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The challenges of funding power and water projects in Africa

On 6th November 2019 a specially invited group of 80 senior executives representing the water and energy sectors, financial institutions and the public sector gathered in Rwanda’s capital of Kigali to address infrastructure funding in Africa, with the focus on water and energy.

Infrastructure has been identified as the biggest single barrier to sustained economic growth in African economies. The Emerging Africa Infrastructure Fund, which is part of the Private Infrastructure Development Group (PIDG) was established in 2002 with the aim of mobilising public funds to attract private sector capital and expertise to building and running infrastructure projects on the continent. Since then, EAIF has supported some 80 projects in over 20 African countries.

In Rwanda, EAIF has played a central part in pioneering water and power projects. It was the lead arranger of the finance for the Kigali Water’s Company’s (KWC) US$60 million water treatment facility, the core part of a large-scale water treatment and supply system currently nearing completion. Some 500,000 of Kigali’s citizens will benefit from safe, clean, fresh water when the KWC plant comes on stream.

PIDG’s Technical Assistance arm, provided a US$6.5 million grant that was a significant element in enabling the financial package for the project’s construction to come together.

Another PIDG facility, DevCo, which is managed by the International Finance Corporation (IFC), provided initial financial support to the Government of Rwanda for the legal, financial, technical and environmental feasibility assessments of the project. The IFC advised Rwanda’s government on this work. It ensured an optimal solution for the long-term needs of Kigali and recommendations for a public/private partnership structure that best suited the development objectives of the Rwandan government.

You can read the full report of the Kigali meeting here.

Energy from water and sun

At Lake Kivu, EAIF was the co-arranger of the KivuWatt facility that draws naturally produced methane gas from the lake which is then used to fuel a 25MW power plant. Lake Kivu is in an area of geological instability which presents a risk to human life from methane explosion, so reducing the amount of gas in the lake not only helps meet Rwanda’s energy needs but also helps make it safer for people to live on the lake’s shores.

In 2014, EAIF arranged the finance for Gigawatt Global, one of the first industrial scale solar farms in Africa. Today, it supplies power to around 15,000 homes. Gigawatt Global leases the land for its solar farm from an orphanage, which benefits from steady, long-term income from the land rent.