The first GREEN initiative project for a government in Africa — an unexpected encounter kickstarts a project contributing to society

Steady efforts to build a relationship turned coincidence into opportunity

“Could you grant us an opportunity to meet with you...” Numerous letters and messages with this request were sent to the Republic of Benin’s Minister of Economy and Finance, but failed to produce a response. Deciding that they needed to go in person to make any progress at all, the director general of the Energy Solutions Finance Department flew to Benin. Accompanying him was HIRATO Hitomi, who had only joined JBIC three months before.

“By pure coincidence, Benin’s Economy and Finance Minister Romuald Wadagni, whom I had been trying to contact all this time, was on the same plane. Our director general, who was acquainted with the minister, called me to join him in an ‘in-flight meeting, starting now.’ Thanks to this brief meeting in a corner of the plane, we were able to arrange another official meeting with the minister in Benin.”

This unexpected encounter flung open the doors for a project that HIRATO was tasked with.

Although JBIC had signed a credit line agreement with the government of Benin in March 2021, no significant progress had been seen around talks on specific projects due to differences in time zones and business practices. It was initially assumed that the credit line would be fully utilized for financing an electrified lantern project for elementary schools. However, through the meeting on the plane and the ensuing meeting in Benin, it became clear that the government of Benin had other projects in mind requiring priority funding. After these meetings, numerous negotiations continuously took place, and eventually, in June 2023, a decision was made to co-finance two projects: providing EUR29 million for a solar power project and EUR1 million for an electrified lantern project.

This is the first loan for an African government to come under ‘Global action for Reconciling Economic growth and Environmental preservation’ (GREEN) operations, and is also JBIC’s first loan for Benin.

FUKAYA Satoko, Director of Division 3, Energy Solutions Finance Department, and HIRATO’s supervisor, explains the background to the agreement: “We had been receiving proposals from trading companies about loans for Benin, but none had been realized. However, we were aware that Benin was comparatively stable both politically and economically compared to other African countries and that it had a lot of potential. Then, a high-level meeting with President Talon at the 7th Tokyo International Conference on African Development (TICAD 7) held in Yokohama in 2019 provided an occasion to build a relationship with the government of Benin. This agreement was the fruit of our work on this relationship over the past few years.”

Adjustments made after hearing Benin’s request. Contributions also made for its promotion of renewables

Benin is located in West Africa and imports fossil fuels and electricity from neighboring countries such as Nigeria. It has a low electrification rate, in the 40 percent range, and its energy self-sufficiency ratio is only around 10 percent. The government of Benin had thus also been searching for solutions from the perspective of energy security.

In its national development plan, the government of Benin has set a goal of launching solar power generation facilities with a total capacity of 150 MW by 2026. Through this loan, a solar facility with a capacity of 25 MW and two substations are slated to be built within the grounds of an existing 50 MW solar plant, one of the country’s largest.

“Expanding the supply of electricity produced by clean energy is expected to help promote Benin’s adoption of renewable energy and also improve the distorted energy structure that is dependent on other countries’ fossil fuels,” says HIRATO.

The electrified lantern project involved installing solar panels on the roofs of elementary schools in areas with no electricity access, and allowing students to take home lanterns that have been charged with the generated electricity. Japanese non-profit GOOD ON ROOFS consulted JBIC on the implementation of this initiative in Benin, and the credit line agreement was signed with this as a candidate project.

“However, when we spoke with the minister, we learned that in addition to the lantern project, there was a need for a larger scale solar power generation as well,” says FUKAYA. Moreover, the minister had expressed concern about the sustainability of the lantern project. “He pointed out that the lanterns supplied to the children could be stolen, broken, or sold to obtain daily food.”

Although it is important to adjust a project while ascertaining the needs of the loan recipients, a project’s social contribution must not be overlooked. In the case of the lantern project, more children will be able to attend elementary school.

According to HIRATO, “In the GOOD ON ROOFS project, the lanterns that the children take home would not only provide light for their homes but can also be used to recharge their parents’ cell phones. This gives parents an additional motivation to send their children to school.”

Recognizing the potential for social contribution via finance

This is a small project compared to other loans to African countries that have been handled by the Energy Solutions Finance Department. Nevertheless, with the growing global interest in ESG investment, and the movement to push socially significant projects such as in environmental conservation and education, “we became aware of JBIC’s potential in this field as well,” notes FUKAYA.

HIRATO, who handled the project on the ground, notes with pride that, “How serious the Benin government is about this can be seen from the fact that they opted for a loan, rather than aid or a yen loan. The fact that we could conduct discussions as equals should be mutually beneficial for further enhancing our bilateral relationship.”

The virtuous circle of social contribution through finance will continue to expand around the world as a means to support sustainable growth. HIRATO is also eagerly looking forward to JBIC, and herself as an employee, playing a role in supporting such activities.