The development of a thriving and sustainable biomass and bioenergy industry in Southern Africa could be a catalyst for the economic recovery of the region and serve to establish it as a major bioenergy provider to global markets.
This was the recurring message at a recent symposium held in Johannesburg and hosted by the New Partnership for Africa’s Development (Nepad) Agency, which has kicked off a strategy to establish a world-class bioenergy invest- ment incubator for the Southern African Development Community (SADC).
The Nepad Agency, the implementing body of the African Union, is driving the sustainable exploitation of Africa’s vast bioenergy resources to achieve the twin goal of energy and food security for the continent’s inhabitants.
The agency hoped the symposium would provide a platform through which member countries could engage in this burgeoning industry.
The event attracted several leading developers and investors from the international bioenergy community with the intent to develop a tangible framework for the development of a sustainable bioenergy industry in Southern Africa.
Central to the success of a local industry would be the investment support for innovation and appropriate public and private funding mechanisms.
“The ultimate objective of this symposium was to develop an investment hub that would solve the biggest obstacle facing local bioenergy projects – securing the requisite finance,” noted symposium chairperson and bioenergy specialist Gavin Maxwell.
He added that a lack of funding was not exclusively an African issue, but a global one, and was indicative of the inability of bioenergy projects to advance beyond the risky pilot-project stage to a commercial level.
“There is a lack of investor confidence in the bioenergy industry on a global scale,” he explained.
Biomass sources such as hybrid and engineered energy grasses, energy cane and sugar beet are all potential energy sources from biomass, which can be transformed into solid fuels, liquid fuels and gaseous fuels.
“From an engineering and technical point of view, the biomass transformation process is not that complicated; it is simply a question of converting raw materials into products and fuels,” said Maxwell.
It was this degree of simplicity, he added, that made it ideal for Southern African application.
The proposed bioenergy investment incubator would be a mechanism for multiple finance providers to invest in a fund that would enable the maturation of Afrocentric bioenergy initiatives and enable such projects to become ‘bankable’ in the traditional sense.
“These projects could be small-scale community-driven and collective-farming projects that require the development of technology or expertise investment, which could be supported by the fund incubator under the auspices of the Nepad Agency,” he pointed out.
Maxwell hastened to add that the fund should not be seen as a charity.
“This is not a ‘free money’ approach. This fund will aim at equitising the value of projects to raise the risk money and raise their level of attractiveness to the global banking community,” he said.
The distinction between conventional venture banking and the incubator fund is that the redeemable equity would enable the project developer to either buy back the equity or convert it, thus gaining access to peer groups who are able to assist them in accessing the market.