- Enel’s renewable arm Enel Green Power started construction of the 34 MW solar PV facility, which is located in southern Zambia and, once completed, is expected to produce around 70 GWh per year, avoiding the annual emission of over 45,000 tons of CO2 into the atmosphere
- Enel will be investing approximately 40 million US dollars in the construction of Ngonye, which will be partly funded through a financing agreement signed with Zambia’s Industrial Development Corporation
- The project, which is expected to enter into operation in the first quarter of 2019, is supported by a 25-year power purchase agreement with Zambia’s state-owned utility ZESCO
EnergyWeek Morocco will take place from 14-15th November in Marrakech. The event is a platform for decision-makers in the energy sector to discuss the progress of regional power projects in North & West Africa
Two separate investment meetings will be hosted within this week - the 3rd annual Africa Renewable Energy Forum (http://www.Africa-Renewable-Energy-Forum.com) and 2nd annual Gas Options: North & West Africa (http://www.GasOptions-NWAfrica.com/) - to explore opportunities for gas and renewable energy project development.
The event is endorsed by the Ministries of Energy of Morocco, Burkina Faso, Ghana, Gabon, Liberia, Mali, Mauritania and Sierra Leone with the support of leading Moroccan organisations ONEE, ONHYM, MASEN and AMEE, as well as lead private sector companies BP, Cheniere, Fieldstone, Skypower, ENGIE, Wartsila, Acwa Power, Ibvogt and Larsen & Toubro.
The rise of renewables across Africa
Recent estimates from IRENA indicated US$32 billion is required each year from 2015 to 2030 to fully exploit Africa’s renewable energy potential. With many North & West African countries harbouring significant untapped natural resources, a vast potential exists for the continued development of an investment in renewable power projects. Ambitious goals have been set by governments to increase renewable energy generation, such as Morocco’s targets of achieving 52% clean energy from sources such as solar and wind by 2030, or Nigeria’s vision of renewables accounting for 10% total energy consumption by 2025.
Milestone projects are now driving forward this momentum, such as Morocco’s 580MW Noor Ouarzazate IV power station, scheduled to be fully commissioned by October 2018, or Senegal’s 29 MW Senergy 1 solar PV plant – currently the largest solar farm in West Africa.
The future of gas in Africa
With gas widely considered the most affordable and clean base-load energy source, new discoveries in the gas sector are stimulating sector growth and infrastructure development, paving the way for the emergence of new players such as Senegal and Mauritania. With African countries, both importing and exporting gas, the development of regional projects is set to benefit both gas producing and non-producing countries by supporting industrial and economic development.
Globeleq, a power sector leader in Africa, and an affiliate of Brookfield Asset Management have reached a definitive agreement whereby Globeleq acquires Brookfield’s interests in its South African renewable energy portfolio. The agreement is subject to various closing conditions and once fulfilled, will give Globeleq a majority shareholding in six renewable projects totaling 178 MWs, as well as ownership in Brookfield’s South African asset management company.Globeleq, a power sector leader in Africa, and an affiliate of Brookfield Asset Management have reached a definitive agreement whereby Globeleq acquires Brookfield’s interests in its South African renewable energy portfolio.
The agreement is subject to various closing conditions and once fulfilled, will give Globeleq a majority shareholding in six renewable projects totaling 178 MWs, as well as ownership in Brookfield’s South African asset management company.
Globeleq is a long term strategic investor in Africa. The addition of the Brookfield assets fully complements its existing power plants in South Africa where it owns, operates and manages 238 MW of solar and wind projects and sets the stage for Globeleq to continue to expand its renewable energy portfolio throughout the continent.
Paul Hanrahan, Globeleq’s CEO stated: “Our team is working hard to complete this very exciting transaction. The expertise of our South African team will be able to enhance these assets by driving operational improvements and improve the existing social and economic development programmes.”
The assets include five solar assets: Aries (11MW), Boshoff (66MW); Konkoonsies (11 MW); Soutpan (31 MW), and Witkop (33 MW) and the Klipheuwel wind farm (27 MW). The six projects were part of rounds 1 and 2 of the South African Government’s renewable energy programme and reached commercial operations in 2014. All plants have a 20-year power purchase agreement with Eskom.
