AECF launches a £16 million Competition to fund businesses promoting Household Solar Systems to Rural Markets in sub-Saharan Africa
Addis Abba, April 3, 2019-The Africa Enterprise Challenge Fund (AECF) in partnership with United Kingdom Government has launched the Household Solar Round 2 competition worth £ 16 million. The competition seeks to accelerate access to transformative solar home systems to the rural poor households in Ethiopia, Somalia, Ghana, Nigeria, and Senegal.
1 in 7 people live in energy poverty and are forced to light and power their lives with candles, kerosene and batteries. “The increasing demand for electricity, high cost of power generation and limited supply of electricity to rural areas in sub-Saharan African is a narrative that constantly repeats its self across the continent,” said Dr. Christian Rogg, Head of Office, DFID Ethiopia. “Although the situation persists, initiatives promoting household solar systems through the private sector have started to offer affordable solutions to rural communities for lighting and economic use.”
In Ethiopia, approximately 11 million rural households do not have access to electricity, making the off-grid market attractive for private sector.
In his speech, H. E. Dr. Frehiwot Woldehanna, State Minister of Water, Irrigation and Electricity, said, “We are committed to working with AECF and DFID to support companies provide access to electricity to our rural populations. Rapid growth and transformational development requires reliable energy production, supply and efficiency. Without adequate and reliable supply of energy, no industrialization, agricultural value additions, job creation, economic and sustainable growth are achievable.”
REACT Household Solar-Round Two funding will provide a mix of interest free loans, repayable grants and technical assistance to the private sector. As a critical component of Africa Clean Energy (ACE) Programme, the competition seeks to increase the supply of household systems to rural markets at affordable costs, facilitated through innovative financing models, operating and distribution models such as PAYGO and micro-financed interventions.
“Renewables provide just 18% of Africa’s current power generating capacity, therefore developing off-grid alternatives could create many more opportunities and transform millions of lives. Solar home systems are a simple solution that do not appear in the macro-economic statistics yet they have the ability to transform the lives of millions of school children,” Daniel Ohonde, CEO, The AECF.Over the past seven years AECF has funded private sector companies that take advantage of market drivers like mobile network and data services, mobile payment systems, growing micro- finance networks and an appreciation of social collateral to accelerate access to solar home systems in rural sub-Saharan Africa.
“With REACT Household Solar Round One investing a total of US $7 million in 10 companies spread across 4 countries, the additional funding for Round Two will enable AECF to continue investing in private sector companies to deliver business models which accelerate access to transformative solar home systems to rural markets in sub Saharan Africa,” Daniel Ohonde, CEO, AECF.
About UK Aid
UK aid is official development assistance provided on behalf of the UK government. The Department for International Development (DFID) leads the UK’s work to end extreme poverty and works to build a safer, healthier, more prosperous world for people in developing countries and in the UK. DFID is supporting the REACT Household Solar Round 2 competition as part of its broader Africa Clean Energy (ACE) programme. ACE aims to increase access to clean, affordable energy for low-income households in Sub Saharan Africa by providing up to £44 million to promote a market-based approach for solar home system products and services through: i) supporting early stage household solar businesses via REACT Household Solar, implemented by AECF; ii) technical assistance to improve the solar home system enabling environment, implemented by Coffey International; and iii) quality assurance to ensure consumers have access to high quality solar products, implemented through the IFC’s Lighting Africa. The ACE programme started in 2017 and runs until 2022.
About the AECF
AECF is a US $356 million development institution that works in agribusiness and renewable energy sector with the private sector on a risk sharing basis across 26 African countries to reduce poverty. It provides catalytic funding as grants or interest free loans to businesses that have a positive impact on the rural poor in sub-Saharan Africa. With the vision to build a “Prosperous and Enterprising Rural Africa”, the AECF has supported 267 businesses in Africa and impacted the lives of 19 million people through jobs and increased household incomes, generating a total net development impact of US$ 354 million in 2018 alone – reaching cumulative impact of US$ 1 billion and leveraging over US$ 658 million in matching funds from the private sector (attracted US$ 5 for every US$ 1 invested). AECF is supported by Australia, Canada, Denmark, The Netherlands, Sweden and United Kingdom governments, international financial institutions, Consultative Group to Assist the Poor (CGAP) and IFAD. For more information visit www.aecfafrica.org
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