African Development Bank’s Sustainable Energy Fund for Africa (SEFA) converts to concessional finance facility
By Winston Mwale
First established in 2012, SEFA is anchored in a commitment of $121 million by the Governments of Denmark, United States, United Kingdom, Italy, Norway and Spain
The African Development Bank’s (www.AfDB.org) Board of Governors has approved the conversion of the Bank-administered multi-donor trust fund SEFA into a “special fund”, to amplify its development impact by allowing it to access a wider range of financial instruments beyond the current scope of technical assistance.
Currently, SEFA, the Sustainable Energy Fund for Africa, supports small and medium-scale renewable energy and energy-efficiency projects through early-stage interventions that enhance project bankability and access to private sector investments.
Under the new dispensation, the fund will focus its interventions on three areas: (1) green mini-grids to accelerate energy access to underserved populations; (2) green baseload to support clean generation capacity; and (3) energy efficiency to optimize energy systems and reduce energy intensity.
This support will be provided through technical assistance and concessional investments that will improve the bankability of projects across innovative technologies and challenging geographies and crowd-in more commercial investments into the sector.
“The new SEFA will provide critical support to African countries to accelerate the transition towards greener and more sustainable power systems. The special fund’s ability to provide various financial instruments will unlock more private sector investments in new technologies and businesses,” said Wale Shonibare, the Bank’s Acting Vice-President for Power, Energy, Climate and Green Growth.
Dr. Daniel Schroth, Bank Acting Director for Renewable Energy and Efficiency, added that the proposed restructuring was designed to incorporate lessons from SEFA’s seven years of operational experience.
“The new structure of the special fund responds to the demand from external clients and the Bank’s teams for catalytic support, and sufficiently accommodates market needs arising from the transformation of the renewable energy landscape in African countries,” he said.
First established in 2012, SEFA is anchored in a commitment of $121 million by the Governments of Denmark, United States, United Kingdom, Italy, Norway and Spain. To date, the fund has committed $76 million across 56 projects in 30 countries.
The fund’s investments are expected to leverage in excess of $1.5 billion in investments in new capacity and connections across the continent.
SEFA is central to the Bank’s New Deal on Energy for Africa Strategy, and a “catalytic” financial vehicle for the achievement of universal energy access by 2030 in line with Sustainable Development Goal 7.