Sustainable Energy Fund for Africa

Date of agreement: Pending To be approved in 2011
Current volume of the fund: NA
Volume of funds committed: DKK 300 million (approx US$ 58 million) indicative commitment
Financial contributors: Government of Denmark

Background and Objectives

The Sustainable Energy Fund for Africa (SEFA) aims to support the implementation of the AfDB‟s Private Sector Development (PSD) Strategy by providing untied grants and equity support to smaller-size renewable energy and energy efficiency players. It is also envisioned that SEFA will support the Bank‟s energy strategy, which is currently under development. It is aimed at exploiting the potential of the emerging “clean energy” market in Africa as a source of growth and innovation for SMEs as producers, distributors, suppliers, and consumers of climate-friendly energy. In the greater context of the Africa Commission, this initiative and associated fund are seen as a means to achieve higher em-ployment and induce competitive job creation throughout Africa.

SEFA will provide two financing windows. The first will support the development and design of re-newable energy generation and distribution projects with a total investment between USD 30 and 75 million on a grant basis. The second will support SMEs all along the renewable energy and energy efficiency value chain with a total investment of under USD 30 million on a mixed grant and equity investment basis.

Areas of Focus / Sub-Sectors

The thematic area covered by SEFA is the promotion of clean, low-carbon energy production and use. This includes the following sub-themes:

• Enhancing the SME value chain for the provision of energy efficiency products and services;
• Increasing investment in renewable energy production and distribution;
• Increasing investment in SMEs aimed at proliferating technology, techniques and capacity for ener-gy efficiency;
• Increasing rural access to clean electricity in order to support the increase of employment levels;
• Providing technical assistance and preparation costs (feasibility studies) to bring sustaina-ble/renewable energy projects to bankability.

Target Beneficiaries

• Rural and peri-urban communities currently with inconsistent or no access to energy;
• Sustainable energy production projects and PPPs that are currently unbankable; and
• African sustainable energy/energy efficiency SMEs and entrepreneurs.

Indicative Timeframe and Proposed Outcomes

Financing Objectives

• USD 400 million leveraged through upstream support to RE generation projects, and USD 40 mil-lion additional equity investment leveraged by grant and equity support to SMEs

Development Objectives

• Sustainable, private sector led economic growth in African countries promoted through efficient utilization of and access to untapped renewable energy resources.
• Scope for establishing and operating private sector enterprises in Africa improved through reliable and environment-friendly energy supply thereby enhancing their productivity, cost-effectiveness, competitiveness, and job creation.
• Loans facilitated and provided to medium-sized enterprises for investing in renewable energy pro-duction.
• Involvement of SMEs in RE/EE-related business activities increased through SEFA investments.

Proposed Administration and Governance Structure

The governance and administrative structure will be composed of a coordinator, a technical review committee and an oversight committee.

• Coordinator: He/she will be a Bank staff member. Responsible for receiving and screening financ-ing requests, coordinating the preparation of projects or activities, and ensuring their supervision.
• Technical Review Committee (TRC): The TRC will be composed of relevant experts from across the Bank. The technical committee will review all operations and recommend their approval by the appropriate authority.
• Oversight Committee (OC): composed by a Bank representative and representatives of the financ-ing partners. Responsible for approving the operational guidelines of the Fund as well as verifying the conformity of the use of resources in accordance with the objectives of the Fund.
• Operations of over US$ 1 million will be submitted to the Board of Directors for approval.

Technical Department and Task Manager

Youssef Arfaoui, Senior Infrastructure Investment Officer, Private Sector Department
Tel: (216) 7110 2308

Partnerships and Cooperation Unit Focal Point

Veronica Giardina, Principal Cooperation Officer
Tel: (216) 7110 2519