In June 2018, Bouake, the second largest city of Cote d’Ivoire, suffered its first-ever shutdown of domestic water supply. The country’s dammed lake, which supplies 70 percent of the city’s water supply, completely ran dry. According to many experts, this was yet-again another consequence of climate change.
As a result of the drought, the people of Cote d’Ivoire went through extraordinary hardships affecting everything in their daily life, from acquiring clean drinking water and cooking to basic hygiene. The story of Bouake is one of many currently unfolding in Africa, where climate change has consequences of a magnitude never-seen-before globally.
To battle climate change, keep up with their pace of development and ensure food security, some countries, like Nigeria, Uganda and Zimbabwe, have resorted to solar energy as a solution. A growing body of research from some of the world’s most renowned energy experts and researchers, has demonstrated in a crystal clear fashion that no other energy source, from hydro to wind, can provide power and have an impact as sustainably, reliably, and efficiently as solar.
Solarplaza decided to highlight this great life-changing potential by publishing “Africa Solar Impact Cases”, an extensive report focusing on a small number of impact cases across the three main areas of solar development in Africa: utility-scale, mini-grid/microgrid and off-grid. They are not all rosy success stories; challenges remain palpable. However, they are able to show that solar energy’s potential to positively impact lives for the long term is greater than ever
One of those cases is the Mashaba project, which is a small village in southern Zimbabwe that installed a 99 kW mini-grid to power 2 irrigation schemes, 2 business centers, 1 school and 1 clinic. Mpokiseng Moyo, a farmer and mother of three, has been able to harvest 15 tonnes of wheat with this new solar system, compared to barely one tonne before the mini-grid was installed. This way the devastating consequences of droughts - inherent to the region, but worsened by the effect of climate change - can be mitigated. “Before being connected to the solar grid, we irrigated our crops using diesel pumps and traveled as far as Gwanda (more than 100km away) to buy diesel for the pumps. The pumps broke down many times, affecting productivity. But with solar energy we are able to farm throughout the year without any hassles,” Moyo said.
Learn more about the Mashaba mini-grid, as well as the deployment of solar vaccine refrigerators (Nigeria), the Tororo solar plant (Uganda), the Entasopia microgrid (Kenya), and several other inspiring stories in the ‘Africa Solar Impact Cases Report’ (https://Africa.UnlockingSolarCapital.com/africa-solar-impact-cases-report/).
If you would like to learn more about the challenges and solutions related to the development and financing of solar projects in Africa, consider attending Unlocking Solar Capital (“USC”) Africa, the African region’s largest and foremost conference on unlocking capital for new solar development. The 2-day conference is organized in partnership with the Global Off-grid and Lighting Association (GOGLA) and will be held in Kigali, Rwanda on the 7-8th of November, 2018. The event will be aimed at bringing together hundreds of solar stakeholders, such as representatives from solar developers, development banks, investment funds, EPCs, IPPs and others, and is wholly focused on unlocking capital for new solar project development in Africa. For more information on Unlocking Solar Capital Africa, please visit: https://Africa.UnlockingSolarCapital.com
Canadian Solar Inc. announced it established a joint venture with ET Energy, a global clean energy developer and operator. Together they will provide Engineering, Procurement and Construction services for two solar power projects totaling 132 MWp in South Africa for BioTherm Energy, an independent African power producer.Canadian Solar Inc., one of the world's largest solar power companies today announced it established a joint venture with ET Energy, a global clean energy developer and operator. Together they will provide Engineering, Procurement and Construction services for two solar power projects totaling 132 MWp in South Africa for BioTherm Energy, an independent African power producer.
The projects, Aggeneys (46 MWp) and Konkoonsies II (86 MWp), are located in northwest South Africa and cover an immense area of 387 hectares. They are Round IV projects of the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP).
The two solar power plants are expected to be grid-connected by the end of 2019 and early 2020, respectively. Over 400,000 Canadian Solar's 1500V high voltage modules, CS6U-P, will be installed on single-axis solar tracking systems, with a total of 34 central inverters for the two solar projects. Construction of the projects is expected to start in September 2018.
