KfW backs renewables finance tool for sub-Saharan Africa

German development bank KfW and the African Trade Insurance Agency (ATI) have created a new financial instrument that aims to support small- and mid-scale renewable energy projects in sub-Saharan Africa.

Through KfW, the German Federal Ministry of Economic Cooperation and Development (BMZ) will provide funding of up to EUR 32.9 million (USD 38.7m) to the so-called Regional Liquidity Support Facility (RLSF).

The particular instrument will help small-and mid-scale projects of up to 50 MW achieve financial close by addressing liquidity requirements set by lenders. ATI’s offerings will cover the full range of political and financial risks facing investors on such projects, the parties said in a joint statement.

The amount provided under the facility will allow independent power producers (IPPs) to operate and service the debt for up to six months. The RLSF is also designed to be in place for multiple years.

“Unlike some of the alternative solutions to the liquidity issue, ATI’s guarantee (as provided via the RLSF) will not require a counter-guarantee from the relevant Ministry of Finance, and as such we are confident this will be a very useful tool for those projects that we expect to support,” said Jef Vincent, Senior Advisor to ATI.

(EUR 1.0 = USD 1.176)

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