Nigeria among first 5 beneficiaries of $3.5bn Deutsche Bank clean energy investment

UN Green Climate Fund commits $78.4 million to proposal

The Deutsche Bank has said a sustainable energy for Africa proposal it submitted to the Green Climate Fund has been accepted and approved by the board of GCF which also committed $78.4 million in the first phase of the investment.

The proposal, according to the Bank on its website, aims to provide up to $3.5 billion worth of investment over the next 15 years to African countries, helping nearly half a million of her people, small and medium sized businesses gain access to clean electricity

Nigeria, Benin, Kenya, Namibia and Tanzania are the first five African countries that will benefit from the first phase of the investment.

Deutsche Bank said it welcomes the GCF decision to make the initial $78.4 million investment in Deutsche Asset Management’s fund for renewable energy access in Africa.

It stated its appreciation of GCF’s further support to improve the capacity of project developers and financial institutions in Africa that will be engaged in its investment activities.

“As the first commercial bank accredited by the Green Climate Fund, we are very pleased that the GCF Board has decided to become the anchor investor in our proposed Universal Green Energy Access Program (UGEAP) fund for Africa,” said Nicolas Moreau, Head of Deutsche Asset Management and member of the Management Board of Deutsche Bank AG.

“This investment will allow Deutsche Asset Management to support up to USD3.5bn of investment from local banks and entrepreneurs over the next 15 years and, ultimately, support the provision of clean electrical energy to individuals and businesses,” Moreau added.

According to the Bank, GCF’s anchor investment of $78.4 million will allow Sustainable Investments, the group within Deutsche AM that manages environmental and social assets, to raise a total of $300 million in capital.

This amount, it noted will be invested in the first phase in Benin, Kenya, Namibia, Nigeria and Tanzania.

The Deutsche Bank had submitted this proposal to combine capital from the GCF with private sector investors to finance renewable electricity access for African households, small and medium sized enterprises in cooperation with local banks.

The Bank said it will work with and through local financial institutions in an innovative structure to enable local banks to extend medium and long term loans in local currency or US dollars for businesses that provide clean electricity solutions.

“We have taken our responsibility seriously as the first commercial bank accredited to the UN’s Green Climate Fund, by developing a proposal to contribute to one of the critical Sustainable Development Goals (SDG)s, specifically to “Sustainable Energy for All” (goal No. 7).

“The proposal builds on our track-record of working with public sector investors to raise higher amounts of private capital to achieve positive environmental and social outcomes and a return on investment.

“Without this proposal, private sector investors tend to be too risk adverse to invest at scale in off-grid renewable energy in Africa. And public sector capital will not be sufficient to meet this critical goal,” said Pierre Cherki, Global Head of Alternatives at Deutsche Asset Management.

The Bank said an estimated 621 million people in Sub-Saharan Africa lack access to electricity, which especially affects the rural population.

According to it, the lack of access to clean, reliable and affordable electrical energy is a severe constraint for economic growth and hinders the reduction of poverty. Additionally, it creates significant air pollution which negatively weighs on the health conditions of large parts of the population and contributes to climate change.

Deutsche Asset Management estimates that the fund’s 15 years of operation could lead to cumulative carbon emission reduction savings of approximately 50mtCO2, installation of 1,500 megawatt of renewable electricity, improved renewable energy access for 461,400 households and businesses (450,000 new solar home systems, 10,500 solar mini-grid systems and 900 solar systems for small and medium enterprises).

Also, the initiative could create up to 15,600 permanent jobs and 7,900 temporary jobs.