Over $1 billion in financing commitments and debt from private investors and U.S. agencies is set to be announced on Wednesday for U.S. President Barack Obama’s signature Africa energy initiative, Power Africa, a top USAID official has said.
These deals were made around a U.S.-Africa business event that was held on the sidelines of annual U.N. meetings in New York recently, USAID chief Gayle Smith said.
President Baraka Obama started this initiative in 2013 with an initial investment of $7 billion, which intends to put 10,000 megawatts of new generation capacity, connect 20 million new people, and improve electric reliability over the Sub-Saharan Africa.
The initiative intended to attract private capital into the energy sector in a region where regulatory hindrances and lack of risk instruments have often kept Western investors away.
Smith added that the energy deals covered risk insurance, funding for regional infrastructure facilities and renewable power projects in Kenya, Senegal, Nigeria, Sierra Leone, Tanzania and South Africa.
Currently, the Power Africa initiative has mobilized more than $52 billion in additional commitments, out of which $40 billion has been contributed by private companies, according to the United States Agency for International Development (USAID), which coordinates the program.
Power Africa is running over 500 deals, and 40 transaction advisers operating across have identified 60,000 megawatts of potential deals, Smith said.
While the program has been criticized for its slow take off, she said projects were starting to take shape.
“We’re starting to see some of these projects go online and actually start the generation,” Smith said.
“We’re seeing an uptick in commitments, which is because confidence of the market is building and they’re seeing you can actually get these transactions done.”
Smith said the passing of the Electrify Africa Act, which passed the House of Representatives and Senate, and intends to build on Power Africa, sent a “a signal that this is something the United States will continue to do” even as the Obama administration winds down.
The act is symbolic and declares it the policy of the United States to encourage electrification in Africa and instructs the U.S. Treasury and other agencies to make electrification funding a priority.