Board approves AfDB Group’s Strategy for the New Deal on Energy for Africa 2016–2025

A significant step for Africa’s transformation

21/05/2016
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The Executive Boards of the African Development Bank Group (AfDB) took a significant step towards Africa's economic transformation in Abidjan, Côte d'Ivoire on Wednesday, May 18, 2016, with the approval of the Bank Group's 2016-2025 Strategy for the New Deal on Energy for Africa.

The Strategy sets out the priorities for the Bank's interventions in the energy sector from 2016 to 2025. It aims to spur the transformation of Africa's energy sector, promoting inclusive growth and the transition to green growth by increasing energy production, scaling-up energy access, improving affordability, reliability and energy efficiency as well as the sustainability of energy systems.

The New Deal on Energy for Africa is built on five inter-related and mutually reinforcing principles: raising aspirations to solve Africa's energy challenges; establishing a Transformative Partnership on Energy for Africa; mobilising domestic and international capital for innovative financing in Africa's energy sector; supporting African governments in strengthening energy policy, regulation and sector governance; and increasing the African Development Bank's investments in energy and climate financing.

With over 645 million people in Africa without access to electricity and some 730 million reliant on biomass for cooking, the New Deal proposes to be a game changer for the continent's energy sector.

To tackle this deficit, the New Deal intends to focus on seven themes that are holding back the development of the energy sector.

These strategic themes are: (i) setting up the right enabling policy environment, (ii) enabling utility companies for success, (iii) dramatically increasing the number of bankable energy projects, (iv) increasing the funding pool to deliver new projects, (v) supporting 'bottom of the pyramid' energy access programmes, (vi) accelerating major regional projects and driving integration and (vii) rolling out waves of country-wide energy 'transformations'.

The AfDB intends to address these themes through a series of flagship programmes such as: Independent Power Producers (IPP) procurement, renewable energy, energy efficiency, power utility transformation, early stage project support facility, bottom of the pyramid energy financing, regional project acceleration, energy efficiency, country wide energy sector turnarounds, and transformative partnerships.

Designed to support the implementation of the new strategic goals of the Bank, the High 5s, the New Deal is critical to achieving these goals because energy drives socioeconomic development. Feeding Africa, Industrialising Africa, Integrating Africa, and Improving the Quality of Life of Africans, will rely on Lighting up and Powering Africa. The Strategy is therefore designed to unlock productivity potentials across agribusiness zones and hubs as well as industrial value chains in all economic sectors in rural and urban areas with a focus on reaching the unserved populations across the continent.

The New Deal will contribute to achieving the Sustainable Development Goals (SDGs) in Africa. It will contribute directly to achieving in particular, SDG7 - on ensuring access to affordable, reliable, sustainable, modern energy for all; SDG 1 - on ending poverty in all forms; SDG 13 - on combating climate change and its impact; SDG 3 - on improving health and well-being; SDG 5 - on achieving gender equality and empower all women and girls; and SDG 10 - on reducing inequality within and among countries. In addition, by improving access to clean energy, the New Deal will have co-benefits for social, economic and environment sustainability in Africa. The New Deal will also assist African countries in achieving the COP21 Agreement on climate change, especially the Intended Nationally Determined Contributions (INDCs) of African countries.

The AfDB has developed a significant energy sector portfolio in recent years with over 100 active projects. The volume of the Bank's energy sector approvals from 2006-2015 amounts to about USD 15 billion (UA 10 billion). At the end of 2015, the energy sector portfolio stood at over USD 12 billion (UA 8 billion).

The New Deal is coupled with internal reforms, following the previous approval by the Board of the new Business Delivery Model, which envisages the creation of a Vice Presidency for Power, Energy, Climate, and Green Growth, making the AfDB the only Multilateral Development Bank to do so.