Momentum gathers in Power Africa initiative
Standard Bank Group, Africa’s largest lender by assets, has renewed its commitment to the Power Africa Initiative, a multi-stakeholder project driven by US President Barack Obama, which aims to double access to power in Africa by significantly accelerating investment in the sector over the next five years. The US government has committed more than US$7 billion dollars in financial support to Power Africa over five years.
Power Africa aims to add more than 10 000 megawatts of cleaner, more efficient electricity generating capacity, and in the process electrifying at least 20 million new households and commercial entities with on-grid, mini-grid, and off-grid solutions. The six initial partner countries - Ethiopia, Ghana, Kenya, Liberia, Nigeria and Tanzania - have set ambitious goals to boost their power generating capacity with the ultimate aim of enhancing energy security, decreasing poverty and fostering economic growth.
“We are seeing an increasing pipeline of power projects across sub-Saharan Africa,” said Mr Sim Tshabalala, Chief Executive of Standard Bank Group. “In 2013 we committed to arrange funding of at least $150m of debt in the near term across the Power Africa countries, while more recently that amount has risen to over $400m, principally in Kenya and Nigeria, with smaller transactions in Ghana and Tanzania.”
Standard Bank is using its extensive balance sheet and on-the-ground presence across 20 markets across sub Saharan Africa to help finance projects under the Power Africa initiative while at the same time actively leading the policy reform process required to facilitate increased private sector investment in Africa’s power sector. The bank expects more than $1bn in commercial projects to be realised across the six Power Africa partner countries by 2018, and as much as $5bn when one includes the rest of sub-Saharan Africa.
“Standard Bank will strive to arrange or underwrite at least half of the debt required for these projects,” said Mr Tshabalala. “As such, our commitment to Power Africa is to help fund an additional $600m of debt in the Power Africa countries through 2018, taking our total since joining the initiative a year ago to $1bn, and another $2bn across the rest of sub-Saharan Africa over the same timescale.”
The Ghana Power Compact (GPC) is the largest US Government transaction to date under the Power Africa banner. The GPC takes a system-wide approach to Ghana’s energy challenges with six projects across three areas: distribution, generation and access to energy.
The GPC also supports Ghana’s efforts to mitigate climate change by funding major energy-efficiency initiatives and improving the investment climate for renewable energy. At the heart of the GPC is a strong commitment from the Government of Ghana to change the laws and regulations needed to transform its power sector and put it on a path to profitability and sustainability.
The Millennium Challenge Corporation (MCC) will invest up to $498m over the next five years, to support the transformation of Ghana’s energy sector, helping the country provide a safe, reliable source of power to households and businesses. The Government of Ghana will contribute an additional $37m, bringing the total investment to $535m. This initial investment is expected to catalyse at least $4.6bn in additional private sector energy investment and activity from American firms in the coming years.
“Ghana is one of Africa’s most dynamic and exciting economies and the GPC will make a significant contribution towards putting the country on a sustainable long-term economic growth path,” said Mr Tshabalala. “Standard Bank will use its presence in Ghana and the rest of the continent to further support the Power Africa Initiative as well as other power projects across the continent.”