Funding for Energy Initiatives in Africa: U.S.-Africa Clean Energy Finance Initiative

by Alison Kibe

The U.S.-Africa Clean Energy Finance (ACEF) initiative launched at the UN Conference on Sustainable Development in 2012. As of August 2014, the U.S. had pledged $30 million to fund ACEF. The United States Trade and Development Agency’s (USTDA) January 2015 press release announced the two entities in charge of funding AFEC, the Overseas Private Investment Corporation (OPIC) and USTDA, have both obtained initial funds for AFEC projects. Both organizations are involved with connecting private American businesses to international development projects. The goal of ACEF is to promote privately financed clean energy projects with the hope that ACEF acts as a catalyst for economic development and promotes U.S. foreign policy goals in Africa.

According to Sarah Carta, the AFEC Program Manager, ACEF funds will be used to provide countries, includes Ethiopia, Tanzania, and Rwanda, with greater access to electricity. PennEnergy reports that President Obama’s Power Africa Initiative used ACEF to partially fund its first completed project – a $23.7 million 8.5 megawatt solar field in the Agahozo-Shalom Youth Village. The solar field will not only bring electricity to a village that cares for children orphaned during the Rwandan genocide, but the rent paid to lease the land where the field is located will help pay for expenses related to the village’s charity. The USTDA is using ACEF money to invest in solar corporations like Off-Grid Electric that employs local workers to maintain solar energy home kits in Tanzania. Funds are also being put into African research and development companies.

AFEC is only one among many groups interested in investing in energy projects. As venture capitalists become more prominent in the U.S., the venture capitalist market is heating up in African countries as well. Tom Jackson, writing for an African business and investment website, explains that venture capitalists are especially focused on energy initiatives as many African countries continue to “leap-frog certain technologies.” The outcomes and final impacts on economic development remain to be seen.

 

Carta, Sarah. “Highlights from the Field: ACEF supports African renewable energy projects for enduring development.” The OPIC Blog. August 12, 2014. http://www.opic.gov/blog/opic-in-action/highlights-from-the-field-acef-supports-african-renewable-energy-projects-for-enduring-development

PennEnergy “East Africa’s first utility-scale solar field to officially open.” PennWell Corporation. February 2, 2015.

http://www.pennenergy.com/articles/pennenergy/2015/01/east-africa-s-first-utility-scale-solar-power-field-officially-open.html

Jackson, Tom. “Africa Tech Trends: Cash flowing in for start-ups; Uber’s Kenyan safari.” How We Made It In Africa. February 2, 2015.

http://www.howwemadeitinafrica.com/africa-tech-trends-cash-flowing-in-for-start-ups-ubers-kenyan-safari/46570/

United States Trade and Development Agency. Africa-Focused Renewable Energy Initiative Reaches Full Commitment of Initial $20 Million Investment. [Press release] January 12, 2015. http://www.ustda.gov/news/pressreleases/2015/SubSaharanAfrica/OPIC/AfricaFocusedRenewableEnergyInitiative.asp

 

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