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In sub-Saharan Africa alone, 600 million people live without access to electricity. By providing greater access to clean energy, social and economic development could improve. However, investment in African renewables currently stands as low as 2% of the global total and less than a quarter of the $60 billion a year the continent needs by 2030.
To shift this imbalance, COP28 President-Designate Dr Sultan Al Jaber has announced a finance initiative on behalf of the UAE that will provide $4.5 billion to boost Africa’s clean energy potential. The announcement was made during his keynote address at the inaugural African Climate Summit in Nairobi, Kenya.
The initiative will bring vital public, private, and development capital from UAE institutions, the Abu Dhabi Fund for Development (ADFD), and Etihad Credit Insurance (ECI) to Masdar and AMEA Power.
Africa50, an investment firm formed by African governments and the Africa Development Bank, has joined the fleet working towards the UAE finance initiative.
To cut down barriers to investment, Al Jaber addressed action points including restoring the financial sustainability of local utilities and modernizing basic energy infrastructures, clarifying development processes, and eliminating the red-tape delaying market lead-time, in addition to eliminating restrictions to capital flows and accessing adequate and affordable risk mitigation measures.
“The initiative will prioritize investments in countries across Africa with clear transition strategies, enhanced regulatory frameworks, and a master plan for developing grid infrastructure that integrates supply and demand. In short, this initiative is designed to work with Africa, for Africa. It will act as a scalable model that can be replicated to help put Africa on a superhighway to low carbon growth,” said Al Jaber.
The initiative will also be a part of Etihad 7, which aims to provide 100 million people across Africa with clean electricity by 2035. The ADFD will additionally provide $1 billion in financial aid, while the ECI will lend $500 million of credit insurance to unlock private capital.
Meanwhile, Masdar will provide $2 billion of equity, with an additional $8 billion dedicated to project finance via its Infinity Power platform. Masdar aims to deliver 10 gigawatts (GW) of clean energy capacity in Africa by 2030.