A joint US government and private sector initiative that will spend $16 billion to provide power to 20 million people in six African countries will benefit new wind and biomass power generation projects in Kenya and Tanzania.

US President Barack Obama announced a state-funded initiative of $7 billion while on his Africa trip which ended on Tuesday. Associate private sector organisations will contribute a further $9 billion for clean energy power projects. Other beneficiary countries are Ethiopia, Ghana, Nigeria and Liberia.

The new commitments, to be executed in the next five years, will come as a relief to Kenya and Tanzania as they have been struggling to raise financing to expand their power generation.

Kenya is expected to issue a sovereign bond meant to finance infrastructure projects. Tanzania is also involved in international fundraising.

READ: Kenya seeks advisor for sovereign bond

The new initiative is expected to generate investment opportunities for major US companies like General Electric, which has its regional offices in Kenya, and Symbion Power, a power engineering and construction company that has extensive operations in Iraq and Afghanistan.

Aldwych International, a management company of private equity groups and foundations, has already committed $1.1 billion to develop 400MW of clean wind power in Kenya and Tanzania.

READ: Tanzania wind project to boost electricity supply from next year

Harith General Partners — an investment company that manages the $450 million Pan African Infrastructure Fund (PAIDF), made up of African investors like Africa Development Bank and South African pension fund Public Investment Corporation — has also committed $70 million in investments for clean, wind energy in Kenya and $500 million across the African power sector.

Husk Power Systems, which generates power through biomass gasification and distributes it to villages, said it will complete 200 decentralised biomass-based mini power plants in Tanzania, to provide affordable lighting for 60,000 households.

The African Finance Corporation has also committed $250 million to the power sectors of Ghana, Kenya and Nigeria. Other commitments include General Electric’s 5,000MW of new, affordable energy in Tanzania and Ghana.

Symbion Power has committed $1.8 billion in investment to support the generation of 1,500MW across all the six countries.

Heirs Holdings, which is led by Nigerian businessman and philanthropist Tony Elumelu, has committed to $2.5 billion to generate 2,000MW while Standard Chartered has committed $2 billion to be used across all the six countries. The initiative christened “Power Africa” will see the creation of more than 10,000MW of cleaner, more efficient electricity.  

Most of the US government’s financial commitment will come through the US Export-Import Bank (Ex-Im), which will provide up to $5 billion in support of US exports for the development of power projects across sub-Saharan Africa.

The Overseas Private Investment Corporation (OPIC) will commit up to $1.5 billion in financing and insurance to energy projects in sub-Saharan Africa.

The US Agency for International Development (USAid) will provide $285 million in technical assistance, grants and risk mitigation to advance private sector energy transactions and help governments adopt and implement policies, regulations and reforms necessary to attract private sector investment in the energy and power sectors.