2016 was a year of milestone achievements for the New Deal onEnergy for Africa, the transformative partnership to light up andpower Africa by 2025.
I am pleased with the progress so far. I want to thank our Headsof State and Government, our Board of Governors, and theBoards of Directors of the African Development Bank andAfrican Development Fund, and their Advisors for thephenomenal support they have accorded the New Deal onEnergy for Africa.

Dr. Akinwumi A. AdesinaPresidentAfrican Development BankI also want to thank the staff of the African Development Bank,our institutional partners and stakeholders around the world forthe hard work and commitment in co-developing and coimplementing the New Deal on Energy.

Foreword

We have committed to invest about US$12 billion between 2016and 2020. We expect to leverage between US$45 billion andUS$50 billion in co-financing for energy projects in Africa duringthe period.
The plan is clearly laid out, and our leaders have assured thepolitical will. What we need now is to work together tosignificantly increase the pipeline of bankable projects that willattract the financing needed to accelerate universal access toenergy services in Africa. With universal access to energy, theSustainable Development Goals and the COP21 Agreement willbecome a reality in Africa.
Let us stand together, invest together, and work together to lightup and power Africa.

1What is the New Deal on Energy for Africa?

T

he New Deal on Energy for Africa is a partnership-driven effort with the aspirationalgoal of achieving universal access to energy in Africa by 2025.

To achieve this goal, the African Development Bank has worked with governments, theprivate sector, and bilateral and multilateral energy sector initiatives to develop aTransformative Partnership on Energy for Africa. This is a platform for public-privatepartnerships for innovative financing in Africa’s energy sector.
The New Deal on Energy for Africa helps to unify all the other initiatives that are currentlygeared toward achieving the goals of universal access in Africa. It focuses on the followingfive key principles:•••••raising aspirations to solve Africa's energy challengesestablishing a Transformative Partnership on Energy for Africamobilising domestic and international capital for innovative financing in Africa’senergy sectorsupporting African governments to strengthen energy policy, regulation and sectorgovernanceincreasing the African Development Bank's investments in energy and climatefinancing.

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Why the New Deal?

Over 645 million Africans lack access to electricity. Powerconsumption per capita in sub-Saharan Africa is thelowest of all continents. It is currently estimated at 181kilowatts per annum, paling significantly in comparison to 6,500kilowatts per annum in Europe and 13,000 kilowatts per annumin the United States.

Energy sector bottlenecks and power shortages are estimated tocost Africa 2 to 4 percent of GDP annually, undermining economicgrowth, employment creation and investment. Companies inTanzania and Ghana lose 15 percent of the value of sales as aresult of power outages. In recent years, severe electricitygeneration capacity constraints and frequent ‘load-shedding’ havehobbled South Africa’s economic growth.
An estimated 600,000 Africans - mostly women and children - dieannually due to indoor air pollution associated with the use of fuelwood for cooking. Children under-perform for lack of electricity,since over 90 percent of Africa’s primary schools lack electricity.
Lives are at risk in many African hospitals, as life-saving equipmentand services lie unused due to a lack of electricity.
At the same time, Africa is rich in energy resources. The continenthas well over 10 terawatts of solar potential, 350 gigawatts ofhydroelectric potential, 110 gigawatts of wind potential, and anadditional 15 gigawatts of geothermal potential. This does notinclude coal and gas, which can provide some of the continent’scheapest electricity. Africa cannot power its homes and businessesunless it unlocks this huge renewable energy potential, andcombines it with conventional energy to light up and power thecontinent.
Energy is the engine that powers economiesWhile a number of programmes and projects exist, and more areemerging, the lack of sufficient innovative and appropriatefinancing of bankable projects, appropriate policy and regulatoryenvironments, pricing incentives, and coordination, severely limitsthe scale and speed at which energy is generated and distributedon the continent. It is for these reasons that the AfricanDevelopment Bank has established the New Deal on Energy forAfrica to address these issues.

