Uganda on Friday became the first African country to de-risk small and medium scale renewables in a bid to ensure the viability of these renewable energy projects.
This, as Uganda signed an agreement with the Regional Liquidity Support Facility (RLSF), a joint initiative of the African Trade Insurance Agency (ATI) and KfW, with funding from German Ministry of Economic Cooperation and Development.
Under the programme, RLSF will offer protection to new small and mid-sized renewable energy projects of up to 50 MW in Sub-Saharan Africa.
The RLSF has an initial capacity equivalent to $74-million and is committed to protecting Independent Power Producers (IPPs) against the risk of delayed payments by public off-takers. Many projects have failed in the past due to access funding because this guarantee was not available.
Matia Kasaija, Uganda's finance minister, said the government was committed to improving conditions for investors within the energy sector.
"Uganda has a solid history of supporting our public concession with upwards of $500-million spent in the last decade on improvements to the grid," he said. "With this agreement, we see RLSF providing a perfect complement to our on-going strategy of accelerating the delivery of clean energy to the national grid."
George Otieno, ATI's chief executive, said the RLSF was a tool that can ensure more renewable energy projects reach financial close.