Abidjan, Côte d'Ivoire, October 30, 2023 —To scale access to electricity for hundreds of thousands of low-income households in Côte d'Ivoire, IFC today announced an anchor investment in a bond issued by a securitization vehicle to support the Electricity for All Program (PEPT), a government-led program facilitating access to electricity for underserved populations living in electrified localities.
Proceeds from the bond, the first social bond in the energy sector in the West African Economic and Monetary Union (WAEMU), will contribute to the financing of the connection of up to 800,000 additional low-income households to the national grid over the next four years, representing an increase in the electricity access rate of more than 13 percent nationwide.
Social bonds are debt instruments used to finance or refinance social projects whose purpose is to address a common problem and help those most vulnerable, such as people without access to essential goods and services.
IFC will invest up to FCFA 30 billion (equivalent to $48.8 million) in the bond, which represents half of its total size of FCFA 60 billion (equivalent to $97.6 million). The Emerging Africa Infrastructure Fund (EAIF), a Private Infrastructure Development Group (PIDG) company, will co-invest in the bond. The bond will be issued by a regulated securitization special-purpose vehicle.
This landmark transaction includes a tranche with a 15-year maturity, the longest tenor for a securitization transaction in the region. This transaction was arranged by the investment banking firm Africa Link Capital Structuration (ALC).
Securitization is a financial instrument where illiquid assets, such as loans or receivables, are pooled together and structured into tradable securities. A regulated securitization special purpose vehicle is a type of special purpose vehicle that is established to securitize assets.
"PEPT's implementation has been a game changer to increase access to electricity for underserved populations in rural and urban areas in Côte d'Ivoire. IFC's anchoring this first bond underscores the key role capital markets can play to support access to electricity and support socio-economic development goals," said Zahalo Silué, Chairman of PEPT's Fund.
"Expanding access to electricity and developing local capital markets for inclusive economic development are key pillars of IFC's strategy in Côte d'Ivoire," said Josiane Kwenda, IFC Country Manager for Côte d'Ivoire. " This investment aligns with the Government of Côte d'Ivoire's vision to achieve universal access to electricity by 2030 and will bring hundreds of thousands of households onto the grid, greatly improving their living and working conditions."
PEPT connects low-income households to the grid for an up-front cost of only XOF 1,000 (about $1.67). PEPT funds the balance for the cost, about XOF149,000 (around $249), through flexible financing to the customer, which can be repaid over a period of 2 to 10 years. PEPT's connections are managed by the national utility, Compagnie Ivoirienne d'Électricité (CIE).
According to World Bank Data, Côte d'Ivoire had an electricity access rate of 71.1 percent in 2021, with significant urban-rural discrepancies as many customers in remote areas can't afford the fee to connect to electricity.
As of June 2023, PEPT had already facilitated close to 1,600,000 connections to the grid. IFC's support will help the program grow even further by mobilizing long-term private sector local currency funding in the capital markets.
This project falls under the World Bank's Joint Capital Markets Program (J-CAP) to develop and deepen WAEMU's capital market. J-CAP's work in WAEMU is supported by the governments of Germany and Norway.
IFC's investment is supported by the International Development Association (IDA) 20 Private Sector Window Blended Finance Facility and Local Currency Facility, which helps provide longer-term local currency funding that is not readily available in the market.
About IFC
IFC — a member of the World Bank Group — is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2023, IFC committed a record $43.7 billion to private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity as economies grapple with the impacts of global compounding crises. For more information, visit www.ifc.org
About the IDA Private Sector Window
The International Development Association's (IDA) Private Sector Window was launched in 2017 to catalyze private sector investment in the poorest and most fragile countries. Recognizing the key role of the private sector in achieving IDA's objectives and the World Bank Group's twin goals, the window provides a source of co-investment funding and guarantees to de-risk private investments supported by IFC and the Multilateral Investment Guarantee Agency (MIGA). The IDA PSW is an option when there is no commercial solution, and the World Bank Group's other tools and approaches are insufficient: http://ida.worldbank.org/psw.
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