97 total views, 1 views today
The UK government’s overseas investment arm, CDC Group, said it would invest more than $300m in a new business to develop electricity networks in Africa, which it calls one of the biggest impediments to economic development in the world’s poorest continent.
The company, to be known as Gridworks, will be launched this week, CDC chief executive Nick O’Donohoe said. It will make investments in power transmission and distribution infrastructure, as well as off-grid electricity systems.
Mr O’Donohoe said that, despite decades of investment in generating capacity in many African countries, at least 600m people are without access to electricity because of a a lack of networks to transmit and distribute power. Gridworks will help bridge that gap, he added.
The announcement comes as the UK seeks to strengthen its trading relationships with Africa. CDC last year pledged to invest up to $3.5bn in the continent over the next four years.
Founded by the UK government in 1948, CDC has a mandate to make a financial return on investments that reduce poverty by supporting economic growth and creating jobs. The investment group’s sole shareholder is the Department for International Development.
Gridworks’ chief Simon Hodson called the new venture a “natural evolution” of CDC’s previous investments in energy.
CDC helped establish Uganda’s national electricity utility, Umeme, in 2005 and holds a 70 per cent stake in Globeleq, a leading African power producer with generating facilities in Tanzania, Kenya, Cote d’Ivoire and South Africa.
The group also has holdings in Eneo, the national power utility in Cameroon, and a hydro project in Democratic Republic of Congo. Both will now be managed by Gridworks, Mr Hodson said.
With net assets under management of $5.1bn, CDC last year promised to take on riskier investments after a period of particularly high returns. Between 2012 and 2016 CDC made average returns of 10.3 per cent, against a target of 3.5 per cent, according to a review by the National Audit Office.
Gridworks expects to make at least $300m of investments in the next five years and CDC could provide further capital if the right opportunities arise, Mr O’Donohoe said.
While some African governments have welcomed private investment in power generation projects since the 1990s, transmission and distribution infrastructure has traditionally remained in the hands of the state.
That is beginning to change, according to Mr Hodson.
“We’re at a tipping point and in 10 years from now I really think you’ll see private sector flows into transmission projects evolving,” Mr Hodson said.
The project has the backing of the UK government. “Gridworks is a fantastic initiative using British expertise and finance to connect millions of people across Africa to electricity,” said Harriett Baldwin, minister for Africa.