Written By: Faith Jemosop
On July 14, 2025, the Board of Directors of the African Development Bank (AfDB) approved €173.84 million for the Rwanda Energy Sector Result‑Based Financing II (RBF II) program, aimed at accelerating Rwanda’s goal of universal energy access .
Key Funding Details
- Primary financing: €173.84 million from AfDB.
- Co‑financier: Asian Infrastructure Investment Bank (AIIB), contributing €86.92 million.
- Total program cost: €260.76 million, combining both contributions
Strategic Objectives & Outputs
- Modernizing Rwanda’s grid infrastructure, including substations and transmission systems.
- Expanding electricity access:
- Connecting 200,000 households and 850 productive‑use customers to the national grid.
- Delivering 50,000 off‑grid connections.
- Distributing clean cooking devices to 100,000 households and 310 public institutions.
- Installing street lighting along 200 km of roads in secondary cities across the country .
- Building institutional capacity: Enhancing technical and operational ability of Rwanda’s energy sector institutions.
Why It Matters
- Aligns with Rwanda’s Energy Sector Strategic Plan (ESSP II 2024–2029), which emphasizes performance‑based financing to close infrastructure gaps and enhance service delivery .
- It’s the second RBF operation in Rwanda; the first was in September 2018, a US $305 million energy result‑based program .
- Contributes to two of AfDB’s “High‑5” priorities: “Light up and Power Africa” and “Improve Quality of Life for People of Africa” .
Background
Past Support and Progress
- In April 2022, AfDB approved US $180 million (≈ €160 million) through sovereign loans to co‑finance the Transmission System Reinforcement and Last‑Mile Connectivity project, which built over 1,000 km of medium‑voltage lines, 3,300 km of low‑voltage lines, 137 km of high‑voltage line, and six new substations. This connected 77,470 households, 75 schools, eight health centers, and 65 administration centres to the grid .
- Earlier in May 2021, a combination of US $84.2 million in loan and grant from the African Development Fund supported electrification of nearly 80,000 rural households in southern Rwanda, covering six districts and reinforcing distribution networks .
The Bigger Programmatic Picture
- These initiatives are part of the Rwanda Universal Energy Access Program (RUEAP), a multi‑donor effort co‑financed by institutions including the World Bank, OPEC Fund, Saudi Fund, AFD, EIB, and AfDB. Together they aimed to mobilize ≈ US $670 million and achieve 100% electrification by 2024 .
- By March 2022, AfDB had committed over US $1.4 billion to Rwanda, with approximately US $498 million dedicated to energy projects .
Why Result‑Based Financing Is Effective
- RBF ties disbursements to measurable delivery milestones, encouraging better accountability and alignment with government priorities. Rwanda’s track record with RBF since its first energy operation in 2018 has shown success in both execution and performance outcomes .
- The funding approach ensures that investments are directed toward actual infrastructure development, household connections, and institutional strengthening, not just planning or preparatory costs.
Expected Impact on Rwandan Households & Economy
- 200,000 additional homes will gain grid electricity, enabling lighting, refrigeration, digital access, and productive home-based enterprises.
- 850 productive-use customers such as agro-processing, bakeries, and small factories, will connect to reliable electricity, boosting job creation and value chains.
- 50,000 off-grid solar or mini-grid connections will serve communities beyond existing infrastructure, especially in remote or underserved areas.
- Grants for clean cooking devices to 100,000 households and 310 institutions will reduce indoor air pollution and hardships, aligning energy access with health and environmental goals.
- Street lighting installations across 200 km of urban roads will improve safety, extend commercial hours in secondary towns, and support local economic activity.
- Institutional strengthening efforts will reinforce the ability of Rwanda Energy Group and associated bodies to plan, monitor, and sustain energy infrastructure beyond donor-funded projects.
Also read: Why AIIM Exited Three Major South African Renewable Energy Projects
The financing marks a new chapter for supporting universal access beyond the original 2024 target date. While Rwanda aimed for 100% electricity access by 2024, the RBF II program was approved in mid‑2025, implying ongoing efforts to close remaining gaps and support off-grid coverage .
The investment reinforces Rwanda’s model of leveraging mixed on-grid/off-grid approaches, combining centralized grid expansions with off-grid solar and clean cooking strategies to reach universal access efficiently.
Challenges and Considerations
- Implementation capacity: Is the institutional and technical capacity in Rwanda sufficient to deliver at scale? The program includes dedicated capacity‑building funding, but it must be sustained to avoid bottlenecks.
- Sustainability and affordability: Beyond the installation, ensuring households can afford electricity tariffs, especially for productive uses, remains crucial.
- Maintenance of infrastructure: Expanding networks is one challenge; maintaining voltage stability, minimizing losses, and avoiding frequent outages is another. Proper maintenance planning is central to long-term value.
- Coordination with other donors: With multiple actors (World Bank, AIIB, EIB, AFD) involved in parallel financing, coherent coordination and harmonized conditionality will be essential for project synergy.
What to Watch
- Disbursement milestones and progress reports: Whether the RBF II program hits its targets on schedule, 200,000 grid connections, 50,000 off-grid connections, etc.
- Household energy impact surveys: Data on improved living standards, income-generating activities, and health outcomes tied to energy access will highlight broader developmental returns.
- Institutional reforms: Enhancements in sector governance, service delivery efficiency, and data-driven monitoring will indicate long-term sustainability.
- Expansion beyond 2025: Since universal access remains a long-term target, further phases or complementary programs may be needed to ensure remote and vulnerable communities are not left behind.