4What does the New Deal aim to achieve?
To reach the goal of providing energy access to over 645 million people and sufficientlypowering business, Africa must achieve four targets:• Increase on-grid generation to add 160 gigawatts of new capacity by 2025.
• Increase on-grid transmission and grid connections by 160 percent in order tocreate 130 million new connections by 2025.
• Increase off-grid generation to add 75 million connections by 2025, an increasethat is twenty times more than what Africa generates today.
• Increase access to clean cooking energy for 130 million households.

5What Underpins the New Deal?
provide a platform for coordinated actionamong private and public partners andfor innovative financing. The Partnershipwill unlock Africa’s energy potential andeventually foster a transition to lowcarbon energy futures. It will help reduceduplication, and pool resources toachieve economies of scale in Africa’senergy investments.

The New Deal is built on five inter-related andmutually reinforcing principles.
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Raising aspirations to solve Africa'senergy challengesThe New Deal calls on partners to raiseaspirations and mobilise political will andfinancial support to solve Africa’s energychallenges. This is a prerequisite forachievingtheUN’sSustainableDevelopment Goals (SDGs) agreed inNew York in September 2015. It is also aprerequisite for implementing the globalclimate change deal reached at the UNClimate Summit (‘COP 21’) in Paris inDecember 2015.

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Mobilising domesticand international capitalfor innovative financing in Africa’sEnergy sectorTo achieve universal access by 2025,innovative mechanisms are required tomobilise an additional US$30 billion toUS$55 billion annually in domestic andinternational capital. This is a significantincrease on the US$22.5 billion invested inthe sector in 2015. Achieving this scale ofenergy financing requires that all

Establishing a TransformativePartnership on Energy for AfricaThe New Deal is being implementedthrough a partnership designed to6

stakeholders – public and private – takecollective action to create enabling conditions for financial flows, to developbankable projects, to reform utilities, and toenhance African countries’ absorptivecapacities.
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Increasing the African DevelopmentBank's investments in energyand climate financingOver the past five years, the AfricanDevelopment Bank has invested someUS$6 billion in the energy sector. Underthe New Deal, the Bank will ramp up itsinvestments to provide finance andguarantees, co-financing, and syndication. Between 2016 and 2020, the Bankwill invest approximately US$12 billion andleverage about US$50 billion in public andprivate financing for investments in theenergy sector. In addition, it will triple itsclimate finance to almost US$5 billion perannum, and leverage about US$20 billionin private and public sector investments inclimate mitigation and adaptation by 2020.

Supporting African countriesin strengthening energy policies,regulation and sector governanceThe New Deal builds on and furtherscales up the AfDB’s investments in the“soft” infrastructure of national governments and institutions, to enhance energypolicies, regulations, incentive systems,sector reforms, corporate governance,and transparency and accountability inthe energy sector.

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VP Power,Energy, Climateand GreenGrowth

Climate Changeand Green GrowthClimate and EnvironmentFinance

Climate and GreenGrowth

Energy partnerships

Public Energy Initiativesand Partnerships

Strategic Private SectorRelationships

Energy FinancialSolutions, Policy andRegulation

Energy Policy, Regulationand Statistics

Financial Solutions

Renewable Energyand Energy Efficiency

Renewable Energy

Energy Efficiencyand Clean Cooking

Power SystemsDevelopment

National and RegionalPower Systems

Power Utilities

How the New Deal WorksInstitutional Innovation to Achieve the New Deal. In 2015 the African Development Bankestablished a new vice presidency complex – the Vice Presidency for Power, Energy, ClimateChange and Green Growth. It is staffed by international energy, climate change and greengrowth experts to deliver on the New Deal. The AfDB is the first multilateral development bankto do this, positioning itself to lead Africa’s energy transformation. Five directorates have beenestablished under the new vice presidency complex.

