A wrong signal from the African Development Bank

Harald Schützeichel

The behaviour of the African Development Bank (AfDB) in the COVID 19 crisis is curious: Numerous local SMEs that offer decentralised renewable energy solutions and are classified by most states as a structurally important sector are facing financial difficulties: Jobs are lost and structurally relevant economic potential threatens to disappear.

Local SMEs are the foundation of every African economy. Maintaining and supporting them should therefore be a top priority for AfDB. But the priorities of the African bank obviously lie elsewhere: they proudly declare these days that they have awarded a $760,000 grant to the global investment company Investor Empower New Energy AS (EmNEW). For what? “To develop renewable energy projects with capacity ranging from 1-10 MW towards bankability and construction.”

It probably makes sense for AfDB to support central energy projects with grants in which international investors play a key role. But at the moment it is a fatal and very questionable signal to all local SMEs in the energy sector: it easily gives the impression that for AfDB internationally financed large-scale energy projects are more important than maintaining the local SME structure.

But local SMEs are not only the basis of the African economy, they are also indispensable for the decentralised energy supply that is currently being established. International investors only follow the best profit opportunities. The large outflow of capital from Africa in the COVID pandemic is further evidence of this. Local SMEs, however, remain on site, even and especially in economically difficult times.

In the current emergency situation, it would therefore be urgently necessary for AfDB to distribute grants to support the local African energy industry.

 


 

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