The project SUNREF West Africa II is a tailor-made programme that aims at financing small and medium green investments in Ghana and Nigeria, with a view of creating a demonstrative effect on the market. It is an extension for “English spoken countries” of the SUNREF West Africa I project, co-financed by EU-AITF, which is ongoing since 2014 in Senegal, Ivory Coast, Toga, Benin and Burkina Faso.
In articulation with local public policies, AFD has put in place a targeted support to develop innovative green investments through environmental credit lines for local financial institutions since 2007. This support, called SUNREF (Sustainable Use of Natural Resources and Energy Financing) includes both technical assistance (TA) and credit lines (i.e. loans) to local financial institutions for them to finance small and medium size projects of public and private promoters. The benefits of the SUNREF programme include:
· Enforcing public policies towards entrepreneurs AFD cannot reach directly because of their size (small companies such as SMEs and even individuals)
· Using financial intermediaries as channels for disseminating these types of projects through reliable local counterparts with technical skills
· Disseminating technical know-how and good practices through the TA.
From 2007 to the end of 2014, AFD has committed more than EUR 2 billion through green credit line programmes with 35 financial institutions to finance green projects in developing and emerging countries. AFD has been pioneer in Africa for financing green projects through credit lines to local financial institutions. SUNREF West Africa I started successfully in September 2014.The programme is co-financed by AFD (30m€), the Fond Français pour l’Environnement Mondial - FFEM (EUR 1.5m) and EU-AITF TA (EUR 6m). It is composed of concessional credit lines, a regional TA programme, and an investment grant scheme.
Taking into account the African economic growth and its potential negative impacts in terms of energy and raw material consumption and pollution, AFD intends to further focus in the next few years on Sub-Saharan Africa for the development of green credit lines, in line with the European Union’s objectives of the Sustainable Energy for All initiative and post 2015 objectives. The purpose is to engage the private sector to contribute towards successfully achieving the African energy efficiency and renewable energy policy goals.
The objective of the SUNREF West Africa II is to support national priorities in the energy and environmental fields and scale-up needed private investments with a view of creating a demonstrative effect on the market:
- This facility will enhance private sector access to available financing at lower interest rates and more appropriate maturities.
- The technical assistance (TA) programme will facilitate the origination of viable and bankable projects, provide technical and financial support at critical stages of project development and increase the knowledge and the expertise of the main stakeholders (sponsors, banks, consultants, equipment providers).
- The programme will develop financial intermediaries’ capacity and appetite in these fields to create a sustainable green financing market.
AFD will provide long term loans to PFIs at concessional rates and PFIs are expected to on-lend to sub-borrowers at concessional rates, to finance energy efficiency and renewable energy investments in industry, SMEs, agribusiness, commercial services and the residential sector in Nigeria and Ghana.
Along with the credit facility, the programme aims at developing financial intermediaries’ capacity and appetite in these fields as well as support to investors.The EU contribution allows financing a TA programme benefitting to project promoters and local banks and financial incentives to facilitate the investment decision of promoters.