89Key Dates123456September 2015: First High LevelConsultativeEnergyStakeholdersMeeting hosted to co-design the NewDeal.
January 2016: Appointment of a SeniorAdvisor to the President on Inclusive andGreen Growth Strategy, Policy and Implementation to advise on and guideBank-wide implementation strategy andactivities.
January 2016: Announcement of theNew Deal and launch of theTransformative Partnership on Energy forAfrica at the World Economic Forum,Davos, with support from AfDB, AfricanHeads of States, Eminent Personalitiesand Partners.
May 2016: The New Deal Strategyapproved by the Board to deploy US$12billion, which will leverage US$45 billion toUS$50 billion by 2020.
August 2016: Appointment of the Headof the Independent Delivery Unit of theAfrica Renewable Energy Initiative.
September 2016: Presidential TaskForce for the implementation of the NewDeallaunchedtofasttrackimplementation.

7November 2016: Establishment of a newComplex on Power, Energy, ClimateChange and Green Growth by the Boardto implement the New Deal.
8 November 2016: Appointment of theVice President to lead the Power, Energy,Climate Change and Green GrowthComplex.
9 December 2016: Approval of a US$500million debt-fund Facility for EnergyInclusion with an initial AfDB contributionof US$100 million targeting small-scalerenewable independent power producers(IPPs), mini-grids and off-grid solutions bythe AfDB’s Board of Directors.
10 January 2017: Recruitment of Directorsfor the five directorates of the Power,Energy, Climate Change and GreenGrowth Complex, to lead specialisedactivities on:10•••••Power Systems DevelopmentRenewable Energy and EnergyEfficiencyEnergy Financial Solutions, Policy andRegulationEnergy PartnershipsClimate Change and Green GrowthJanuary – December 2016High Level Stakeholder Consultations and Dialogue to elicit political commitmentat the levels of Heads of State and Government

Key Achievements in 201629 Energy Sector operations approved amounting to US$1.7 billion to deliver:

546 MW of additionalinstalled capacity ofwhich 526 MW are fromRenewable EnergySources

300,000 prepaidmeters to be installed

21,264 km ofdistribution lines

more than 1,600 jobscreated641 km oftransmission linesand associatedsubstations

800 staff trained

7,800 public lightingunits

700,000 tonnes CO2avoided

688,950 newhouseholds /businesses receivingelectricity accessPolicy based operations for energy sector reforms commenced in five (5) countries.
Over the course of 2016, the Bank’s investments in the energy sector (public andprivate) have leveraged US$1.4 billion in additional financing, including US$57 millionfrom external funds channeled by the Bank (e.g. Bank-administered trust funds, cofinancing arrangements, climate finance facilities) and US$1.36 billion in other externalco-financing (including US$965 million in syndication for Eskom, in addition to otherpublic and private co-financing, and recipient country counterpart funding).

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Looking AheadThe African Development Bank has pledged tocommit US$12 billion of its resources toimplement the New Deal by 2020, and toleverage US$45 billion to US$50 billion. In2017, the AfDB expects to invest up to US$2billion in the sector from its own resources. Itexpects a strong emphasis on private sectoroperations as well as significant leverage toattract additional financing.

provide 75 million households and businesseswith affordable electricity using decentralisedrenewable technologies. In 2017, we areworking towards supporting projects that willcontribute:••••

The AfDB will look at new innovative financingstructures. Indeed, on 28 March 2017, theBank convened 150 representatives fromdistributed energy service companies,governments and financiers to discuss howenabling environments, business models andfinancing could be improved to scale up the“off-grid energy revolution.” The aim is to2 gigawatts of power capacity2,500 kilometres of transmission lines,including regional interconnections1,250 kilometres of distribution lines500,000 solar home systems

Also, under the Japan-Africa Energy Initiative,Japan stands ready to provide US$6 billion inboth concessional and non-concessionalfinance for a variety of energy operations forthe support of electricity for homes, schools,hospitals, industries, and clean cooking.

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AFRICAN DEVELOPMENT BANK GROUPCommunication and External Relations DepartmentRue Joseph Anoma 01 BP 1387 Abidjan 01 (Côte d’Ivoire)Tel: +225 20 26 44 44 • Fax: +225 20 21 31 00 • www.afdb.orgnewdealonenergyforafrica@afdb.orgOctober 201713