Ethiopia has taken a significant step towards enhancing its renewable energy sector by signing a Memorandum of Understanding (MoU) with the African Trade Insurance Agency (ATIDI). The agreement aims to accelerate the country’s transition to clean energy by attracting foreign investment into renewable energy projects through ATIDI’s Regional Liquidity Support Facility (RLSF).
The MoU establishes a collaborative framework between Ethiopia and ATIDI, ensuring that Independent Power Producers (IPPs) and Public-Private Partnerships (PPPs) can benefit from RLSF. This liquidity support mechanism, developed in partnership with KfW Development Bank and Norad, provides financial protection to IPPs and PPPs by ensuring timely payments from state-owned utilities. This initiative addresses one of the key challenges in Ethiopia’s energy sector payment security by enhancing financial stability and the overall investment climate.
Ethiopia’s Minister of Finance, Ahmed Shide, emphasized the importance of this partnership, stating that it will facilitate timely payments to developers, mitigate financial risks, and strengthen the bankability of power purchase agreements (PPAs). He added that these measures would enhance the creditworthiness of Ethiopian Electric Power (EEP), making Ethiopia’s renewable energy projects more attractive to investors.
With this MoU, Ethiopia becomes the 11th ATIDI member state to join the RLSF initiative, alongside Benin, Burundi, Côte d’Ivoire, Ghana, Kenya, Madagascar, Malawi, Togo, Uganda, and Zambia. Since its inception, RLSF has approved guarantees worth USD 24.7 million, facilitating investments totaling USD 373.1 million and contributing to 181.95 MW of installed renewable energy capacity across Africa.
Ethiopia has made remarkable progress in expanding its energy sector, with hydropower being the backbone of its electricity generation. However, the government is now looking to diversify its energy mix by harnessing wind, solar, and geothermal resources to ensure sustainability and reliability.
Manuel Moses, CEO of ATIDI, hailed the partnership as a milestone in Ethiopia’s renewable energy transition. He stated that ATIDI’s liquidity support would not only reduce financial risks but also attract greater investment into Ethiopia’s energy infrastructure, helping the country meet its sustainable development goals.
This collaboration aligns with Ethiopia’s Homegrown Economic Reform Agenda, which seeks to enhance macroeconomic stability, investment, and trade. By improving the investment climate and fostering private sector participation, Ethiopia aims to drive economic growth and job creation across multiple sectors beyond energy.
With ATIDI’s support, Ethiopia is poised to strengthen its renewable energy capacity, ensuring financial stability for power sector stakeholders while contributing to Africa’s broader sustainable development objectives.
