benefit first movers and standard setters.

In the Organisation for Economic Co-operation and Development countries, an intergovernmental economic organization of 35 countries, where the digital economy has evolved the most, growing use of ICT has been accompanied by an increasing income gap between rich and poor.

The UNCTAD report also states that developing the right ICT policies depends on countries’ readiness to engage in and benefit from the digital economy, but the least-developed countries are the least prepared. To ensure that more people and enterprises in developing countries have the capacity to participate effectively, the international community will need to expand its support.

Ms. Guermazi urges leaders to develop a comprehensive approach to transforming their countries rather than rely on ad hoc initiatives.

“Digital dividends are within reach,” Ms. Guermazi insists. “The outlook for the future is bright.”


Senegal’s new international airport to boost region’s economy

SENEGAL – Senegal’s new International Blaise Diagne opened early in December, will improve regional connectivity, drive down costs of transportation, grow and transform the economy, co-funders of the project- African Development Bank said.

A statement issued by African Development Bank said, “With a 42,000m2 (square meter) passenger terminal and a 12,800m2 cargo terminal building that is designed to handle 50,000 tons of cargo and 80,000 aircraft movements annually, the new airport resolves a lingering terminal capacity challenge; offers a long-term solution to intra-African economic activity; and resolves a perennial problem of low levels of aviation connectivity in West and Central Africa”.

It is said that during the construction of the project, 3,000 local jobs were created and 427 full-time jobs for the operational phase.

This airport will also open up job opportunities in the engineering, maintenance, information technologies and security fields in the next few years.

African Development Bank vice-president for private sector, infrastructure and industrialisation, Pierre Guislain said, “Africa must be ready to capitalize on this opportunity. We are delighted that our efforts to fund critical quality infrastructure across the continent are showing results. The new Airport brings us closer to winning the West African aviation connectivity and logistics hub battle.”

Approximately 3 million passengers are expected to go through AIBD annually.

It is expected that the facility will trigger emergence of small and medium enterprises; attract regional and foreign investors, while boosting tourism potential for the country.

African Development Bank President, Akinwumi Adesina has complimented the leadership of President Macky Sall. “He is a visionary with a clear commitment to the delivery of transformative projects”.


Zambia ups infrastructure development

ZAMBIA has been touted as the favourite destination for investors.

In an effort to improve the business environment, Government has set out to make the country more attractive by enhancing infrastructure development.

That’s why the country in 2017 made infrastructure development central to its vision to attract investors.
As the year comes to a close, it is gratifying to see that government has rolled out massive infrastructure development running the length and breadth of the country.

Roads and bridges, solar and hydro power projects, hospitals, schools, water reticulation systems and other support infrastructure have been constructed and rehabilitated, thereby setting the stage for socio-economic development.
Minister of Housing and Infrastructure Ronald Chitotela says infrastructure development is an important driver of development for any country.

“By improving infrastructure, will not only have economic growth but also attract investors. Better and improved infrastructure promotes sustainable and socially inclusive economic growth,” Mr Chitotela says.

In the transport sector, the year 2017 has seen roads and bridges being constructed, upgraded, and rehabilitated and maintenance works being The Road Development Agency (RDA) is one arm of government that is implementing an ambitious programme called the Link Zambia 8,000 (implemented in 2012) and Pave 2,000. The Link 8,000 aims to build 8,000 km of roads in order to open up the country to further investment and development.

The project is set to cost around US$31.4 billion. More than 2,000 km of roads have been constructed so far. Zambia is a landlocked country in Central Africa and inadequate infrastructure in all key sectors is one of the country’s main hurdles.
In order to connect the country to various economic corridors in Africa and beyond, a good road network is key and this is why government through National Road Fund Agency has spent K5.3 billion on the construction of roads.

“The money was well spent because roads are key to the country’s economy. The agency is expected to fund the construction of more roads in 2018 and that the Road Development Agency will continue to construct toll gates in order to find the money to finance the rehabilitation and construction works,” Agency Board chairperson Christabel Banda says.

Among the notable roads constructed during the year is the 375 kilometre stretch from Luangwa Bridge to Mwami Border, at a cost of 168.7 million Euros.

The works were done by Condril and Mota Engil construction companies. The road project is co-financed by the European Union (EU) through the European Development Fund (EDF) and the European Investment Bank (EIB), the French Agency for Development (AFD) and the African Development Bank (AfDB).

Another massive road project during the year, whose construction commenced recently is the Great North, the 321-kilometre Lusaka-Ndola dual carriageway.

