Botswana, Nigeria and Cape Verde Secure USD 441 Million for Energy and Poverty Reduction projects

04/11/2009
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Tunis, 28 October 2009 –  Executive directors of the African Development Bank (AfDB) Group approved near to USD 441 million in three loans for the implementation of projects in Botswana, Nigeria and Cape Verde, at their regular weekly session on Wednesday, 28 October 2009, in Tunis.

Botswana

Under the approvals, Botswana will receive €153 million (USD 225 million) to finance the Morupule B Power Project, which involves the construction of a 600 MW (4 x 150 MW) coal-fired power plant and associated transmission infrastructure. The project, to be co-financed by the World Bank, the Industrial and Commercial Bank of China and Standard Bank Consortium (ICBC-SB), is designed to achieve energy generation self-sufficiency in the wake of rapidly declining electricity imports to support economic growth and reduce poverty.

Botswana relies on imported electricity to meet the bulk of its needs. In 2008, 80% of the electricity supplied in the country was imported from South Africa’s Eskom and other neighbouring countries, while 20% was generated by the Morupule “A” plant, a 25-year-old facility that has become increasingly unreliable. Eskom is suspending energy exports to cope with local demand.

The Morupule B project is situated adjacent to the existing Morupule Power Station, which lies approximately 280 km north of Gaborone. The project is of strategic importance to Botswana as it will contribute to national energy security and improve the competitiveness of the national economy. It will also benefit the entire population, estimated at 1.8 million in 2008.

Nigeria

For its part, Nigeria will receive UA 100 million (USD 157 million). African Development Fund (ADF) loan to finance its Economic and Power Sector Reform Program (EPSERP), which seeks to provide access to affordable and reliable electricity in order to encourage economic diversification, sustain growth, create jobs and alleviate poverty. It will also support the implementation of the government’s development agenda which aims at improving the electricity system and the business environment for active private sector involvement in the power sector in the medium term.

In addition, the project provides the Bank with a donor-coordinated platform to engage in dialogue with the Nigerian government on ongoing public finance management and fiduciary reforms as macroeconomic stability is a necessary condition for addressing the critical challenges in the power sector and protecting strategic budget priorities in the context of the global financial crisis..

The EPSERP is the Bank’s first budget support operation in Nigeria and will be implemented over two fiscal years –  2009 to 2010. It is aligned with the Nigerian government’s 2008-2011 Seven-Point Agenda which stresses critical infrastructure, particularly in power, as a key element in building a robust, resilient and competitive economy for sustainable growth.

Cape Verde

The Board also approved a €40 million (USD 59 million) ADF loan to Cape Verde to finance its poverty reduction programme. This additional budget support loan is the AfDB’s response to the economic impact of the financial crisis on Cape Verde. The loan will strengthen public finance management, as well as improve the business climate – the two components of its Poverty Reduction Strategy Support Programme (PRSSP-II).

The impact of the economic and financial crisis has seriously affected the tourism sector, the engine of the country’s economic growth. According to forecasts, the economic slowdown will persist in the second half of 2009 and in 2010. The budget support is designed to stimulate growth while enabling the government to continue implementing its economic and institutional reform programme.

Cape Verde has recorded one of the strongest macroeconomic management performances among Sub-Saharan African countries in the last decade.