“Today, Africa has $640 billion in outstanding debt and pays nearly $70 billion in interest every year. It would only be fair for us to have a financing mechanism that treats us on an equal footing”. Kenyan President William Ruto’s call at the African Union’s 5th biannual coordination meeting in Nairobi in July 2023, was unequivocal: the global financial architecture must be reformed so that Africa is no longer the world’s poor relation.
For President Ruto, courageous decisions are needed to keep Africa’s countries’ debt burdens from being too onerous.
The time has now come for this. The African Development Bank Group, Africa’s leading development finance institution, will make this issue a top priority at its annual meetings — “Africa’s Transformation, the African Development Bank Group and the Reform of the Global Financial Architecture.” To be held in Nairobi from 27-31 May 2024, the meetings will provide a platform for Africa to take up the challenge of reforming global financing institutions as outlined by President Ruto and other African leaders, and to propose a way forward.
The focus at the event will be on the co-construction of a new international financial pact with a “win-win” approach, as advocated by William Ruto. “Let’s change the discourse! Let’s not talk about us against them, North against South. Let’s adopt a win-win approach,” he said at a June 2023 roundtable on the Alliance for Green Infrastructure in Africa, organized at the Paris Summit for a New Global Financial Pact. For despite the many challenges — human, financial, climatic, technical and technological — Africa is always on board for working with the global community to address humanity’s shared challenges.
To combat climate change, for example, Kenya, with the support of its strategic partners, has become one of Africa’s champions in climate adaptation. Indeed, 90% of Kenya’s generated electricity now comes from renewables and the country aims to be a major producer of renewable energy on a global scale.
Agriculture in Kenya has a new face thanks to renewable energy
Cold storage rooms on the outskirts of Nairobi run at full speed. Powered by solar panels, they provide longer-term storage for horticultural products from rural areas some distance from the capital. Large quantities of flowers used to succumb to the heat, but now, fresh products arrive in good condition at local supermarkets. And, like the roses that flourish in the Rift Valley and on Lake Naivasha’s shores, or the tilapia from Lake Victoria, they are being successfully exported.
The energy sector has benefitted from Kenya’s five geothermal power plants at Olkaria Geothermal fields (905 MW), the Turkana wind power project (300 MW), and the first phase of the Menengai Geothermal 35 MW power plant, which started generating in August 2023. Another independent power producer (IPP) has begun building a second 35 MW capacity power plant.
Menengai Geothermal field already supplies electricity to half a million homes
When completed, the Menengai Geothermal Development Project will provide power generation capacity of 105 MW, increasing the production of reliable, clean, affordable electricity for Kenyan industries and households. Kenya’s installed renewable generation capacity has been boosted to 80%, including hydropower plants as of 2023. Geothermal energy production accounted for 45.4% of the country’s total electrical energy in 2022-23.
Over the last decade, the African Development Bank Group has supported the completion of these important renewable energy projects and regional power interconnector so that Kenya could avoid the shortages of the late 2000s.
It contributed to the development of the Menengai geothermal field in 2012 with an ADF loan of $120 million, a Scaling up Renewable Energy Program loan of $7.5 million, and a grant of $17.5 million, for a total of $145 million, or 17 percent of the project’s total cost. It also offered a partial risk guarantee of EUR 20 million through the African Development Fund to facilitate the completion of the power purchase agreement with the first IPP.
Turkana Wind Farm unlocks the Great Rift Valley Wind Potential
“Projects such as the wind farm on Lake Turkana allow us to make great strides towards our priority objectives. The Bank is very proud to be associated with this essential addition to African infrastructure and clean energy production,” stated Dr Akinwumi Adesina, President of the African Development Bank Group, at the opening of the Turkana power plant in July 2019.
Launched in 2013, this EUR 625 million project received a financial contribution of EUR 115 million from the Bank Group. It added 300 MW to electricity production capacity when it was completed. Above all, it helped unlock the Great Rift Valley region to large investment and development. Infrastructure improvements — roads, fibre-optic cable, and electrification – mean that electricity now links the rest of the country to the wind farm.
Thika: Enhancing Power System Reliability and Stability with targeted, high-impact thermal power plants
The Thika Thermal Power Project was the starting point for the African Development Bank’s investments in plants to improve the performance of the power system, to address reliability, loss reduction and stability. Beginning in 2011 with EUR 28.1 million of a total cost of EUR 112.4 million, the Bank Group contributed to the construction and operation of an 87 MW thermal power plant in Thika, 35 kilometres from Nairobi, Kenya’s capital.
The plant has five heavy, fuel-powered generators that can be converted to natural gas, if it becomes available, and a 7 MW steam turbine that increases its efficiency and reduces carbon dioxide emissions. Over time, the Thika plant will supply energy to about 65,000 additional customers.
Regional Power System Integration under the Eastern Africa Power Pool (EAPP)
In 2022, Kenya commissioned 1045 km of 500 kV direct current transmission interconnector with Ethiopia. This year it has completed construction of 507 km of the 400 kV Alternating Current 1500MW power interconnector with Tanzania (of which 93 km is on Kenyan territory). Now, of the 11 EAP member countries, 9 countries are interconnected and trading power on bilateral bases, exchanging more than 3,000 GWhs of energy. The Bank is facilitating the EAPP to acquire the capacity to commence real-time trading of electricity over the interconnected grid system. Cross border power will help countries displace expensive diesel power plants, reduce greenhouse gas emissions, and more importantly, gradually reduce the cost of electricity in the region and improve the business climate.
Kenya’s new strategy
These are significant achievements. Kenya aims to become a major producer on a global scale, but it still awaits access to international climate finance to produce more and to leverage scaling up across the continent. The African Development Bank, in its 2024-2028 Country Strategy Paper for Kenya, pledged to boost the country’s private sector driven by economic growth, by investing in infrastructure development and strategic reforms, on the one hand, and by supporting human capital development, on the other. The five-year plan will consolidate the achievements of the previous plan — focused on energy infrastructure — and put Kenya at the forefront of climate adaptation on the continent.
