IFC has been deeply involved in supporting the power sector in Côte d’Ivoire for over three decades,” stated Diagou. “However, it’s essential to note that we did not create the Electricity for All program (PEPT); rather, we’re complementing existing efforts to accelerate access.”
IFC has introduced an innovative social financing tool to facilitate low-income households in accessing subsidized electricity in Côte d’Ivoire. The country has indeed made significant strides in the electrification sector compared to its peers in the West African Economic and Monetary Union (WAEMU).
Notably, Côte d’Ivoire’s commendable achievement lies in generating a third of its power from hydro sources, with no reliance on coal—a remarkable feat considering that coal accounted for the highest percentage among all power producers in 2022, as per IEA/MSCI ESG Research. By 2030, IEA/MSCI ESG Research projects that the solar power will account for 36 percent of the total power produced. The total power generation is projected to grow by 96 percent in GW over the same period. The country’s implementation of the “Electricity for All” program, which aims to subsidize electricity to ensure universal access, particularly for marginalized communities, is pivotal given the escalating impacts of climate change. Marginalized communities in sub-Saharan Africa bear a disproportionate burden of extreme weather events such as droughts and heatwaves, leading to significant human suffering, including deaths and migration. By 2030, IEA/MSCI ESG Research projects that the solar power will account for 36 percent of the total power produced with total power generation projected to grow by 96 percent in GW over the period.
The World Bank Group’s Joint Capital Markets Program (J-CAP) has introduced securitization as a feature within social financial markets.
Securitization, in essence:
In this financing tool, a special purpose vehicle is created to pool illiquid assets, which are then converted into tradable securities. These special purpose vehicles aim to transfer risk from the balance sheets of organizations, typically banks and asset managers, to separate entities. Securitization often involves the creation of tradable tranches with varied risks, including senior, mezzanine and subordinate tranches. Indeed, the riskier the tranche, such as the subordinate tranche, the higher the potential interest rate charged and return it offers.
The Social Bond:
The structure indeed functions as a pay-as-you-go tool to fund perimeter connections for households unable to afford meters for connecting to the national power grid. This social bond is indeed being implemented in Côte d’Ivoire, a country that has indeed made remarkable progress in promoting affordable energy. As part of the ongoing 10-year Electricity for All program, subsidizing electricity has indeed made significant progress in urban areas. However, rural areas still face challenges due to high meter costs. To address this, Côte d’Ivoire, along with IFC – the largest multilateral institution driving capital into the private sector – has issued a $97 million social bond. This bond indeed funds pre-meter connections for low-income households, thereby improving electrification in rural areas. Its aim is to reach 80,000 households, making a considerable quantitative impact. Created in 2014, the Electricity for All program plans to achieve universal electricity access by 2030.