The Lusaka-Ndola dual carriageway could be one of the biggest road projects in Zambia’s history. This is so because the said road is a key panacea for the country’s socio-economic challenges, as it is an important route to and from the Democratic Republic of Congo and other Southern African Development Community (SADC) and Common Market for Eastern and Southern Africa (COMESA) countries.

Scheduled to be built at the cost of US$1.2 billion, the dual carriageway will according to plan, come with the construction of a transit hotel, a service station between Lusaka and Kabwe, and a mini city to be established between Kapiri Mposhi and Ndola.
A look at policies and frameworks put in place on the African continent makes one conclude that Zambia too is headed for the continental vision is a priority.

For infrastructure development in the energy sector, the year 2017 has seen the construction of the multinational power project called the Zambia-Tanzania-Kenya (ZTK) power interconnector.

Ministry of Energy Office for Promoting Private Power Investment manager Clement Sasa said the project on the Zambian side has made tremendous progress.

He notes that the project on the Zambian side has a funding gap of US$200 million to complete its portion. The ZTK interconnector is a high voltage power transmission line connecting Zambia, Tanzania and Kenya. The project is a Common Market for Eastern and Southern Africa (COMESA), Southern African Development Community (SADC) and East African Community (EAC) Tripartite Priority project as well as a New Partnership for Africa’s Development (NEPAD) programme under the Programme for Infrastructure Development in Africa (PIDA) and the Africa Power Vision which have been endorsed by the African Union Heads of State and Government Assembly.

Another hydropower project worthy noting in 2017 was the launch of the US$4 billion Batoka Gorge Hydro-Electric Scheme implementation process with a call to the media to help market the project to potential financiers locally and abroad.
Batoka Gorge Hydro – electricity Power Station project will be financed by both the Zambian Government and Zimbabwe.
Zambezi River Authority chief executive officer Munyaradzi Munondawafa said the project is in response to this energy crisis in the SADC region, the Governments of Zambia and Zimbabwe have embarked on the bi-lateral Batoka Gorge Hydro-Electric Scheme 54km downstream of the Victoria Falls.

The project is expected to produce 2,400 Megawatts of electricity at an estimated cost of US$4 billion.

On hospitals 2017 has seen improvement in the infrastructure in various health facilities countrywide.

Besides several other clinics and health centres that have been constructed, the mother of them all is the upgrade of Levy Mwanawasa Hospital into Levy Teaching Hospital (LTH) at a cost of US$48 million.

The upgraded facility once complete is scheduled to accommodate 3, 000 students. “Government has an on-going robust programme of constructing health facilities across the country in line with the vision of providing equitable access to cost effective, quality health care services as close to the family as possible,” President Lungu said in a speech read for him by Vice- President Inonge Wina at the ground-breaking ceremony of the expansion of phase two of the Levy Mwanawasa University Teaching Hospital.

On schools, 2017 has seen Government construct 115 new secondary schools and 220 primary schools are being upgraded.
Minister of General education Dennis Wanchinga says a good infrastructure is vital to a quality education for all.

“In all sectors, infrastructure is an essential driver of competitiveness which is critical for ensuring the effective functioning of any economy. That’s why even in the education sector, infrastructure development is priority,” Dr Wanchinga says.

In 2017, the country has seen basic reliable infrastructure coming up in terms of airports, road networks, energy generation and transmission installations and telecommunication infrastructure.

Clearly, investing in infrastructure really pays off. Because a good and quality infrastructure does not only attract investors, it also positively contribute to economic growth.

Experts say increased public infrastructure investment can have powerful effects on the macro-economy. Better infrastructure raises output in the short term by boosting demand and in the long term by raising the economy’s productive capacity.


Africa’s CFTA trade accord holds promise in spite of barriers

Global trade is unravelling. Most recently, the World Trade Organisation biennial trade talks ended with no new agreements, with the WTO calling on members to do some “soul searching”. But amid the doom and gloom, Africa is proving to be one of the arenas for moving regional trade negotiations forward. During recent trade talks in Niger, African governments made a critical step towards creating one of the world’s largest trading areas.

A draft agreement to establish the Continental Free Trade Agreement (CFTA) was reached in Niger this month, meaning it is now awaiting adoption at a summit of the African Union in March next year. Covering a market of 1.2bn people and a combined GDP of $2.2tn, the CFTA holds considerable potential. With the continent’s economy expected to grow to $29tn by 2050, the CFTA may evolve to cover a market that is larger than Nafta today.

