Business News of Wednesday, 14 November 2012
Source: Daily Graphic
Ghana is fast becoming the hotbed for renewable energy projects to support the country’s power generation and also feed other grids in the West African sub-region.
The German development financier with focus on the private sector in developing countries, DEG, is keen on increasing its investments in independent power producers with renewable energy sources in the West African sub-region, Ghana being a key prospective market for its mission.
The private sector financing institution is currently finalising arrangements with some independent power producers to build a biomass power plant and a couple of other plants to generate power from renewable sources.
The Chairman of the Management Board of DEG, Mr Bruno Wenn, hopes the projects, numbering about five in West Africa, would serve as pilots for investing in the renewable power sector in Africa to encourage more German investors to participate in the emerging industry.
“Ghana is more advanced in encouraging renewable energy as we see many concrete steps on the ground. The legal framework is in place, what is left is the feed-in tariff,” Mr Wenn told the GRAPHIC BUSINESS in an exclusive interview in Accra on November 7.
Currently, out of the €1 billion portfolio DEG has in Africa, a third is in West Africa amounting to about €300 million, with Ghana taking about a third of the West African share.
With a standing portfolio of about US$270 million in Ghana, DEG made new investments of about US$40 million for last year, with expectations to repeat that feat this year.
Mr Wenn, told the GRAPHIC BUSINESS in Accra on the sidelines of the West Africa Clean Energy Exhibition and Conference (WACEE’12) that focus of the development financier was on growing small and medium-scale enterprises which drive economies.
“We are trying to promote SMEs in West Africa and Africa as a whole. We need these SMEs for development as they create the jobs, new markets and are innovative. This is how we started it in Germany, promoting the SMEs after the second World War,” Mr Wenn said.
While supporting SMEs through the banks, the development financier ensures that it assists the recipients to make their operations sustainable by respecting the environment and becoming efficient, particularly in the use of energy and power.
The bank has a chunk of its portfolios in renewable energy and clean power generation as well as environmental management and climate change activities.
“We are promoting renewable energy in Ghana and West Africa because the region needs a lot of energy and we need to include more renewable and clean energy sources in the generation,” Mr Wenn explained to the GRAPHIC BUSINESS.
Ghana passed the Renewable Energy Act last year which provides for a number of activities to ensure sustainability of power generation. These include the inclusion of up to 10 per cent of renewable energy sources in the power generation by 2010.
This vision, however laudable, requires ample creativity, massive investments in new technology, research and development and new turn-key projects to bring it to fruition.
Since Germany, has walked this path successfully and has the knowledge and the technology, its institutions such as DEG and the Delegation of German Industry and Commerce (AHK) have been encouraging its companies and private sector to take advantage of such opportunities created in Ghana and other West African countries.
Germany has, in recent years, taken several strategic decisions to boost its renewable energies and energy efficiency sector, with amazing outcomes that have impacted positively on generation and employment creation.
According to the Deputy Head of Mission at the German Embassy in Ghana, Mr Thomas Wimmer, between 2000-2011, Germany has more than tripled the share of renewable energy in electricity production from 6.3 per cent to over 20 per cent, which have triggered new investments amounting to €30 billion (about GH¢75 billion, for last year alone.
He added that German companies active in that sector had an annual turnover of somewhere about €40 billion, employing a whopping 370,000 people.
As part of helping companies to ensure energy efficiency – another area the bank promotes – it conducts energy audits for its clients free of charge to help them cut down on their energy demands through various ways.
DEG is supporting a small German company, AWAS, to install water treatment plant for Ghana Nuts Ltd, an edible oil processing company, to enable it dispose effluent in an environmentally friendly way.
The Deputy Managing Director of Ghana Nuts, Mr Prince Obeng Asante, said the two companies had also identified the potential of generating power from biomass using waste generated at the factory to power the factory and the surrounding community.
DEG’s strategy in Ghana and many parts of West Africa includes supporting financial institutions with long term financing, sometimes equity, to enable the local partners to benefit from the development financier’s rich base of expertise and knowledge.
In Ghana, the development bank has interests in UT Bank, Fidelity Bank and a few other banks, where it also offers them technical support in risk and portfolio management and how to better understand the SMEs and lend appropriately to them.
Mr Wenn said the bank believed there were a lot of liquidity in the Ghanaian financial services sector, but the marketed sometimes fell short of creative ways of making the funds benefit businesses, particularly the SMEs that needed them.
“This is why we are focusing on the financial services and SMEs in Ghana. We believe there liquidity is available but how to translate them to benefit the SMEs is the challenge,” the DEG boss said, adding that it was easier to discount SMEs as risky until they were understood.