Commercial and Industrial Window

Private sector companies that are commercially active in the renewable energy market in Nigeria

To be eligible for funding, private sector companies must meet the following criteria:

• Request a grant within the stipulated range.
• Be legally registered and physically established in Nigeria as a for-profit company and must have operated for a period of no less than two (2) full accounting years at the time of application. Must not have received a grant within six (6) months before the application time.
• Be a registered (or willing to register before the start of the investment), private sector enterprise that is aligned with the focus value chains.
• Have been in operation for a minimum of two years, with the ability to produce two years of audited accounts.
• Passes AECF’s Know Your Customer), AMT/CFT (anti-money laundering and counter-financing of terrorism), PEP (politically exposed person) and IDD (integrity due diligence) screening, based on the information submitted as part of the concept note.
• Be able to show commitment to matching AECF funding based on the ratios stated in the matching contributions.
• Be compliant with fundamental laws and regulations in-country, including tax compliance laws.
• Be compliant with international human rights, labor standards, and environmental management laws.
• NOT be involved in any act of corruption. AECF requires that the applicant (including its staff, contractors, and suppliers) not be involved in offering third parties, or seeking, accepting, or being promised by third parties, for themselves or any other party any gift, remuneration, compensation, or benefit of any kind whatsoever, which could be interpreted as an illegal or corrupt practice.]
• NOT be associated with activities prohibited by the government of Sudan, terrorism, money laundering, or a list that prohibits trading with some businesses (IFC, USAID, UN, EU, and any other networks), United Nations Security Council resolutions issued under Chapter VII of the UN Charter. The screening will be conducted for all applicants and associated parties against provisions such as https://sanctionssearch.ofac.treas.gov/, worldbank.org/debarr, World-Check, EU sanctions list, etc
• NOT be a representative of a government or a semi-governmental agency of any sort. This includes government-owned or partially owned enterprises or companies that have ownership or substantial business ties with government or quasi-government bodies. Any subsequent identification of such links will lead to the immediate termination of the grant agreement.
• Allow regular due diligence

Eligible businesses must demonstrate that their offerings are accessible and affordable, directly benefit women and young women, and encourage the adoption of climate—and gender-appropriate technologies, products, or services.

Proposed initiatives can cover any part of the value chain but must demonstrate an ambition to address systemic challenges that keep women from more effectively engaging in agricultural markets to be eligible for funding.  Examples of business models that will be attractive include (but are not limited to):

• Market aggregators providing reliable and new market opportunities for women or women-owned enterprises to increase their profits and incomes.
• Information and media companies providing market information services to women and women-owned enterprises through traditional and digital platforms.
• Electronic/technology services (markets, finance, technology, and knowledge) linking value chain actors to the products and services of women-owned SMEs.
• Processors and/or manufacturing companies and/or market agents creating economic opportunities for women through employment creation and/or as suppliers of produce/services along the value chain and employees.
• Production and distribution models that support local entrepreneurship and growth of SMEs and women groups within the agricultural value chains in Kano.
• Business models that provide incentives for women to access and adopt improved use of environmentally friendly and climate-smart solutions and technologies.
• Business models that address climate-smart solutions and technologies at the household, production, transportation, and processing levels in value chains.
• Information Technology companies providing digital platforms to create linkages between actors across value chains for Access to Inputs, Access to Market and or Access to Finance.
• Solutions that have linkages to multiple layers of agricultural value chains.

 

The support package includes:

• Provision of grants
• Provision of targeted technical assistance on business development services as required by the investee.

Access to further funding through investment advisory and investment facilitation support.

Applicants are expected to submit a short funding application with their concept, justifying their requirements for the project to be funded, the funding amount, and the project duration.  Shortlisted applicants will be requested to submit a more comprehensive full proposal and business plan.

Funding must be additional – it must be used for a specific project, e.g., new C&I project, scaling up an existing project, or replication/expanding to a new market.

Investees can apply for a range of funding depending on their proposed project requirement:

• Minimum funding is EUR 100,000 while the maximum funding per investee is EUR 800,000.

Funding is subject to meeting the required level of match funding (see Matching Contribution). Businesses should apply for funding depending

on their project requirements and capacity to absorb funding for the proposed project. Funding will be in the form of non-repayable grants and will be disbursed in US dollars, Euros, and/or local currency equivalent.

Funding payments will be milestone-based, where disbursements are based on mutually agreed milestones that must be achieved/delivered. The first disbursement will not exceed 20% of the total amount awarded.

Funding payments for inventory may be disbursed in US dollars or Euro on behalf of businesses directly to suppliers. Operational Expenditure shall be disbursed in local currency equivalent.

Businesses are obliged to open bank accounts via an AECF local banking partner and provide invoices before each disbursement.

Duration of the funding agreement with investees: 12 months

Business models must demonstrate how they deliver and sustain social impact in their target markets. Specifically, this means the number of households served by the product, service or a combination of both, improvements in women’s income, inclusivity of women, stimulation of market growth, and engagement of women -owned/led micro, small and medium enterprises (MSMEs) in the target value chains of the SMEs.

