Engaging Banks in Financing Energy Transition Projects in East Africa

Set-up of a Regional Technical Assistance Program ("RTAP"):  environmental credit lines extended by AFD to local banks in Kenya, Uganda and Tanzania for the financing of selected renewable energy (RE) and energy efficiency (EE) investments.  The first line of credit will be extended to two participating banks in Kenya and a second line of credit to local banks in Uganda.  Both credit lines are for an amount of EUR 30m and should be in place by December 2010 in Kenya and during the first semester of 2011 in Uganda. A third credit line for Tanzania (amount to be determined) will be under appraisal in late 2010 early 2011.  The target investments are mainly projects of a maximum amount of EUR 10m in hydroelectricity, biomass, biogas, solar and wind power. Other types of projects eligible to the AFD financing are energy efficiency projects, mainly in the Agribusiness sector.

The RTAP will be organized as a regional platform and will contribute to the development of capacities in the three countries through the transfer of skills to local experts and help the future development of RE projects in the region. This platform will be located in Nairobi with a pool of experts through which local skills will be progressively built up.

The ITF Grant will fund the general management expenses of the Project management unit (PMU) as well as the development and assistance of RE projects to be connected to the electricity distribution grids of Kenya, Uganda or Tanzania.  The development of and assistance to EE projects and RE projects with no reasonable prospects of becoming connected to the electricity distribution grids will be financed exclusively by a grant from AFD of EUR 600,000.