The World Bank Group has approved an investment package of $794.5 million for the Nachtigal Hydropower project in Cameroon, to help the country reach its goal of providing access to electricity for 88 percent of its people by 2022.
The Nachtigal Hydro power project builds on a sustained, 20-year engagement in the energy sector by the World Bank Group in Cameroon. Once completed, it will increase Cameroon’s electricity generating capacity by 30% and provide greater opportunities for the poor, who are disproportionately excluded from economic activities due to inadequate power supply.
“This investment in clean energy is key to lowering the cost of electricity and ensuring that Cameroon’s economy is competitive. The Nachtigal Project is one of the very few public-private partnership (PPP) hydropower projects in Sub-Saharan Africa that will accelerate Cameroon’s realization of its development goals, including poverty reduction,” said Elisabeth Huybens, World Bank Country Director for Cameroon.
Over the past two decades, Cameroon has embarked on a series of sector reforms in the power sector to enhance financial viability and attract private sector investment.
Reflecting an integrated approach to maximizing finance for development,’ the WBG has been instrumental in securing private finance for the Nachtigal Hydropower Project. Guarantees amounting to $300 million from the International Bank for Reconstruction and Development (IBRD), guarantees worth $262.5 million from the Multilateral Investment Guarantee Agency (MIGA) and equity totaling $70 million, loans worth $152 million, and currency risk management swaps from the International Finance Corporation (IFC) have been brought together in a package to bring sustainable private sector solutions to the infrastructure sector.
“By working for almost five years as co-developer of the project, the Nachtigal HPP is a great example of how IFC is using InfraVentures to help projects become reality in Africa. In addition, as Global Coordinator of the Project’s senior debt, IFC has mobilized the entire debt package, including senior loans from development finance institutions and local commercial banks of around EUR 735 million ($ 859 million equivalent),” said Oumar Seydi, IFC Director for Africa.
The project will support the government of Cameroon’s Vision 2035 to achieve shared growth, reduce poverty, and create jobs through increased industrialization, improved productivity, and better governance. It will also actively contribute to the WBG FY17-21 Cameroon Country Partnership Framework (CPF), which focuses on addressing multiple poverty traps in rural areas, particularly northern regions, fostering infrastructure and private sector development, and improving governance.