The Federal Democratic Republic of Ethiopia, through its Ministry of Finance and Ethiopian Electric Power (EEP), has entered into a Memorandum of Understanding (MoU) with the African Trade Insurance Agency (ATIDI).
This agreement is aimed at accelerating Ethiopia’s transition to renewable energy by attracting foreign investment through ATIDI’s Regional Liquidity Support Facility (RLSF), a mechanism designed to enhance financial security in the energy sector.
The MoU sets a foundation for cooperation, allowing Independent Power Producers (IPPs) and Public-Private Partnerships (PPPs) to benefit from RLSF. Developed by ATIDI in collaboration with KfW Development Bank and Norad, this facility ensures timely payments for power projects by addressing liquidity challenges faced by state-owned utilities. By mitigating financial risks, the initiative strengthens the credibility of power purchase agreements (PPAs) and enhances the financial stability of Ethiopia’s energy sector.
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Favorable investment environment
Ethiopia’s Minister of Finance, H.E. Ahmed Shide, emphasized that the partnership will facilitate timely payments to developers, improve the financial reliability of energy projects, and create a favorable investment environment for renewable energy. With this agreement, Ethiopia joins 10 other ATIDI member states that have signed onto RLSF, including Kenya, Ghana, Uganda, and Zambia. To date, the facility has backed guarantees worth USD 24.7 million, supporting investments totaling USD 373.1 million and adding 181.95 MW of renewable energy capacity across Africa.
As Ethiopia continues to expand its energy sector, hydropower remains its primary source of electricity. However, the government is actively working to diversify its energy mix by harnessing wind, solar, and geothermal resources. The collaboration with ATIDI marks a significant milestone in Ethiopia’s efforts to create a more resilient and investor-friendly renewable energy sector.
Manuel Moses, CEO of ATIDI, highlighted the importance of this partnership, stating that ATIDI’s liquidity support will help reduce financial risks and attract further investment into Ethiopia’s energy infrastructure. He expressed confidence that this collaboration will contribute to Ethiopia’s renewable energy goals and broader sustainable development across Africa.
Minister Ahmed Shide also linked this initiative to Ethiopia’s broader economic strategy, known as the Homegrown Economic Reform Agenda. This reform program focuses on macroeconomic stability, investment promotion, and trade facilitation. By improving regulatory frameworks, infrastructure, and private sector participation, Ethiopia aims to drive economic growth in key sectors such as agriculture, manufacturing, and services. The minister also noted the potential for expanding cooperation with ATIDI beyond energy to include other vital sectors.
Founded in 2001 by African states, ATIDI provides trade and investment risk coverage to businesses operating on the continent. Its key services include political risk insurance, credit insurance, and surety insurance. To date, ATIDI has supported investments and trade worth USD 85 billion across Africa. The organization maintains a strong financial rating, with Standard & Poor’s assigning an ‘A/Stable’ rating and Moody’s upgrading its rating to A3/Positive in recent years.
