The project objective is to bring additional solutions (through technical assistance) to achieve the diversification of energy resources in the East African region and help the region’s transition towards renewable energy solutions that are technically, economically and financially viable. The targeted investments are mainly projects of a maximum amount of EUR 5m in hydroelectricity, biomass, biogas, solar and wind power. Other types of projects eligible to the AFD financing are energy efficiency projects, especially in the Agribusiness sector. These solutions, both energy efficiency (EE) and renewable energy (RE) projects, will also contribute to the improvement of the investors’ sustainability, through a more secure power supply and a lower energy bill.
The Project consists of three successive lines of credit at concessional terms (tenor of over 10 years, below market interest rate) to the local banks who in turn will lend at soft conditions to local investors. To be eligible to the credit line, these investors, mainly medium scale enterprises, will have to sponsor renewable energy (RE) projects – for the main part - or energy efficiency (EE) projects. As at June 2014, two credit agreements have been signed between AFD and two banks in Kenya and one with a Tanzanian bank and the negotiation are still ongoing with several Ugandan Banks.
End of 2014, additional euros 60 million were approved by AFD for Kenya and in 2015, Chase Bank and Commercial Bank of Africa have joined the project. In 2016, two additional banks in Kenya (DTB and Coop Bank) joined the project, one bank in Uganda (DTB Uganda) in July 2016 and one bank in Tanzania (Bank of Africa Tanzania - BOAT) in November 2016.
A second EU-AITF technical assistance grant was approved in June 2013 and will finance the experts of the Regional Technical Assistance Programme (RTAP), who are in charge of, amongst others: (i) contributing to the identification of new energy efficiency and renewable energy projects; (ii) supervising pre-feasibility studies and energy audits; (iii) checking the projects’ feasibility studies; (iv) assisting the sponsors in carrying out the first feasibility study and in preparing their project presentation to potential financiers; (v) contributing to the monitoring of the first stages of the project’s implementation; and assisting the banks in thoroughly assessing the risks of the projects and building up their financial and technical expertise through the appraisal of the projects.
The grant agreement between the Kenya Association of Manufacturers and AFD has been signed in March 2014, and the Technical Assistance team is in place since May 2014.
To date, eight projects benefit from loans under these credit lines and 228 sponsors are in contact with the Regional Technical Assitance Programme in the three countries. Projects in Uganda and Tanzania are about to benefit from the program for the first time. Since the first credit lines in Uganda and Tanzania, the Technical Assistance has intensified its work in the two countries. Financed projects are very diverse from mini hydro to energy efficiency for a textile company.