Dennis She, President and CEO of ET Energy, said, "In partnership with Canadian Solar, BioTherm Energy, and other market leaders in South Africa, we have met all the requirements of the REIPPPP. With our South African subsidiary founded in 2016, and years of experience in project operation and EPC management, ET Energy will offer professional EPC and O&M services to utility scale PV plants in Sub-Saharan Africa, including South Africa."
Dr. Shawn Qu, Chairman and Chief Executive Officer of Canadian Solar, said, "These projects are the first large-scale applications of our products in Africa's high voltage market. We hope to set more benchmarks for the renewable energy market in South Africa with high-quality products, advanced PV technology, and global expertise."
As a signatory to the Paris Agreement of the United Nations Framework Convention on Climate Change, South Africa has long been a leader in the African renewable energy industry. In November 2016, the country released the latest draft of its Integrated Resource Plan, which outlines the country's electricity strategy to 2050. Under the plan, the country seeks to add 18 GW of PV plants over 2021-50. In recent years, the successful implementation of the REIPPPP has ensured that the South African renewable energy sector has adhered to this strategy.
BBOXX (www.BBOXX.co.uk), a next generation utility, and GE (www.GE.com) have launched a partnership to provide energy access for small businesses, schools and other organisations in Goma, Democratic Republic of Congo (DRC).
A large number of businesses and organisations across the DRC are currently without sufficient energy access. Many are paying excessive amounts for diesel and have to dedicate considerable time to solving problems caused by unreliable supply. This is hindering economic growth and acting as a barrier to improving quality of life in one of the least developed nations in Africa.
BBOXX has deployed the first of GE’s Hybrid Distributed Power (HDP) systems in the city of Goma, close to the Rwandan border, to connect up to 10 customers. The first is a local school, Kivu International School. More customers will be added to the “mini grid” over the following weeks.
GE’s HDP technology provides sustainable energy in off-grid settings, combining solar energy, battery storage and diesel generation to ensure a reliable electricity supply.
The systems will be linked between GE’s Predix digital remote monitoring and diagnostics platform to BBOXX’s cloud-based Pulse platform in the near future. This pioneering technology proactively troubleshoots issues with any system before they become a problem for customers. Pulse uses big data and predictive analytics to help improve customer service and provide a deep understanding of customer behaviour.
The partnership forms part of BBOXX’s strategy to improve access to vital utilities for customers with a range of needs, from small solar home systems of 50W in rural communities, to businesses in urban areas with higher energy demands of 0.5kW – 5.0kW, and beyond. GE’s HDP system in Goma is capable of delivering up to 30kW.
“Many businesses and small organisations in the DRC, and across the developing world, do not have a reliable, affordable way of maintaining electricity supply. Hybrid distributed power and micro-grid technology provides one solution to solve this pressing problem by delivering an on-grid experience in an off-grid setting,” said Mansoor Hamayun, CEO and co-founder of BBOXX.
“We look forward to working with our technical partners in the future to supply energy and other utility services to more customers across the distribution mix, from small rural homes through to urban SMEs and public institutions, improving productivity and powering economic growth.”
“We are excited to partner with BBOXX to enable energy access in the DRC. GE’s Hybrid Distributed Power system offers flexibility to deliver fast, reliable power with a digital backbone found in utility scale power plants,” said Brian Selby, Managing Director of Licensing at GE.
BBOXX is already positively impacting the lives of 750,000 people living in off-grid communities in Africa and Asia by providing clean, reliable and affordable solar electricity. BBOXX recognises that electricity is the entry point to a broader range of products and services as well as further economic development.
The purchase of a stake in SolarWorks!, a company selling decentralized solar energy solutions, marks the beginning of a new strategy in this area.
