The African Development Bank will commit $164 million to help six African countries promote decentralized renewable energy to have better access to sustainable and clean electricity.

The Leveraging Energy Access Finance Framework, or LEAF, which is set to be implemented in Ghana, Guinea, Ethiopia, Kenya, Nigeria and Tunisia, is expected to help spur commercial and local currency investments to scale up the activities of decentralized renewable energy companies in the six African countries.

As Africa strives to ensure a green sustainable future, it faces the challenge of rising energy poverty in addition to inadequate investment in Africa's plentiful hydrocarbon resources.

In a report titled Energy Prices in Africa: Transition Towards Clean Energy for Africa's Industrialization released by the United Nations Economic Commission for Africa in July, it revealed that high energy production costs, transmission and distribution losses, which range between 18 and 25 percent, means that utilities need to be constantly bailed out and subsidies implemented for users.

Kevin Kariuki, vice-president of African Development Bank, said that the approval of LEAF is very timely as it increases the bank's toolbox to support the fast-moving decentralized energy access market which complements conventional grid-connected solutions.

"The African Development Bank is delighted to partner with the Green Climate Fund on the LEAF, which will not only accelerate access to electricity based on decentralized renewable energy solutions, hence reducing the respective countries' carbon footprints, but will do so with the active participation of a private sector facilitated by local currency financing and commercial capital availed under the program," Kariuki said.

The bank developed the program in collaboration with the Green Climate Fund, which approved $170.9 million in concessional financing for it in July. The framework forms part of the Bank's broader off-grid strategy under the New Deal on Energy for Africa and complements existing initiatives, such as the Sustainable Energy Fund for Africa.

Maimuna Kabatesi, project manager for the Green and Inclusive Energy Program East Africa, said that it is a good thing that funds are being set aside for decentralized systems which go a long way to reach the remotest parts of the village.

She added that there has been an urgent need to amplify the importance of decentralized renewable energy solutions which would be directly helpful to communities overlooked by larger-scale energy solutions.

"A lot of financing in the energy sector is very large-scale. What that means is that it cannot support small projects that will directly impact citizens, particularly those in rural and remote areas. However, decentralized renewable energy is usually much smaller projects that can have a huge impact on a community," Kabatesi said.