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The government of Ghana has signed a Memorandum of Understanding (MoU) with the African Trade Insurance Agency (ATI) for the rollout of the Regional Liquidity Support Facility (RLSF) within the country.   

African States founded ATI in 2001 to cover trade and investment risks of companies doing business on the continent. Since its inception, ATI has supported US$70 billion worth of investments and trade into Africa.   

The MoU aligns with Ghana’s mission to promote access to reliable, clean, affordable electricity.   

RLSF is a joint initiative of ATI, the KfW Development Bank, and the Norwegian Agency for Development Cooperation (Norad).

KfW is owned by the German federal government and German federal states, and finances investments and advisory services in developing countries, typically with governmental institutions. Norad’s primary purpose is to ensure that Norwegian development aid funds are spent in the best feasible way.  

The Regional Liquidity Support Facility is a financial product with a capacity of US$153.7 million. It is designed to address the short-term liquidity risks faced by small and medium-sized Independent Power Producers (IPPs) that sell electricity to state-owned power utilities–improving bankability and helping such projects reach financial close.   

The signing of the MoU comes when the demand for energy in Ghana is increasing by 10% per year, coupled with the country’s focus on expanding the contribution of renewable energy sources to its energy mix.   

IPPs in Ghana will benefit from RLSF, which helped tackle climate change, attract investments by supporting renewable energy projects in ATI’s member countries, and protect the IPPs against the risk of delayed payments by public offtakers.   

The country has one of Africa’s highest electricity access rates at 86.63%, with 74% rural and 95% urban residents connected to the electricity grid. It also exports excess power to neighbouring Benin, Burkina Faso, and Togo.

Ghana, which currently has a total installed capacity of over 5,300 megawatts aspires to industrialize and modernize its agriculture, and provide economic opportunities for its growing population.   

However, one of the key constraints to this vision is access to reliable and cost-efficient electric power and the sector’s current financial deficit.    

The Electricity Company of Ghana (ECG) is often asked to provide collateral for similar liquidity instruments under power purchase agreements. RLSF will relieve the national utility’s financial burden.   

Ghana is the ninth ATI Member State to have signed the RLSF MoU, joining Benin, Burundi, Côte d’Ivoire, Madagascar, Malawi, Togo, Uganda, and Zambia.  

Top Photo: ATI Chief Executive Officer Manuel Moses (seated) with Ghana's Vice President Mahamudu Bawumia at the Company's AGM held in June 2022 in Accra, Ghana. (Supplied by African Trade Insurance Agency)