Notably, this new accord comes at a time when other mega-regional trade agreements are stalling. President Donald Trump’s decision to withdraw from the Trans-Pacific Partnership sent member states back to the negotiating table. At the same time, negotiators from Canada, the United States and Mexico continue to hit walls in Nafta negotiations.

Now, however, there is hope on the horizon. Africa’s ambitious trade deal covers 90 per cent of goods traded within the continent, with the remaining 10 per cent of sensitive items and excluded products to be reviewed and phased-in. It goes beyond traditional trade agreements in mere goods. Through the agreement, services too are to be progressively liberalised.

This is to be supported by a mechanism for addressing Africa’s prevalent non-tariff barriers, like border delays, burdensome customs and inspection procedures. In its next phase, negotiations will begin on competition policy, intellectual property rights and possibly also e-commerce. When trade grows, markets open and economies begin to diversify. Intra-African trade is especially valuable, comprising a large share of value-added and industrial products like processed agricultural goods, basic produce, and financial and retail services. It is also different from the trade goods that flow from Africa to the rest of the world, which are mostly crops, mineral products, metals and oil.

The CFTA will revolutionise the way Africa trades. Moving away from commodity-driven exports will help to secure a more sustainable and inclusive trade that is less dependent on the fluctuations of commodity prices. This will be of particular benefit to Africa’s small and medium-sized enterprises, which support 90 per cent of jobs, and which are better positioned to tap into regional destinations than markets overseas.

An enlarged regional market also provides better incentives both for inward foreign direct investment and for cross-border investment from within the continent. Most African markets are small and fragmented, but through integration we can create the scale necessary for industrial investments. Cumulatively, these benefits from the agreement will contribute to several Sustainable Development Goals (SDG) — from targets for decent work and economic growth to food security.

However, of utmost importance is furthering the SDG of keeping the pledge that “no one will be left behind . . . starting with the furthest behind first”. So, there is much to celebrate with the conclusion of the CFTA negotiations, but this is just the first step.

Matching ambition with implementation is now the challenge, as outlined in a new joint report by the Economic Commission for Africa, the African Union Commission and the African Development Bank on ‘Bringing the CFTA About’.

Implementing the CFTA requires an astute appreciation of the political economy of integration in Africa. It will involve tackling vested interests that benefit from the status quo and making difficult decisions over import taxes and trade openness. The Boosting Intra-African Trade Action plan will guide leaders to make these decisions.

It will address issues such as trade policy, capacity, infrastructure, and finance — tackling head-on elements which can quickly derail any agreement. What is required is the continued commitment of Africa’s leaders, and engagement from the private sector and civil society to power a new era of innovation, trade and investment steered by its vibrant youth population. Together, we can shape a better future for Africa.


AfDB to support Mozambique rail project with $300m

The African Development Bank (AfDB) is taking the lead in facilitating the takeoff of one of Africa’s largest infrastructureproject − the $5-billion Nacala corridor rail and port project, supporting the project with $300-million from its private sector window.

After years of financial structuring, a signing ceremony presided over by the Mozambican Economy and FinanceMinister Adriano Maleiane, Transport and Communications Minister Carlos Mesquita, and Energyand Natural Resources Minister Laeticia Klemens in Maputo marked the formal signing of the project deal.

The project will provide a 912 km rail line from the Tete province western in Mozambique to the Nacala port on the eastern coast of the country, through Malawi.  The projectalso includes the construction of a deep sea port and associated terminal infrastructure at Nacala.

“This project supports two of the High 5s that guide the bank’s contribution to the sustainable development goals in Africa. By providing a rail link across Mozambique and Malawi with a possible extension to Zambia, it will help Integrate Africa; and by opening up markets for agricultural commodities it will help the AfDB’s Feed Africa strategy. This dual use infrastructure development shows that Mozambique can put its natural resources at the service of its citizens,” said AfDB Mozambique country manager Pietro Toigo.

The AfDB played a key role as the co-lead arranger in the transaction, which includes the Japanese Bank for International Cooperation, the Nippon Export and Investment Insurance, and the Export Credit Insurance Corporation of South Africa, including a range of commercial Banks providing finance to the project sponsored by Valeand Mitsui & Co.

When the rail comes into full operation, coal exports will increase by 40% in 2018 and generate crucial foreign earnings for the Mozambique economy at a time the country is witnessing a cyclical downturn. The project anticipates 4 million tons a year of freight capacity for non-coalcommodities, and opening up regional agricultural producers to world markets.

The African Development Bank is also investing $1-million in grants to assist small- and medium-enterprises and developing agribusiness along the corridor in Malawi and Mozambique.  This support aims to ensure that small businesses benefit from the potential of the port and the raillink potential.

