SMEs in renewable sector receives leg-up from TDB

16th March 2021

By: Marleny Arnoldi

Deputy Editor Online

     

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The Eastern and Southern African Trade and Development Bank (TDB) on March 15 launched an off-grid facility for small and medium-sized enterprises (SMEs).

The $75-million facility is aimed at facilitating access to debt financing for SMEs, primarily targeting renewable energy businesses in the off-grid energy sector, as well as SMEs in the broader infrastructure value chain operating in the region served by TDB.

The facility will preserve household economic activity in the short term and support firm productivity in the medium term by enhancing the liquidity of SMEs involved in infrastructure value chains affected by the Covid-19 crisis, the bank states.

The TDB SME Off-Grid Facility will prioritise infrastructure projects with significant development impact and high private sector mobilisation potential and will have stringent environmental and social eligibility criteria.

Primary beneficiaries of the facility will be private firms and entities in 22 TDB member States involved in the supply, construction and operation of infrastructure projects.

“The facility is an innovative tailor-made instrument positioned to address current financing challenges faced by renewable energy and off-grid SMEs. It offers affordable financing, including working capital or capital expenditure, with longer tenors, and other non-financial incentives to unlock further financial intermediation,” TDB explains.

Ultimately, selected projects must provide communities with access to improved, reliable and affordable electricity, efficient transport and logistics services and other social and economic infrastructure at the same time as enhancing security of energy supply, creating jobs and reducing greenhouse-gas emissions.

Additionally, to build an actionable pipeline of viable private sector projects in the renewable energy space and ultimately, accelerate deal origination in the sector, TDB has launched the TDB Renewable Energy DealRoom in partnership with Asoko Insight.

This initiative is supported by the $415-million World Bank Regional Infrastructure Finance Facility signed with TDB in 2020 – the first of its kind to be extended to a regional development bank by the World Bank’s International Development Association.

Through this facility, TDB will finance long-term infrastructure projects, particularly in renewable energy, including those of SMEs in need of debt financing in the off-grid energy sector.

Applying firms must provide evidence of established operations with a minimum of three years of operating in the renewable energy sector, as well as a business plan demonstrating the viability of the business, including financial projections with financial statement forecasts, a clear path to profitability, product description and market analysis.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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