Aga Khan Fund for Economic Development (AKFED), Industrial Promotion Services (IPS) and CDC Group plc to develop and invest in power projects in sub-Saharan Africa, mobilising project funding of over US$ 1billion.
CDC, alongside AKFED and its industrial and infrastructure development arm, IPS, today launched a new joint power platform that will boost power generation in sub-Saharan Africa, accelerating economic growth and impacting millions of people in the region.
The joint platform will house IPS’s existing power projects in Kenya and Uganda, and will focus on new power projects in greater East Africa (including Democratic Republic of Congo (DRC), Mozambique, and Madagascar) and West Africa.
CDC will invest up to $70m in the formation of the joint venture and subsequently the partners will invest US$140m (including a further US$70m from CDC) and mobilise project funding of US$1bn for new power projects including the 147MW Ruzizi III project in the Great Lakes region (Rwanda, Burundi and the DRC). The Ruzizi project is expected to double Burundi’s current capacity, increase Rwanda’s capacity by 30% and provide much needed baseload power in Eastern DRC a region that is otherwise isolated from DRC’s interconnected grid. It will also reduce reliance on thermal (fossil fuel based) generation in these countries.
Besides developing regional and national power projects, both IPS and CDC intend to partner on mini and off-grid projects that will directly provide reliable and affordable electricity to rural populations away from regional and national grids.
Lutaf Kassam, Executive Director of AKFED, welcoming the partnership, said:
“IPS has been investing and co-developing power projects in West and East Africa for over 20 years. We co-developed Sub-Sahara Africa’s pioneering independent power projects in the 1990s and 2000s, namely the Azito power plant in Côte d’Ivoire, the Kipevu II (Tsavo Power) plant in Kenya, as well as the Bujagali Hydropower Project in Uganda. It has been an evolving journey, involving both public and private partners, which has seen a recent shift in focusing investments on renewable energy, taking advantage of advancement in solar and wind technologies, as well continuing to provide the reliable baseload power which many sub-Saharan African countries need.
“We see in CDC a likeminded partner that is strategically aligned to our values and mandate for contributing to development, and have partnered with them previously on pioneering power projects in the region. This platform, therefore, will build on this existing partnership, accelerating and scaling the development of new power projects, spreading our impact across the sub-Saharan region and, ultimately, improving the quality of life of communities.”
CDC’s Chief Executive, Diana Noble said:
“Power infrastructure is vital for Africa’s economic growth and job creation and CDC has identified early-stage development as the area with the greatest need for investment in this priority sector. The market needs long-term, committed investors like CDC and AKFED to bring the capital, time horizons and expertise necessary to boost power generation for the continent.
“The partnership we’re announcing today complements CDC’s existing efforts in the sector. In 2015, we decided to take direct ownership and control of Globeleq Africa. With this new partnership launched today, we are tapping into the AKFED Group’s proven power sector expertise, including in hydropower, and excellent local relationships, with the aim of bringing reliable power to many millions of individuals, families and businesses across Africa.”
CDC was advised by HSBC during the process.
CDC Group plc is the UK’s development finance institution. Wholly owned by the UK Government, it invests in sub-Saharan Africa and South Asia with the aim of supporting economic development to create jobs. CDC takes a flexible approach and provides capital in all its forms, including equity, debt, mezzanine and guarantees, to meet businesses’ needs and achieve development impact. CDC has net assets of £4.8bn.