By Faridat Salifu
The International Finance Corporation (IFC) and the Emerging Africa Infrastructure Fund (EAIF) are investing more than €91 million to provide electricity for poor households in Ivory Coast.
The investment is being carried out under the first securitisation phase of the Electricity for All Programme (PEPT) in Ivory Coast. It was gathered that the transaction, which is denominated in local currency, is aimed at electrifying 800,000 households and connecting them to the national grid.
Securitization is a financial instrument where illiquid assets, such as loans or receivables, are pooled together and structured into tradable securities. A regulated securitization special purpose vehicle is a type of special purpose vehicle that is established to securitize assets.
The International Finance Corporation (IFC), a subsidiary of the World Bank Group, and the Emerging Africa Infrastructure Fund (EAIF) of the Private Infrastructure Development Group (PIDG) are each contributing 30 billion CFA francs, or more than 45.7 million euros.
PEPT is to fund the balance for the cost, about XOF149,000 (around $249), through flexible financing to the customer, which can be repaid over a period of 2 to 10 years. PEPT’s connections are managed by the national utility, Compagnie Ivoirienne d’Électricité (CIE).
The investment was announced by the IFC at the weekend, saying it is being carried out through social bond issuance.
This is the first social bond to be issued for access to electricity within the West African Economic and Monetary Union (WAEMU). This debt instrument, which is currently very little valued in Africa, is used to finance or refinance social projects.
“Expanding access to electricity and developing local capital markets for inclusive economic development are key pillars of IFC’s strategy in Côte d’Ivoire.
“This investment aligns with the Government of Côte d’Ivoire’s vision to achieve universal access to electricity by 2030 and will bring hundreds of thousands of households onto the grid, greatly improving their living and working conditions, said Josiane Kwenda, IFC Country Manager for Côte d’Ivoire.
Proceeds from the bond, which the first social bond in the energy sector in the West African Economic and Monetary Union (WAEMU), it was gathered, represents an increase in the electricity access rate of more than 13 percent nationwide.
Report say IFC will invest up to FCFA 30 billion (equivalent to $48.8 million) in the bond, which represents half of its total size of FCFA 60 billion (equivalent to $97.6 million), while the Emerging Africa Infrastructure Fund (EAIF), will co-invest in the bond.
This landmark transaction, according to reports, includes a tranche with a 15-year maturity, the longest tenor for a securitization transaction in the region. This transaction was arranged by the investment banking firm Africa Link Capital Structuration (ALC).
“PEPT’s implementation has been a game changer to increase access to electricity for underserved populations in rural and urban areas in Côte d’Ivoire. IFC’s anchoring this first bond underscores the key role capital markets can play to support access to electricity and support socio-economic development goals,” said Zahalo Silué, Chairman of PEPT’s Fund.
According to World Bank Data, Côte d’Ivoire had an electricity access rate of 71.1 percent in 2021, with significant urban-rural discrepancies as many customers in remote areas can’t afford the fee to connect to electricity.
As of June 2023, PEPT had already facilitated close to 1,600,000 connections to the grid. IFC’s support will help the program grow even further by mobilizing long-term private sector local currency funding in the capital markets.
This project falls under the World Bank’s Joint Capital Markets Program (J-CAP) to develop and deepen WAEMU’s capital market. J-CAP’s work in WAEMU is supported by the governments of Germany and Norway.