Public lecture by Deputy Minister Reginah Mhaule on the Outcomes of the 10th BRICS Johannesburg Summit at the Sol Plaatjie University, Kimberley, Northern Cape, 19 September 2018 :
Our Programme Director, Prof Mary Jean Baxen,
Prof Collin Miruka,
Prof Patrick Fitzgerald,
Members of Senate and Council present,
MEC of Education, Ms Barbara Bartlett and other members of Exco present,
Academics and Staff,
Provincial Chairperson of the ANC, Dr Zamani Saul, the leadership and all other political parties present,
President of SRC, Mr Zolani Jack, Members of the SRC and the entire student leadership present,
Officials present here,
I am honoured and of course delighted to interact with you today, particularly because of our focus of engagement which is the outcomes of the recently concluded 10th BRICS Summit which was held in Johannesburg in July this year. You will recall that before the commencement of the Summit, we criss-crossed the length and breadth of our country presenting and informing our people what our partnership within the BRICS entails. We further focused on ensuring that South Africans understands the importance we attach to the BRICS formation and the benefits we derive thereof.
In this context we made a commitment to get back to the people and report on the outcomes of the Summit. Certainly this is our first public lecture of this kind which is held at the university named after the first Secretary General of the South African Native National Congress, later named African National Congress (ANC) and also the first Black South African to write a novel, Solomon Tshekisho Plaatje.
The summit took place during the 10th anniversary of the BRICS formation which coincided with a very significant year where South Africa celebrates the centenary of the two giants in our liberation, namely Mama Albertina Sisulu and former President Tata Nelson Mandela. Whose contribution shape our current democratic dispensation and internationalist character.
The Summit indeed afforded us a fitting platform to again reflect on the important pillars of our foreign policy, particularly our cooperation with countries of the South. Tata Madiba alluded to this in his inaugural State of the Nation Address (SONA) on 24 May 1994 when he said: “We will also be looking very closely at the question of enhancing South-South cooperation in general as part of the effort to expand our economic links with the rest of the world.”
I can inform you that it is in this context that South Africa accepted the invitation to join BRICS in 2011. We believe that economic cooperation remains an important instrument to pursue our national interests and improve the living conditions of our people while contributing to the well-being of our fellow Africans and all those in communities across our nations.
Having said that, I would like to take an opportunity to briefly reflect on the history of our membership to the BRICS formation before outlining the outcomes of the summit and the benefits we have leveraged from the opportunities it continues to provide.
Ladies and Gentlemen,
It must be public knowledge that our foreign policy outlook and continued focus on strengthening relations with formations and people of the South is largely informed by our history as well as identity. We however must emphasise that we are Africans who share historic commonalities with countries of the Global South which includes amongst others, the struggle against apartheid and colonialism. We also share common aspirations in regard to the kind of the world we wish to live in and the shared future which can benefit humanity.
Similarly, the BRICS formation in this context signifies a long standing tradition of solidarity that was firmly established 63 years ago, in April 1955. This was when countries of Asia and Africa met at the historic Bandung Conference in the emerging Cold War era situation of which the meeting’s significance and outcomes are well documented. I must however remind you that the Bandung Conference resulted in the formation of the Non-Aligned Movement (NAM) in later years.
Amid pressure from the Cold War bipolarisation, those countries were able to concertedly affirm that they would choose neither the East nor the West, but pursue their own path and strategy under the “Bandung Principles” of the Afro-Asia solidarity. For us it is important to recall that South Africa was at the Bandung Conference, represented by selected ANC leaders.
Subsequently, with the attainment of our democracy, it is again common knowledge that South Africa shared the same socio-economic and underdeveloped challenges as countries of the Global South. To a certain extent our challenges continue to be compounded by an international system that perpetuates the marginalisation of the Global South and the poor in every corner of the globe.
The BRICS formation has demonstrated potential to change the world. This is possible considering that the BRICS formation has joined an array of inter-regional bodies that contribute to global diffusion of power. Of course we joined the BRICS formation to advance our foreign policy objectives that are predicated on our domestic interests and the promotion of the African Agenda.
We can, once again, underscore that our 2018 Chairship of the BRICS Forum has been guided by our commitment to ensure that the African Agenda, as well as that of the Global South, remain on the Agenda of BRICS, particularly as it relates to garnering BRICS support for industrialisation and infrastructure development. We have sought to harmonise policies adopted in regional and international fora with those pursued in BRICS, more notably the African Union’s Agenda 2063 and the United Nations 2030 Agenda for Sustainable Development.
