KfW Development Bank is joining the Beyond the Grid Fund for Africa (BGFA) initiative on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ, Bundesministerium für wirtschaftliche Zusammenarbeit und Entwicklung). KfW is contributing EUR 7.5 million to BGFA’s Zambian country window.
Zambia is currently BGFA’s largest Country Programme, building on the experiences of the Beyond the Grid Fund for Zambia launched in 2016. The German contribution will jointly fund the Zambia Country Programme, together with Sweden, aiming at supporting private companies to establish and scale innovative and sustainable business models. Productive use of energy and the inclusion of institutional clients, e.g. health and education, will be incentivised within the three Funding Lots to be implemented in Zambia.
“BGFA is based on a proven concept, targeting private sector initiatives in the off-grid segment. By supporting private players in establishing and growing their business in the country, our investment will contribute to increase energy access in remote areas and incentivise the productive use of energy”, commented Marco Freitag, Principal Portfolio Manager at KfW.
The core function of BGFA is to provide financial incentives to selected private companies, which shall offer high quality and climate-friendly energy services and products under sustainable and inclusive market conditions to rural and peri-urban people in the target countries. The German contribution will primarily be channelled to support mini-grid deployments in Zambia under the first BGFA Call for Proposals, for which the Final Application stage is currently ongoing.
“BGFA is pleased to welcome Germany as its latest donor, with a particular focus on mini-grid deployment. We are also happy to partner with KfW Development Bank, which has been closely involved in the preparation of the first BGFA Call for Proposals (BGFA1). The latest contribution affirms that BGFA is seen as a proven and scaleable results-based financing instrument capable of rapidly directing funding to rural energy access, mobilising private capital in sustainable businesses and supporting a post-COVID green recovery”, stated Ash Sharma, Head of BGFA.
BGFA is a multi-donor facility targeting five sub-Saharan African countries. Sweden is the inaugural and largest donor to BGFA with contribution coming through the Swedish International Development Cooperation Agency (Sida) and Swedish embassies in the BGFA target countries. In June 2020, USAID joined BGFA with an in-kind contribution, followed by Denmark in December 2020. The facility is now capitalised at EUR 78 million.
The Beyond the Grid Fund for Africa is a multi-donor facility established and managed by the Nordic Environment Finance Corporation (Nefco), an international financial institution focused on environmental and climate investments, based in Helsinki, Finland. BGFA is implemented in partnership with the Renewable Energy and Energy Efficiency Partnership (REEEP), an international multilateral partnership based in Vienna, Austria, working to accelerate market-based deployment of renewable energy and energy efficiency in developing countries.
The facility was initially funded by Sweden through the Swedish International Development Cooperation Agency (Sida) and Swedish embassies in the target countries. Power Africa, an initiative administered by USAID, is providing an in-kind technical assistance contribution worth approx. EUR 4 million (USD 4.5 million) over three years to help operationalise the initiative and develop a pipeline of commercially viable projects within the framework of BGFA. Denmark, through the Ministry of Foreign Affairs, joined the BGFA programme in December 2020 with EUR 5 million (DKK 37.5 million) and an additional EUR 10.8 million (DKK 80 million, subject to final parliamentary approval) to follow in 2021 to support a planned expansion to Uganda. The facility remains open to donors as a cost-effective tool to finance future Calls for Proposals through existing or new country windows for bringing access to clean energy to millions of rural Africans.
BGFA supports, in particular, the objective of Sustainable Development Goal 7, which aims to ensure access to affordable, reliable, sustainable modern energy for all by 2030, as well as the Paris Agreement on climate change and host country priorities.
For further information
Ash Sharma, Head of BGFA, Nefco
Ash.firstname.lastname@example.org, M: +358 50 471 2850
Marco Freitag, Principal Portfolio Manager, KfW
Marco.Freitag@kfw.de, M: +49 15 20 549 2103
Lia Oker-Blom, Senior Communications Officer, Nefco
email@example.com, M: +358 50 325 6610
Photo: Jason Mulikita