“Even though we are only emitting less than 4% I think the impact on us is quite severe. And I think we need to be at the table where people discuss us.”: Alain Ebobisee on African countries' involvement in the 2021 COP26 conference in Glasgow.
In this episode of Cleaning Up, Michael Liebreich talks to Alain Ebobisee, CEO of the Africa 50 development organisation.
Michael and Alain begin by explaining the role of Africa 50 and how it differs from other development funding bodies.
They then discuss how Africa can balance its future development goals with the need to reduce greenhouse gas emissions,
Finally, they look forward to the COP26 conference in Glasgow and how Africa should be involved there.
This is an abridged transcript of the conversation, edited for clarity.
Michael Liebreich: Can you explain what Africa 50 is and what is that you do?
Alain Ebobisee: We are essentially a pan-African organization, with the mandate given to us by African heads of states, to catalyze more private sector financing to help bridge the infrastructure gap in Africa. We do this by carefully preparing projects to make them bankable, attractive to investors and ready to receive financing. The key differentiating factor is that we are funded entirely by African shareholders in 28 countries. We have two central banks and also the African Development Bank. We have about $1bn of committed capital today, which we invest in projects. We have a double bottom line of environmental impact and financial returns. We operate like private sector funds, we are nimble and we target a few sectors for now. Energy, transport, ICT, midstream gas. Recently we added health infrastructure, fintech, and education.
ML: Can you tell us about the size of projects that you finance and how long it takes to get them up and running?
AE: So the sweet spot is maybe a project with a total cost of around $300 million and we are also in bigger projects. For example, in Cameroon, we invested in a $1.2 billion project called Nachtigal, where we are a minority shareholder. It's very complicated as an infrastructure investment shop, to look at small projects, because you will tend to do the same type of due diligence and it could cost a lot of money by looking at small projects. So, we look at those small projects exceptionally so any anything. In terms of time, let’s take a solar project that we did in Egypt for example. It took us about two and a half years to three years to develop the project, raise the financing, and construct the plant. And now the project is delivering power to Egyptians. So, it's three years, the whole cycle, that's fast. And we hope that most of the project will take only three years to get done. The important part is, who spends the first dollars to actually put the project together? At Africa50 we do that. I think this is one of the most important parts, in my opinion, of trying to unlock the private capital to provide a bankable solution to later stage investors that typically, if the project is well designed, they will jump on it and finance it.
ML: How do you balance the need for Africa to develop with the need to reduce carbon emissions? Is it unfair that developed countries which have huge historic emissions, ask African countries to reduce their emissions?
AE: The continent of Africa contributes only to 4% of global greenhouse emissions, the lowest of any region. And, the trend, according to the World Bank, is down. Africa has the lowest per capita consumption of electricity in the world, about 285 kilowatt hours per annum as per the World Bank. That’s equivalent to what an American households consumes in six days. And yet, Africa's economic development is threatened by the climate crisis. We emit or contribute the least to emission, but we suffer massively. We have droughts, we have extreme weather, we have flooding, we have food insecurity, we have population displacement. I do believe that what we are asking for is a balanced approach, we have to be very clear that we are impacted by the crisis, so we have to contribute to addressing it. But we also have development goals, and we have to figure out a way to do both. At Africa 50 we take a balanced approach which is to massively invest in renewables, but also to look at ways we can use natural gas to support the industrialization of Africa.
ML: Doesn’t natural gas development pose the risk of stranded assets? Could Africa not ‘leap-frog’ fossil fuels and go straight to using renewables?
AE: I think natural gas can serve as a bridge fuel but of course, there's a risk of stranded assets. Over three quarters of new generation capacity that comes to Africa is from renewables. But we need fertilisers, we need to replace biomass based cooking. We need to retrofit HFO and diesel power projects. Today in Africa there's 46 gigawatts of HFO and diesel based generation capacity. Let's retrofit most of them and use natural gas and reduce emissions by 40%. So this is the view that I'm trying to take. And I think those conversations should happen at COP26. We should talk about the projections today, which says that between 660 to 820 million people will rely on traditional biomass cooking stoves by 2030, if we don't do anything.
ML: Speaking of COP26, what would be a good outcome from the summit from Africa 50’s perspective?
AE: I think there has to be a major shift in policy on climate financing for Africa, and really other developing regions as well. We need to see a significant increase in the climate financing commitment from developed countries, to developing countries. We also need to acknowledge acknowledge that in Africa we need a bit more flexibility to adopt the appropriate energy mix that would basically both help us meet our emissions targets, but also meet our urgent development needs. And natural gas should be part of the equation. The other thing that I would like to see, if possible, is really to leverage the COP platform to push for some innovative financing mechanism to try to drive private investment in climate friendly assets in Africa. So I'm hoping that Africa will be a key, central theme at the climate discussions at COP 26 because even though we are only emitting less than 4% I think the impact on us is quite severe.