The Board of Directors of the African Development Bank (AfDB) has approved a technical cooperation agreement with the Government of Denmark for the establishment of a sustainable energy fund for Africa (SEFA) for capacity building and investment in sustainable energy over a five-year period. The budget for the fund is set at a DKK 300 million (equivalent to USD 57 million).

The objective of this Fund is to provide technical capacity building and investment capital to support the provision of sustainable energy to SMEs in Africa. SEFA seeks to serve the overall the purpose of generating employment and economic growth.

This proposal to establish a Sustainable Energy Fund for Africa demonstrates a strong commitment of the Government of Denmark to support Regional Member Countries through the Bank in addressing the major development challenges towards the achievement of the Millennium Development Goals by 2015.

It is intended that SEFA becomes a multi donor fund as soon as additional donors agree to join. SEFA is completely untied and intended for financing projects with special emphasis on sustainable energy in support of the Bank's mandates.

Africa's untapped renewable energy sources could become the backbone of a reliable, affordable and low-carbon energy system. The technologies are well known and are becoming more reliable and profitable in response to fluctuating fossil fuel prices, increasing market volumes and technological innovation. There are thus promising market opportunities in Africa for small and medium enterprises, both as energy producers and energy consumers, be it in agriculture, industry (especially agro-industry), tourism or commerce.