AFRICA – The African Development Bank (AfDB) has freed up US$600 million for investment in renewable energy in Africa.

The President, African Development Bank, Dr Akinwumi Adesina, who disclosed this in his keynote speech at the UK-Africa Investment Summit, said, “Huge opportunities exist for investment in renewable energy, especially for hydropower, wind, solar, thermal and geothermal.”

“But many of these opportunities can’t be realised unless we invest a lot more in project preparation to make the projects bankable,” noted the Bank President.

According to Adesina, The African Development Bank through its NEPAD infrastructure project preparation facility has helped to mobilise financing for US$8.5bn of infrastructure projects.

The AfDB said the Sustainable Energy Fund for Africa, based at the bank, had so far supported investments in excess of US$800m in renewable energy.

Adesina noted that with global climate change, and increasing frequency and intensity of extreme weather events, there is an urgent need to climate proof infrastructure investments.

To illustrate his point, he gave the example of the devastating cyclones in Mozambique, Malawi and Zimbabwe that led to massive destruction of critical infrastructure.

He noted that coastal states, which are more vulnerable to coastal erosion and floods also needed Infrastructure investment to make them climate resilient.

According to Adesina, the bank used a partial risk guarantee to support the Lake Turkana wind power project in Kenya, the largest wind power generation project in Africa, which will produce 300 megawatts of electricity.

“The African Development Bank’s €20 million Partial Risk Guarantee essentially backstopped the government of Kenya’s obligations to developers against delays in the construction of transmission lines,” he said.

Adesina further noted that the Bank was currently exploring with the DFID the use of synthetic securitisation for the sovereign portfolio of the African Development Bank.

This will be used to transfer sovereign risk to the market, working with insurers and reinsurers in the UK.

Adesina noted that the success of the project could be a huge game changer for how governments can transfer their sovereign risks on infrastructure to the market.