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AfDB Group’s Strategy for the New Deal on Energy for Africa 2016-2025


AfDB Group’s Strategy for the New Deal on Energy for Africa 2016-2025

AfDB Group’s Strategy for the New Deal on Energy for Africa 2016-2025
Photo credit: EUEI PDF

Energy – its availability, reliability, affordability and sustainability – is critical for Africa’s transformation. Modern energy services enable economic growth and have a central role in sustaining inclusive growth: they drive employment and increase productivity across the value chain in agriculture and other sectors. However, shortages, high cost and poor access to energy remain major impediments to Africa’s social and economic progress.

The African Development Bank’s Energy Policy (2012) and the African Development Bank’s Strategy for 2013-2022 (also referred to as the Ten Year Strategy) recognise the opportunities and challenges in the energy sector. The Bank’s operations have responded to these opportunities and challenges by addressing a variety of needs across the continent ranging from sector level interventions to project preparation support and transaction advisory work. While these efforts have yielded results much more needs to be done.

The aspiration of the Bank’s New Deal on Energy for Africa is achieving universal access to energy across the continent by 2025 – 100 per cent access in urban areas and 95 per cent in rural areas, leveraging on- and off-grid solutions and related technological advances.

The New Deal on Energy for Africa is a partnership-driven effort. To achieve and drive towards this goal, the AfDB is working with governments, the private sector, bilateral and multilateral energy sector initiatives to develop a Transformative Partnership on Energy for Africa – a platform for public-private partnerships for innovative financing in Africa’s energy sector. The design of the New Deal draws on consultations with African countries, utilities, private sector investors and financiers and foundations in various forums such as (i) the high-level consultation meeting in Abidjan in September 2015 – at which the concepts and flagship programs were co-developed with public and private stakeholders; (ii) the World Economic Forum – at which the Transformative Partnership on Energy for Africa was launched with African heads of States and Governments and global Partners; (iii) the African Union Summit in January 2016 where several heads of state expressed their full support for this effort and affirmed the appointment of the African Development Bank as the Trustee for the African Renewable Energy Initiative and the host of its Independent Delivery Unit; and (iv) several energy sector meetings, including the PIDA Week; and (iv) several consultative meetings between the Bank’s President and Senior Management and Heads of States and Governments, relevant ministers and stakeholders in Africa and beyond.

The New Deal is built on five inter-related and mutually reinforcing principles: raising aspirations to solve Africa’s energy challenges, establishing a Transformative Partnership on Energy for Africa; mobilising domestic and international capital for innovative financing in Africa’s energy sector, supporting African governments in strengthening energy policy, regulation and sector governance, and increasing the African Development Bank’s investments in energy and climate financing.

This Strategy for the New Deal on Energy for Africa sets out the priorities for the Bank’s interventions in the energy sector from 2016 to 2025. The Strategy will contribute to the transformation of Africa’s energy sector and promote inclusive growth and the transition to green growth by increasing energy production scaling-up energy access improving affordability, reliability and energy efficiency while improving the sustainability of energy systems.

The New Deal focuses on seven strategic themes that are holding back the development of the energy sector. These strategic themes are: (i) setting up the right enabling policy environment, (ii) enabling utility companies for success, (iii) dramatically increasing the number of bankable energy projects, (iv) increasing the funding pool to deliver new projects, (v) supporting ‘bottom of the pyramid’ energy access programmes, (vi) accelerating major regional projects and driving integration, and (vii) rolling out waves of country-wide energy ‘transformations’. The Bank will implement these themes through a series of flagship programmes such as: the rolling out of an Independent Power Producer (IPP) Procurement Programme (IPP), power utility transformation, early stage project support facilities, funding catalyst programmes, bottom of the pyramid energy financing facilities, mobile payment programmes, regional project acceleration programmes, country wide energy sector turnarounds and transformative partnerships.

The New Deal supports the implementation of other relevant policies and strategies of the Bank. The achievement of other standing policies and strategies of the Bank require significant improvements in Africa’s energy systems, access and security. The New Deal was designed to support the effective implementation of the Bank’s Private Sector Development Strategy (2013-2017), the Regional Integration Policy and Strategy (2014-2023), the Governance Strategic Framework and Action Plan (2014-2018), the cross-cutting Gender Strategy (2014-2018), and to achieve the twin goals of the Bank’s Ten Year Strategy – inclusive and green growth in Africa.

The New Deal supports the implementation of the new strategic goals of the Bank, the High 5s: Energy is the lifeblood of the economy. To successfully Feed Africa, Industrialize Africa, Integrate Africa, and Improve the Quality of Life of Africans, we must first Light up and Power Africa. The New Deal was designed to unlock productivity potentials across agribusiness zones and hubs, as well as industrial value chains in all economic sectors in rural and urban areas with a focus on reaching the unserved populations across the continent.

The New Deal on Energy for Africa contributes to the achievement of the Sustainable Development Goals (SDG) in Africa. It directly contributes to achieving in particular, ensuring access to affordable, reliable, sustainable, modern energy for all (SDG 7); ending poverty in all forms (SDG 1); combating climate change and its impact (SDG 13); improving health and well-being (SDG 3); SDG achieving gender equality and empower all women and girls (SDG 5); and reducing inequality within and among countries (SDG 10). By improving access to clean energy, the New Deal will also contribute to social and economic growth and environment sustainability in Africa.

The New Deal on Energy for Africa will assist African countries in achieving the COP21 Agreement on climate change, especially their Intended Nationally Determined Contributions (INDCs). While the energy sector contributes a major share of greenhouse gas (GHG) emissions in most industrialized countries, historical green-house gas emissions in Africa have been driven by land use change, agriculture and forestry. However, the energy sector has risen to prominence in the past decade. Without transformative actions to accelerate access to affordable, reliable, sustainable, modern energy – for lighting homes, clean cooking, and base load energy for industrialization and wealth creation – population growth will engender increased deforestation and GHG emission in Africa.

African countries have demonstrated political will and leadership and have submitted ambitious plans to curb GHG emissions in their INDCs, amounting to a reduction in emissions by 2030 of more than 40 per cent against a business as usual baseline. Many INDCs include ambitious plans and policies to scale up renewable electricity generation, increase energy efficiency and reduce emissions from the energy sector. Adaptation in the energy sector is a key component in many Africa’s INDCs to ensure that both existing and new energy infrastructures take into account climate impacts which, in turn, can play a crucial role in increasing general societal resilience todisasters and climatic extremes). While some of the emission reductions strategies proposed in the INDCs are unconditional, others are conditional on support from the international community. The New Deal will contribute to the twin goals of the African Development Bank’s Ten Year Strategy by prioritising coordinated transformative actions that accelerate the achievement of universal access to affordable, reliable and modern energy services (SDG 7) and enhance the capacity of countries to achieve other SDGs, including climate action (SDG 13).

» Download: The Bank Group’s Strategy for the New Deal on Energy for Africa 2016-2025 (PDF, 2.23 MB)


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