George Obulutsa Nairobi

The Africa Renewable Energy Fund, which aims to invest in projects in sub-Saharan Africa, had raised $100 million (R1.1 billion) and expected to double that this year, lead investor the African Development Bank (AfDB) said yesterday.

Poor electricity access is a major constraint to economic growth in the region, where governments and private sector providers have often struggled to raise funds for capital-intensive projects.

The fund will target small and medium-sized independent power projects producing between 5 megawatts and 50MW.

Managed by Mauritius-based Berkeley Energy, the fund will invest between $10m and $30m on each project, and will have an option of seeking more funds where need arises from other investors for larger investments.

Gabriel Negatu, the AfDB’s regional director for the east Africa resource centre, said the fund manager wanted to raise $200m by the end of this year. “The $200m is not the end of it. The whole idea is that this is supposed to catalyse and crowd in other investors, so I can assure you that in a few years’ time we may be looking at maybe $1 billion or half a billion dollars,” he said during the fund’s launch.

The AfDB has contributed $65m of the $100m raised so far.

The fund, which will have its headquarters in Nairobi, said that it would target projects in small hydroelectric power plants, wind, solar, geothermal and waste gas.

Negatu said the fund planned to take controlling stakes in 12 greenfield projects.

Other contributors include the West African Development Bank, Ecowas Bank for Investment and Development, Dutch development fund FMO, and Togo-based African Biofuel and Energy Company.

Negatu said the bank was also in talks with Kenya and Uganda on how best to participate in developing infrastructure such as a crude oil pipeline and refinery to harness the two countries’ oil discoveries. “We hope to be able to provide resources. We hope to be able to co-finance, lead arrange, whatever way they would like us to support. We are very much committed to this.” – Reuters