Despite the enormous potential that exists in Africa for the development of renewable energy resources, access to energy for all, electricity for all, remains an enormous challenge:

• The 48 countries of sub-Saharan Africa, with a combined population of 800 million, together generate roughly the same amount of electricity as Spain.
• According to the Sustainable Energy for ALL (SE4All) Global Tracking Framework, less than 38% of the sub-Saharan African population has access to mains electricity.

One of the many reasons for this gap is that energy projects in the region often face high real or perceived public counterparty risks that deter private sector investments. Insurance offers a way to hedge against such risks, making investments more attractive. However, effective insurance of this kind is rarely available in this context. The Africa Energy Guarantee Facility responds to this gap. Developed with technical assistance funding from the EU-Africa Infrastructure Trust Fund (EU-AITF), this guarantee facility is an innovative, first-in-its-kind initiative, expected to play a catalytic role in unlocking private sector investment in sustainable energy in Africa. It will support an EU-based reinsurer, Munich Re, in the provision of political and (sub-) sovereign risk insurance services for the energy sector in the region, working through local primary insurers.

The EIB initiated the operation, which forms part of the Bank's response to the UN initiative Sustainable Energy for All. The EIB’s leading role, its USD 50m investment and the EU-AITF funding for technical assistance have been critical to develop the concept and attract other partners. The facility is on track to catalyse up to USD 1bn in reinsurance capacity to support the financing of clean energy projects. Based on the preliminary pipeline of eligible energy projects, the facility could support the installation of 360 MW of generation capacity from renewables, enough to serve the typical consumption of some 876 000 households, or just over 4 million people.