A USD1 Billion Africa Energy Guarantee Facility Launched for Sub-Saharan Africa

African Trade Insurance (ATI) and European Investment Bank (EIB) have launched a USD1 Billion Renewable Energy Facility for sub-Saharan Africa.

The facility was launched at the Berne Union Spring Meeting hosted by African Trade Insurance and supported by Government of Kenya.  This is the largest meeting the Berne Union has ever held in Africa.

The African Trade Insurance Agency (ATI), successfully bid to host this year’s Annual Spring Meeting. The previous Spring meeting took place in Copenhagen, Denmark in 2017, and was hosted EKF, the Danish government’s export credit agency, under the auspices of their Minister of Finance.

The partners were backed by the government of Germany and the EU as part of their commitment to backing the UN’s Sustainable Energy for All initiative.

Representing Kenya’s Cabinet Secretary for the National Treasury Honorable Henry Rotich, Kenya Principal Secretary for Energy Eng. Joseph Njoroge said Kenya was honored to be hosting the important meeting of insurers that underpin a large number of global investments and financing.

“This meeting is shining the spotlight on Africa at an opportune moment. The continent now has six of the world’s ten fastest-growing economies. Add to this, Africa’s renewed emphasis on infrastructure development combined with innovation, natural resources, and improved regulatory structures. Quite simply, the message we would like to relay to the global investment community through this meeting, is that Africa is brimming with opportunities.”

“This facility is particularly important because it reassures financiers and investors in the energy sector in Africa that their investments are fully covered and safe and this eventually ensure the production of cheaper energy which benefits the final energy users,” Mr. Njoroge added.

To address the insurance gap in Africa, which is tied to an annual USD20 billion shortfall in energy infrastructure investments, a risk-sharing platform called the African Energy Guarantee Facility was created to boost investment insurance availability by providing up to USD1 billion in reinsurance capacity for African sustainable energy projects.

African Trade Insurance Chief Executive Officer George Otieno said the reliable access to clean and efficient energy supply is key to building a sustainable economic base.

Products offered under the AEGF will include insurance against sovereign or sub-sovereign non-payment under a PPA, expropriation, and breach of contract, currency inconvertibility, war, civil unrest and arbitration award default.

The investment insurance industry consists of both private and public institutions and a number of multilateral, namely ATI, The Arab Investment & Export Credit Guarantee Corporation (DHAMAN), the Islamic Corporation for Insurance of Investment and Export Credit (ICIEC) and the World Bank’s Multilateral Investment Guarantee Agency (MIGA).

The public companies are also called Export Credit Agencies (ECAs). Export Credit Agencies provide government-backed loans, guarantees, and insurance to their home-grown corporations that seek to do business overseas in developing countries and emerging markets. Through their respective ECAs, these countries arm their exporters and investors with the tools to be competitive and access financing to fund their overseas businesses.

Some of the Export Credit Agencies (ECAs) attending this year’s Berne Union Spring Meeting include China’s Sinosure, France’s BpiFrance (split-off from Coface), Germany’s Euler Hermes, India’s ECGC, Italy’s SACE, Japan’s NEXI and the UK’s UKEF among others.

In Kenya, these corporations have supported some of the country’s largest infrastructure projects including the Turkana wind power project and the soon-to-be-constructed Nairobi-Mombasa road expansion.