San Francisco-based Wells Fargo bank has contributed $50 million to build an innovative power and infrastructure loan facility in Africa as part of $300 million in funding to be managed by South Africa-based Standard bank, one of Malawi’s largest banks.
Malawi has an opportunity to tap into the funds, according to a report in Nyasa Times.
The country is struggling with its worst-ever electricity shortages. Black-outs have reached crisis level.
Wedged between Mozambique, Tanzania and Zambia, Malawi is rich in natural resources and tourism potential, but consistently scores near the bottom of economic indexes such as income per capita, BBC reported.Malawians typically earn about $1 a day. About 9 percent of the population is connected to the grid — about 1 percent in rural areas. The population is growing about 3 percent a year, so each year the country falls further and further behind.
The state utility, Electricity Supply Commission of Malawi (Escom) produces most of its grid power from hydroelectric installations on the Shire river, but falling water levels affect reliability of this source, BBC reported.
The fund to which Wells Fargo contributed is a 12-year finance program and was signed on the sidelines of the U.S.-Africa Business Forum, Nyasa Times reported.
It will target low-income and IDA-eligible countries in Africa to finance renewable energy projects, said Wells Fargo executive vice president Chuck Silverman.
The International Development Association (IDA) is an international financial institution that offers concessional loans and grants to the world’s poorest developing countries. The IDA is a member of the World Bank Group and is based in Washington, D.C.
“Wells Fargo is pleased to sponsor this landmark facility for The Standard Bank of South Africa. We are proud to have worked in close partnership with OPIC to arrange and co-lend in support of this project,” he said.
Standard Bank added $33 million from its own balance sheet and Wells Fargo contributed $50 million to the facility, making it the largest deal Wells Fargo has done in Africa, according to a press release from the U.S. Agency for International Development (USAID.)
At last week’s U.S.-Africa Business Forum in New York, the U.S. government and its Power Africa partners announced several new milestones for dozens of energy projects and transactions. These commitments, totaling more than $1 billion in debt and finance, aim to fund access to electricity across sub-Saharan Africa.
The Overseas Private Investment Corporation (OPIC) committed $250 million in financing to Standard Bank for an innovative power and infrastructure facility, at least $150 million of which is dedicated to power projects in Africa
OPIC mobilizes private capital and invests in development projects to advance U.S. foreign policy.
The facility will leverage Standard Bank’s experience, knowledge and presence on the continent to originate critical infrastructure transactions, USAID said in a prepared statement.
“By supporting both infrastructure and power projects, this forward-thinking loan facility brings badly-needed capital to the table and will pave the way for future development in Africa to take root and grow,” said OPIC President and CEO Elizabeth Littlefield.