Stimulating Sustainable Energy Financing Ecobank case Climate change and Renewable energies Ecobank experience in Benin AfDB/IRENA Dakar, Senegal 29 February to 1 March, 2016 1
Financial Assessment of RE project Appropriate RE project satisfies of Risk analysis Notion of project Ability of the Entrepreneur to it of the to make the project a success More, RE projects present o o New activity is related to under should be, including Operational technicalities Both are the scope and spectrum of 2
From Ecobank, SOLUTIONS ANYWAY Because of Deep commitment in favor of RE, SOLUTIONS HAVE TO BE FOUND 3
Identity and Issues Constraints to be considered New activity: Identity of the Borrowing Actors: Most ENTREPRENEURS are STARTUPS Financially: Not reach enough to provide for personal Real GUARANTEES Relative ISSUES to go beyond How work with Startups not able yet to demonstrate former performances or deliveries How not make the question of Guarantee an absolute barrier? 4
Micro and Macro Solutions *On Micro grounds: 1. Need for the Promoter to have a personal input as Shareholder s stake 2. For Guarantees: at least 2 Solutions 2.1. Before starting, introduce a HNWI or an Institution to play the role of Guarantor 2.2. The promotor progressively constitutes a Term deposit from his sales or profit 3. Among Key Success Factors, make sure the Promotor knows well his competitive environment; and for investments, produce on request feasibility study with sensitivity analysis including Energy efficiency For the Promotor 5
Micro and Macro Solutions *On Macro grounds: Follow up necessary on: Tax Framework Research: Make a strategic change: Will it be public Private should be interested Private and Public is an opportunity here 6
Why is Ecobank committed 3 BL: THE TRIPLE BOTTOM-LINE People Planet Profit (as Economic, Environmental and Social Added Value) 7
Pillars of Sustainability THE TRIPLE BOTTOM-LINE (3BL) 3BL recognizes that business need to measure their performance not just by how well they further the interest of the stakeholders (shareholders) through profitability (economic bottom line) but also how they further protect the interest of their secondary stakeholders (including wider society) in relation to social and environmental sustainability. Sustainable Procurement... Green Initiatives
Potential for procurement to add value to the 3BL Profit Adding Economic Value Securing Value for Money Effective investment appraisal and capital purchasing Added value through sourcing efficiencies, supplier involvement, quality improvement) Ethical trading into support the long term financial viability of suppliers and supply markets (including sustainable pricing, ethical tendering, negotiation and payment on time Planet Adding environmental Value Inputs to design and specification of green products/services Sourcing of green materials and resources Green sourcing including selection, management and development of suppliers with environmental capability and commitment Managing logistics, reducing the waste of resources throughout the sourcing cycle. People adding Social Value Encouraging purchasing team and supplier diversity Monitoring supplier practices to ensure observance of labor standards (e.g. conditions of work, health & safety, equal opportunity) Fair and ethical trading (fair pricing, ethical use of power, ethical business practices) Making provision for local and small business sourcing Supplier quality management Sustainable Procurement... Green Initiatives
Ecobank Benin s experience Some actions in favor of Renewable energies (namely Solar) 3 Concepts: BASIC One: Trade 2 nd One: Structured Financing 3 rd One: Sharing experiences among Ecobank affiliates in 36 African countries based in Middle Africa, with Representative offices in Dubai (United Arab Emirates), Paris, London and Beijing (China) 10
Ecobank Group 11
Sustainability Framework Driving economic transformation Creating economic value Fostering Integration Partnership for Development Socially responsible finance Microfinance and microbanking Women in Business Ecobank Foundation Community engagement Protecting natural resources: environmental sustainability Risk management Green business Global initiatives Internal Carbon footprint Management Human Capital: attracting and retaining employees Diversity and culture Training and development Pan-African spirit 12
Great potential (Project related corporate financing) Climate Financing Model in Ecobank Fuel switch Sust Forestry Industrial EE High potential (SMME financing) Household EE Solar streetlight EE in Refrigerator Great potential, hard to implement Hydro Landfill gas Agricultural waste 13
Local Demand for Global & Regional Support Biogas conversion to Ethanol, Kenya Waste to Energy, Cameroun UNEP AREED Energy Efficient End-User initiative, Ghana Energy Efficient refrigerator scheme, Ghana Captive Energy Initiative, Nigeria 14
Climate Financing and Profit to the whole Community Telecoms Energy efficiency, including Solar base station Mining & Quarry 1. Performance bond 2. Solar powered radio devices & CCTV 3. Cleaner Technology (Retrofitting) Real Estate & Hotel 1. Solar Home System (Lighting, cooling & water heating system) 2. Cleaner Technology (Retrofitting) Manufacturing industry 1. Energy efficiency 2. Cleaner Technology Ecobank internal M& A Environmental Auditing 15
Enhancement for SEF in Middle Africa Market supply efficiency Favourable & customised credit lines Appropriate risk sharing mechanism Tailored capacity building 16
Sustainability Performance Based Pricing Incentive Compliance with pre-defined performance milestones, such as: 1. Total volume of loans disbursed 2. Volume of loans disbursed within timeframe 3. Quality of the portfolio of eligble transactions Step down on interest rate Some DFIs are willing to explore a retroactive effect on existing lines Other funding lines: 1. Credit lines & senior loans 2. Risk sharing products & guarantees 3. Mezzanine financing & subordinate debt Screening criteria: 1. Portfolio inventory 2. Costing & pipeline development 3. Proposal to participating DFIs 17
To sum up *The bank is RE Committed *Started and already DOING before GUARANTEE FUNDS are arranged by Development Banks and Other International Financial Partners *Would suggest that Priorities are necessary for the Region Optimal resources allocation Given extent of investment and challenges, useful to affirm SOLAR s Top position among many other solutions *MUTUALIZE Research NEED OF REGIONAL APPROACH: Harmonization when possible PHOTOVOLTAÏC technical priority *Encourage Local Manufacturing; for instance assembling panels. ON THEIR OUTPUT, Focus on QUALITY Merci Thank You *Work on Certification: Criteria on what makes a professional a recognized EXPERT *Ecobank appreciates at the highest point contribution from IRENA, cooperation with ECREEE at various levels 18
Merci Thank You 19