The Norwegian Agency for Development Cooperation (NORAD) has committed to provide a Ksh. 6.4 billion (USD 56 million) grant funding to the African Trade Insurance Agency (ATI), to be allocated over a period of 5 years. The grant is geared towards the continued implementation of ATI’s Regional Liquidity Support Facility (RLSF) and the development of additional insurance or guarantee products. This is in support of small and medium sized renewable energy sector initiatives.
RLSF was launched in 2017 by ATI and KfW to address short-term liquidity risks in financing of small and medium sized renewable energy projects in sub-Saharan Africa. The RLSF policy is used to complement the buyer payment security provided by state-owned offtakers under Power Purchase Agreements (PPAs) entered into with Independent Power Producers (IPPs). The risk addressed by the RLSF policy is the delay in payment by the offtaker beyond the credit period provided in the PPA.
Since its launch, RLSF has supported four landmark solar projects in Burundi and Malawi, enabling over USD 150m in project financing and a total installed capacity of 108.5 MW. Beyond RLSF, ATI has supported other renewable energy projects across its member countries, enabling an installed capacity of over 500 MW.
To date, Benin, Burundi, Côte d’Ivoire, Madagascar, Malawi, Uganda and Zambia have already signed the MoU with the expectation that more of ATI’s twenty member countries will follow. In addition to having access to RLSF, IPPs operational in these countries are able to register for the Transparency Tool. The Transparency Tool is a web-based platform designed to show payment trends of public utilities.
Commenting on the grant, Manuel Moses, CEO of ATI said, “ATI is proud to be NORAD’s strategic partner on this initiative, which will go a long way in enhancing our renewable energy sector initiatives. Furthermore, this partnership is happening at an opportune moment as Africa is seeing greater interest from public and private stakeholders in the renewable energy sector. The grant will enable ATI to support more projects reach financial close, thus increasing electricity generation capacity and supporting sustainable economic growth in Africa.”