The African Development Bank (AfDB) will, as part of its support for U.S. President Barack Obama's Power Africa initiative, deepen and expand its work in reforming the energy sector.
Already a major investor in the energy sector, the AfDB will scale funding for energy production, transmission and distribution infrastructure, cross-border power pools, as well as government policy and regulatory reforms. The Bank will particularly emphasize reforms for national power utilities, many of which are in need of better business models and financial reinforcement.
"We expect to allocate as much as $3 billion over the next 5 years. This will leverage at least 4 times more investments in the energy sector. Our interventions will include investment loans, reforms, advisory, and guarantees," AfDB President Donald Kaberuka said in Dar es Salaam, in reference to Tanzania, Kenya, Ethiopia, Ghana, Liberia, and Nigeria -- the Power Africa priority countries.
"Reforms are the key," Kaberuka said. "The billions of dollars available for investment in the energy sector will translate into actual bulbs in people's homes and electricity necessary to grow small businesses if state utilities run efficiently and effectively. The policy reforms will facilitate and enhance cross-border energy markets."
The main financial source for the Bank's assistance to the energy sector in the Power Africa countries is the African Development Fund (ADF), which is its concessional window. The ADF contributed $1.4 billion out of the Bank's $1.6 billion over the last five years in the six priority countries' energy investments.
Addressing CEOs in Tanzania on 1 July, US President Barack Obama said that he saw Africa as the next major success story and with Power Africa he wanted the US to be part of that success.
"So that's why... I announced Power Africa -- our initiative to double access to electricity in sub-Saharan Africa. I want to thank the African Development Bank for its partnership, as well as many companies that have stepped up with commitments, including some here," President Obama said.
"And I have to say, those who are involved in this process, they continually tell us the problem is not going to be private-sector financing. The problem is going to be getting the rules right, creating the framework whereby we can build to scale rapidly. That's what we're committed to doing."
President Kaberuka welcomed the initiative: "Power Africa is a timely initiative and the Bank will work with the six countries for a successful implementation."