The benefits that South Africa and the African derive from our membership of the BRICS are both practical and tangible. A case in point is that South Africa-BRIC trade has grown from $28bn in 2010 to $35bn in 2017.
Additionally the establishment and operalisation of the BRICS New Development Bank as well as the Africa Regional Centre (ARC), which we proudly host in Johannesburg, has brought closer the alternative project funding institution to our people and the continent.
Just as a reminder, infrastructure and sustainable development project funding by the BRICS bank will also be extended to countries that are not members of the formation, and therefore African countries will benefit a great deal. I can say without any fear of contradiction that the ARC will enable us to identify projects that will enhance economic connectivity and bolster intra-Africa trade, among others.
It must further be noted that we witnessed with pride the first tranche of NDB project loans disbursed in 2016. I recall that this trench included a project in renewable energy amounting to 180 million USD to our own country. This has enabled us to stabilize our electricity grid supply and keep the much-needed jobs through continued operations in factories. There are those who are already saying the NDB could be the new World Bank, as far as I know this was not the objective of its creation. In May 2018 South Africa was granted an additional loan of USD 200 million by the NDB for expansion of the Durban port. It is worth noting that thus far the NDB has disbursed loans totalling USD 5.1 billion.
Let me at this juncture turn my focus to some specific outcomes of the 2018 10th BRICS Summit. South Africa in its capacity as Chair of the BRICS grouping hosted the Johannesburg Summit on the 25-27 July 2018, in Sandton, Johannesburg, under the theme, “BRICS in Africa: Collaboration for Inclusive Growth and Shared Prosperity in the 4th Industrial Revolution”.
President Ramaphosa in his opening address to the Summit expanded on the theme, further stating, quantum leaps in technology and innovation present enormous opportunities for growth, development and human progress.The president also indicated that the surge in innovation has the potential to dramatically improve productivity and to place entire countries on a new trajectory of prosperity. It has the potential to solve many of the social problems we face, by better equipping us to combat disease, hunger and environmental degradation.
A report by the World Economic Forum predicts that by 2020, which is roughly two years from now, three most important skills for an employee will be complex problem-solving, critical thinking and creativity. Admittedly this require emerging markets to institute innovative programmes to re-skill the current workforce to be able to match the advances in technology. This of course will be achieved within the context of BRICS and also in cooperation with other formation across the globe.
In line with the theme, we informed our guests that, as a country, we have already committed to establish a Digital Industrial Revolution Commission. It will include the private sector and civil society, among others. In this regard, the BRICS Summit has adopted the Johannesburg declaration and an Action Plan based on this thematic focus and other pressing international issues. The BRICS Heads of State also presided over the signing of a couple of memorandums of understanding.
During deliberations of the Annual Meeting of the BRICS Business Council, we recognised the achievements and progress the Council had made over the past year and analysed the opportunities and challenges facing the emerging economies. The five BRICS countries reinforced their ongoing commitment and agreed on the importance of ensuring greater economic, trade and investment ties amongst the BRICS countries.
The three major focus areas identified during South Africa’s BRICS Business Council’s rotating chairmanship were: 1. Youth – Fostering Entrepreneurship 2. The Digital Economy – Skills Development for the 4th Industrial Revolution 3. Agriculture and Food Security
Perhaps I must state that, flowing from the above and our commitment to the Establishment of the BRICS Credit Rating Agency, there is growing global interests in how we manage the BRICS affairs. Just a few week ago, two of the ‘Big Three’ rating agencies has given the BRICS New Development Bank positive ratings, Standard & Poor's (S&P) has assigned its AA+ long-term and A1+ short-term issuer ratings with a stable outlook while Fitch assigned the NDB a long-term issuer default rating (IDR) of AA+ with a stable outlook and a short-term IDR of F1+. This is a positive development in that it provides the NDB with a unique opportunity to establish itself as an important player in the multilateral development finance space. This further negates the perception of naysayers that the BRICS grouping lacks the required clout to influence global power dynamics.
Also, the Council reviewed the major work and achievements during South Africa’s presidency in 2018 and listened to the reports presented by the nine working groups, on energy and the green economy, financial services, deregulation, manufacturing, infrastructure, agribusiness, skills development, regional aviation and the digital economy.