Mozambique Transport Minister Carlos Mesquita noted that the project could provide wider benefits to Mozambique, Malawi and Zambia, and allow Mozambique to fulfill its ambition to be a regional gateway to world markets.


The World Bank Won’t Back Oil and Gas – What Now?

The decision to end finance to upstream oil and gas marks a turning point for development assistance.

At the One Planet Summit in Paris last week, the World Bank Group announced that, from 2019, it will no longer finance upstream oil and gas. This reflects the Bank’s decision to realign its development assistance with climate commitments. But how does this square with the priorities of those countries that want to use their fossil fuels to drive economic growth and improve access to energy? And can it meaningfully affect CO2 emissions, when alternative sources of investment and assistance are still available for oil and gas development?

Between 2000 and 2015, around $4.8 billion of official development assistance went to upstream oil and gas development, and $22.2 billion to (often-linked) thermal power generation. Generally, this was delivered alongside programs of technical assistance and capacity building, initiatives on ‘good governance’ and transparency, and increasingly, support for linked energy projects and economic activities.

These sums are small in relation to the wider aid budget and accelerating climate finance; but they help ‘de-risk’ and thus leverage large sums of private finance into the oil and gas sector – and therefore carry disproportionate influence over a country’s political and economic direction.

An optimistic view

The high commodity prices of the late 2000s supported the idea that well-managed fossil fuel development could present a ‘transformative opportunity’ for developing countries, and a chance to ‘graduate from aid’. Development banks and donor countries often took an optimistic view of what fossil fuels could deliver, sometimes reinforcing the industry’s case for rapid development and expectations of the benefits it would bring.

Many countries are now revising those expectations in light of price collapses and subsequent national debt. Several established producers including Norway and Saudi Arabia are already preparing for the effects of global energy decarbonization on their export markets. Yet for emerging producers, such as Guyana or Tanzania, the concepts of unburnable carbon and stranded assets do not sit well with the sovereign right to develop resources, particularly in post-colonial contexts.

Nor does a call to ‘keep it in the ground’ seem fair. Lower income countries have every right to increase their emissions, given their negligible historical responsibility for climate change and their urgent need for development. However, oil and gas projects and linked large-scale thermal power infrastructure last for decades. Can new investments of this kind meet development needs competitively, when the costs of renewable energy, storage technologies and smart systems are falling so rapidly?

Growing awareness of climate impacts and international commitments to cut greenhouse gas emissions are not new challenges for assistance and advice to the oil and gas sector. Back in 2003, the World Bank’s Extractives Industries Review recommended that it cease coal investment immediately, and phase out oil investment by 2008, in line with the Kyoto protocol. The Review also urged the Bank to consider the negative impacts of fossil fuels on climate, and in turn on agriculture and food production.

Since then, internal and external reviews have urged development banks and donors to integrate climate considerations into assistance to the sector. These efforts were generally limited to ‘greening’ oil and gas activity, for instance by enhancing efficiency and eliminating the flaring of associated gas. Rarely have they addressed the wider carbon risks that upstream decisions can lock in, from reliance on vulnerable export revenues, to the development of domestic refinery capacity, thermal power infrastructure, and fossil-fuel fed industries such as cement, fertilizers and petrochemicals.

Inconsistent messages

As a result, development banks and donors have sent inconsistent messages on new fossil fuel development. Since 2013, this has typically translated into no support for coal, active support for gas as a ‘transitional fuel’, and ambiguity around oil. The Bank’s latest announcement does not change its position on thermal power generation, although the accompanying decision to apply carbon pricing in much of its economic analysis may do so.

To some extent, conflicting interests amongst their members and the ‘ask’ from less developed countries have constrained the choices of development banks and donors. Oil and gas assistance works separately from programs for climate and green growth, and engages with different ministries and country groups. It also tends to focus on ‘how to do it right’ rather than whether to do it at all – after all, new sources of finance from Asia have proved ready and willing to fill any gaps.

The World Bank’s announcement marks a turning point. Others are already making practical inroads. Among others, the European Bank for Reconstruction and Development has begun analyzing the fiscal risks of low carbon transition in partner countries that export oil and gas. And the African Development Bank is considering how best to assist fossil fuel producers with climate-resilient growth and with implementing their nationally determined contributions (NDCs) under the Paris Agreement.

Our experience suggests that demand from developing countries for these kinds of assistance is growing, even from their national oil companies. Development banks and donors, old and new, must now work together to reform development assistance to countries with oil and gas in a way that enables them to effectively manage carbon risk, and benefit from green growth opportunities.


