Multinational - Facility for Energy Inclusion (FEI)


Project Summary

Approval Date 13 Dec 2016
Signature Date 27 Nov 2018
Sovereign / Non-Sovereign Non Sovereign
Sector Power
DAC Sector Code 23010
Commitment U.A 14,406,627.05
Status Implementation

Project General Description

The Project entails the design, structuring, and implementation of a USD 500 million debt fund, the Facility for Energy Inclusion (FEI). Working through a streamlined platform and a highly specialized team, the Facility seeks to alleviate the barrier of lack of access to debt financing faced by small scale renewable energy projects, thus increasing the flow of capital to the energy sector in Africa. FEI will support projects with financing needs that are less than what is currently required to justify the high transaction costs associated with the lending platforms of most DFIs, and financing requirements that are not adequately satisfied by local commercial banks due to a number of factors including risk perception and the dearth of suitable financing models (e.g. receivable-based financing). It will focus on providing senior and mezzanine debt financing to small scale projects (off-grid, mini-grid and on-grid) with total costs not exceeding USD 30 million. The Facility will operate with loan structures and pricing commensurate with risk profiles of projects and on a platform conducive to the efficient execution of deals, in accordance with evolving market needs. Unlike other debt funds proposed in the market, the Facility constitutes a direct lending platform. Although FEI does not seek to deploy funds through local financial intermediaries, through its demonstration effect and financial performance, FEI may support the continent’s local commercial banks and other financial intermediaries in their efforts to “bank” the sector.

Project Objectives

FEI seeks to address these market failures and increase the flow of debt capital to small scale energy projects by deploying innovative investment strategies, specialized financial products, and streamlined due diligence procedures across Africa’s energy sector value chain. The Facility aims to reduce processing timelines and related due diligence costs of small scale projects. Although streamlined, the Facility’s platform will ensure compliance with acceptable credit criteria and the social and environmental considerations of its investors

Beneficiaries

FEI is expected to assist in realizing ~50 small scale energy projects, with individual investments of between USD 5 and 20 million, thus increasing electricity generation in Africa by at least 300 MW and energy connections by a minimum of 2 million households, including off-grid. While providing access to power, projects financed by FEI will contribute to local, economic development through job creation and increased productivity, resulting in improved livelihoods and quality of life.

Participating Organization

Funding
African Development Bank

Information

IATI identifier 46002-P-Z1-F00-063
Last Update 25 Jul 2019

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Contact Details

Email private-sector@afdb.org

Geographic Location

Country Multinational