Further moves towards enhancing economic development came in the form of the establishment of a BRICS Tourism Track and the BRICS Women’s Initiative.
On a separate matter, a proposal was made to the Summit, arising from deliberations from the 2018 BRICS Youth Summit, to consider the establishment of a Youth Working Group, as the 10th Working Group of the Council. This matter is receiving the attention it deserves.
Ladies and Gentlemen,
Let me underscore that all the BRICS partners utilised the summit occasion to recommit to the pursuit of a rules-based, transparent, non-discriminatory, open and inclusive multilateral trading system, as embodied in the World Trade Organisation (WTO). Importantly, this commitment of the BRICS Leaders was also strongly supported by the BRICS Outreach partners.
This brings me to an important aspect of our hosting. We convened, on the margins of the summit, the BRICS-Africa Outreach Dialogue and the BRICS Plus Initiative. Thus the following Heads of State/Government attended the Summit: Rwanda, Ethiopia, Angola, Zambia, Namibia, Senegal, Gabon, Togo, Uganda, Jamaica, Argentina, Turkey, Botswana, DRC, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Seychelles, Tanzania and Zimbabwe
I must indicate that both the Outreach Dialogue and the Initiative were held simultaneously to reflect the broad partnerships BRICS has stimulated with the African continent and the Global South.
Key outcomes of the Johannesburg Declaration, included amongst others: establishment of a BRICS Working Group on the 4th Industrial Revolution through the BRICS Partnership on New Industrial Revolution (PartNIR) and its Advisory Group consisting of respective representatives of BRICS Ministries of Industry; BRICS Networks of Science Parks, Technology Business Incubators and Small and Medium-sized Enterprises were established to further support initiatives of the 4th Industrial Revolution; BRICS Vaccine Centre was established here in South Africa.
The declaration, which was reached to the principles of consensus further committed to the principals of mutual respects, sovereignty, equality, democracy, inclusiveness and strengthened collaboration in key subthemes; namely: Strengthening multilateralism, reforming global governance and addressing common challenges; Strengthening and consolidation BRICS cooperation in International peace and Security; BRICS partnership for global economic recovery, reform of financial and economic global governance institutions, and the Forth Industrial Revolution; and People to People Cooperation.
Ladies and Gentlemen,
In conclusion, allow me to turn my attention to education as a matter that received a focused attention of the summit. Our leaders agreed that there is a need to develop an outcome based education that will assist us in meeting the developmental challenges brought by the Fourth Industrial Revolution. In this vein the BRICS Heads of State/Governments reaffirmed the importance of higher education exchange for BRICS and called for a network of universities across the BRICS countries to collaborate and exchange knowledge and research experience.
Again, I am alluding to this so that the Institution we visiting today, knows that it also has a role to play in the development of the BRICS educational Programme. The BRICS University Network is therefore an important structure that will undertake the research that is needed to inform the overall BRICS collaboration and how it must evolve.
There are pockets of excellence in all our universities and our goal should be to benefit all.
SOVENTIX South Africa, a subsidiary of the international solar project developer SOVENTIX GmbH has been awarded the construction of the largest IPP Solar PV project in Zimbabwe.
Sharing the lessons learned will shorten the path for other MDB’s
Room2Run, the African Development Bank (www.AfDB.org) and partners’ innovative US $1 billion synthetic securitization of a portfolio of seasoned African Development Bank private sector loans, will serve as a model for other lenders, help reduce costs, and shorten execution time, finance experts told participants at a workshop on Saturday.
The landmark securitization instrument, a first for any multilateral development bank, has been described by investors as a “strong market fit.” The instrument offers other multilateral development banks and investors a roadmap for innovative financing and new ways to explore the release of much-needed capital to impact financing and catalyze private capital in developing markets.
"This is particulat, asrly importan it opens the door for significant scale in the future, both in Africa and in other continents where your institutions are present and financing development projects,” said Swazi Tshabalala, the Bank’s Vice President of Finance.