Africa Finance Corporation secures term loan

Africa Finance Corporation (AFC) has signed a US$200mn three-year term loan facility, to be used for general corporate purposes, including facilitating trade.

Mandated lead arrangers and bookrunners on the facility were First Abu Dhabi Bank, Industrial and Commercial Bank of China, Rand Merchant Bank and Mitsubishi UFJ Financial Group. KfW Ipex-Bank joined as arranger.

Norton Rose Fulbright and Jackson Etti & Edu acted as lenders’ counsel, with White & Case as borrower’s counsel.

According to Banji Fehintola, director and head of treasury and financial institutions at AFC, the facility will support the execution of the corporation’s infrastructure development mandate and provide it with the necessary capital resources required to continue bridging Africa’s infrastructure deficit and facilitating international trade on the continent.

“The successful closure of this facility, which was oversubscribed, attests to AFC’s strong credit profile and robust governance procedures, making AFC very attractive to global lenders and investors,” says Fehintola.

To date, AFC has invested approximately US$4bn in infrastructure projects, including power, transport, and telecommunications, within 28 countries across North, East, West and Southern Africa.

With a current balance sheet size of approximately US$3.5bn, AFC is the second-highest investment-grade-rated multilateral financial institution in Africa with an A3/P2 (stable outlook) rating from Moody’s.


AfDB disburses €71 million to build a 714 km power line linking Guinea and Mali

The African Development Bank disbursed more than €71 million for the construction of a 714 km high voltage power line. The infrastructure which will link N’Zérékoré (Guinea) and Sanankoroba (Mali), will enable the electrification of 201 villages and provide a better access to electricity.

Marie-Laure Akin-Olugbadé, assistant general manager of the AfDB in West Africa, said: “In addition to the funding it provides, the African Development Bank played the role of lead funder. It has financed and monitored technical and economic feasibility studies and environmental and social impact assessments”.

The project’s total cost is €358 million. The power line is expected to be connected to the high voltage lines of the sub-region, thus allowing interconnection between its countries. Once completed, it will help increase the electrification rates of Guinea and Mali which respectively stand at 18% 41% presently.


Namibia: US$153 million approved for rail and road works

The Board of the African Development Bank has approved a US$153 million loan for Namibia to upgrade a 210 km stretch of railway in the west of the country.

The support will also finance the upgrade of a section of the road from the capital of Namibia, Windhoek, to its international airport.

The two interventions are part of the priority projects identified in the government’s Harambee Prosperity Plan, an action plan launched in April 2016, to support priority interventions identified in the government’s national development plan.

The upgrading of the railway track between Walvis Bay and Kranzberg will speed up both freight and passenger traffic.

The current railway line, of Cape Gauge standard, was last upgraded in the 1960s and, in its current condition with speed restrictions is an infrastructure bottleneck, resulting in increased  transport costs.

The upgrading is particularly important because it will involve a direct linkage to Walvis Bay Port, and therefore will speed the passage of goods to and from the port into Namibia and beyond into other Southern African Development Community countries.

The African Development Bank is also providing support in the expansion of the container terminal at Walvis Bay Port.

After improvement, freight trains will be able to travel at up to 80km/h and passengers will enjoy speeds of up to 100km/h.

The rail upgrading work will be implemented over three years.

As to the road to the airport, which will be implemented over a period of 42 months, this will be a new dual carriageway with two lanes in each direction, and will incorporate an option for a third lane in the future.

The existing road will be retained as an alternative to service local traffic.

The Government of the Republic of Namibia is a co-financing partner in the project.

The government recognizes that the combination of having direct access to the South Atlantic and a good transport network can improve its competitiveness and desire to become an international logistics hub.

It shares borders with Angola, South Africa, Botswana and Zambia, and the latter two countries are landlocked.

While presenting the project to the board, the bank’s deputy director-general, Southern Africa Regional Development and Business Delivery Office, Josephine Ngure said:

“The project is strongly aligned with the government’s priorities, and complements the other three projects approved by the Bank for Namibia this year.

“It is in line with two of the African Development Bank’s High 5 strategic priorities: ‘Integrate Africa’ and ‘Improve the quality of life for the people of Africa’ through the creation of construction jobs during the works and other employment after completion.”

Amadou Oumarou, director of the Bank’s Infrastructure, Cities and Urban Development Department, further noted the opportunities for the involvement of the private sector in the project.

“This road and rail project will have a welcome effect on Namibia’s ability to integrate with the other members of the Southern African Development Community, improving access to both sea  and air ports.”

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