About 70 participants from the international finance community – investors, bankers and other financial institutions, attended the workshop entitled “A Look at Optimizing MDB Balance Sheets Through Securitization, “organized by the African Development Bank and the Mariner Investment Group, LLC (Mariner), a key investor in the deal. The participants heard presentations on the structure of the securitization, challenges and lessons learned, followed by a question and answer session.
The workshop took place on the sidelines of the International Monetary Fund and World Bank annual meetings and the 2018 Global Infrastructure Forum in the Indonesian island of Bali. The AfDB’s Chief Risk Officer Tim Turner said the meeting was convened in response to massive interest from sister development institutions following the announcement of Room2Run in September, 2018.
The Bank, the European Commission, Mariner Investment Group, LLC (Mariner), Africa50, and Mizuho International plc announced the pricing of Room2Run on 18 September in Ottawa, Canada - the first-ever portfolio synthetic securitization between a Multilateral Development Bank (MDB) and private sector investors, pioneering the use of securitization and credit risk transfer technology to a new and previously unexplored segment of the financial markets.
Tshabalala said Room2Run was timely in the light of new regulations in banking that would see more traditional commercial bank lenders scaling back some of their activities in the project finance and trade finance markets. “These regulations will make investments in regions such as Africa more expensive and capital intensive, and this is why we have to find new avenues to crowd-in non-traditional sources of funding, " Tshabalala said.
Describing Room2Run as the “crown jewel of our impact activity, Andrew Hohns, Lead Portfolio Manager of the IIFC Strategy, Mariner Investment Group, said that there is a common misconception about the performance of MDB’s loans as unattractive; but the risk perceptions were often unbalanced”, he said.
“These assets have performer pretty well,” Hohns, said, giving reasons for Mariner’s global involvement with impact financing – nearly US$14 billion of infrastructure assets covering 1,250 projects world-wide. Hohns said the investor’s decision to partner with the Bank rested on its strong track record. The Bank is by far the most positioned of institutions on the continent to offer this kind of securitization, he said and synthetic securitization deals such as Room2Run were a “strong market fit.”
“The level of interest in taking exposure to the assets within the MDB’s is high,” Hohns said.
Kay Parplies, Head of Unit Investment & Innovative Financing, European Commission, said Room2Run was “catalytic” and hoped its involvement would attract other private investors and rating agencies to refine their approaches to African assets. Parplies said our experience over two decades had shown many in the investor community that actual risks (in African investments) were often lower than the perceived risks.
Other presenters at the workshop included Juan-Carlos Martorell Co-Head of Structured Products Solutions, Mizuho International and Nicole Giles Director General, International Finance and Development, Finance Canada.
Room2Run Roadmap to be shared with MDB’s
Turner said the Bank would soon publish a detailed journey of the Room2Run initiative, including all the documentation involved in its set up, to encourage other MDB’s to consider adopting synthetic securitization models to free up capital and create new pathways for institutional investors to support development. The document would be a “technical manual” to help others lower the cost and shorten the time to develop similar transactions.
“There is no need for our development partners to redo what we did. This is a knowledge sharing session of learnings from the school of hard knocks,” Turner said.
By creating new pathways between those with savings and those needing capital for development projects, Room 2Run would generate excitement within investment spaces normally far removed from development financing.
“Imagine a pensioner in Toronto knowing that his retirement investments are financing a power plant that was giving electricity to a family in Yopougon (Cote d’Ivoire). It’s a win-win.”, Turner said.
Structured as an impact investment, Room2Run is designed to enable the African Development Bank to increase lending in support of its mission to spur sustainable economic development and social progress.
Synthetic securitization and other similar models are intended to bring together public and private capital to finance development.
“MDB’s need to look at more than the financial return,” Bank Director of Syndication & Co-Financing, African Development Olivier Weck said, adding that the Bank had itself invested time to educate its board about the deal. “We needed to demonstrate additionality and the development outcome,” Eweck said.
Room2Run, positions the Bank as an innovative leader in providing lending in pursuit of the global development agenda, which prioritizes its own High 5’s and the Sustainable Development Goals. Freed-up capital will be directed toward renewable energy projects in Sub-Saharan Africa, including projects in low income and fragile countries.
“The Bank is treating this (Room2Run) as a pilot project,” Hohns said. “Mariner is very much interested in doing more.”
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