Companies should articulate their strategy to meet the following:

• Include women, especially young women, in the management of the organization.
• Gender-inclusive practices in their operations (e.g., women-centered design and collection of gendered data).
• Demonstrable benefits to women in terms of increased time available for other activities, improved health, reduced drudgery, and increased household spending power.
• Women-led supply chains; demonstrate the engagement of women, especially young women, in micro and small enterprises as key actors within the supply chain and potential opportunities for such women-led micro-enterprises to grow into SMEs.
• Qualitative indicators around women empowerment (e.g., ability to own assets; access to credit, use of existing women development structures to increase access to climate-smart technologies in the rural and peri-urban communities).
• Demonstrate a clear end-user mechanism/ strategy that enables target communities with low/irregular incomes to access improved climate-smart technology, practices, and services.
• Projects must be environmentally friendly, with the promotion of climate smart solutions particularly encouraged. Environmental impact assessments and mitigation measures approved by pertinent regulatory authorities must be obtained where required.
• Throughout the funding life, companies must demonstrate that they promote sustainable development outcomes in their target communities and market.

Progress in attaining the above will be measured through:

• Number of new jobs created by the enterprise (60% being for women).
• The volume of products or services bought from women owned SMEs in CAN$ or USD equivalent.
• The volume of inputs and or services sold to women and women owned SMEs.
• Number of poor and vulnerable people reached through awareness programming on social norms, by-products, and services.
• Number of eligible women owned enterprises expanding their business

The ETCF requires a matching contribution from the applicant to demonstrate interest, commitment, and trust from the wider investor community. Acceptance of match funding is subject to approval by the Programme Manager. Proof of the availability of matched funding is required during the selection process and before any disbursement.

The match funding requirements are:

• Matching contribution: 100% of the requested amount (At least 80% in cash and 20% in-kind)

Applicants who cannot provide matching funding in cash are still encouraged to apply, justifying why they cannot provide it. Applicants who provide cash matching funds will be prioritized in the selection process. Matching contributions can be made either all in cash or a combination of ‘in cash’ and/or ‘in kind’ as highlighted below:

 

In cash

Where at least one party (e.g., venture capital firm, impact investor, incubator/accelerator, foundation, or the founder) agrees to provide funding to the applicant. Evidence accepted includes a signed MoU or contract, a bank statement, and a letter confirming the total amount disbursed or to be disbursed by the other party. The submitted documents to the Fund of matching commitments must include all conditions, timescales, and any other considerations.

Examples include:

• Investment funding (equity funding)
• Impact investment
• Crowd funding
• Grants (from foundations or NGOs).
• Internal resources such as loans from founders, family etc
• Loans from financial institutions

In-Kind

In-kind matching includes any significant and quantifiable contribution to the project that is not financial. Applicants must quantify and demonstrate what results in any match given in kind will achieve for the proposed project.

In cases where in-kind matching is offered, the Fund will discuss with the applicant how best to agree on the match funding commitment and valuation. For example, a contractual agreement of support from a local incubator (providing the equivalent monetary value of the service).

Examples include:

• Use of goods, services, and facilities (such as software, real estate)
• Founders time
• Management time
• Provision and access to equipment.
• Special materials
• Technical assistance

This section defines the basis of making funding decisions. The AECF investment principles will guide the investment decisions. These principles shall be applied in evaluating project ideas and making final award decisions.

Investment Principles

1. Private sector demand-driven: ETCF is demand-driven and harnesses private sector initiative and implementation capacity to achieve economic and social outcomes.
2. Systemic Change: the funded projects must illustrate the potential for economic and social impact beyond their immediate Project impact, which will change the way the market works.
3. Address Market Failure or otherwise demonstrate additionality: The ETCF funds projects are constrained by market failure for access to finance within the context of the specific markets within which they are to be implemented.
4. Risk sharing: ETCF shares risk with private firms. The underlying principle is that the fund recipients have more risk in the venture than in the Programme. For practical purposes, recipient companies make financial contributions to the projects/businesses funded by the Programme as this maximizes resource mobilization and applicant commitment to successful implementation. Companies’ financial and in-kind contributions can be in the form of equity finance (external or shareholder equity injections), commercial or concessionary loans, and/or grants from other funding sources.
5. Competition: The ETCF application process and term sheets are available in the public domain to ensure that all eligible organizations have equal opportunity to compete for the available funds and ensure transparency.
6. Portfolio approach: The ETCF seeks to build a portfolio of investments that is diversified in terms of risk, sector distribution, and economic, social, and market impact.
7. Additionality, the funded projects seek to create social and economic benefits that would not have been attained without this support. Therefore, funded projects should clearly outline the additionality of the funding provided.

 

While we recognize that additionality is context-specific (e.g., geography, sector, etc.), below is a description of different types of additionalities: Faster: The company could be expected to invest in other sources in several years to come, meaning the development impact is delayed or lost. ETCF can be used to enable the proposed investment/business to launch sooner, create transformational changes quickly, and expose the business to attract additional investments. Bigger: The company could be expected to invest in other sources, but it would not be as large as ETCF funding, thus enabling scaling multiples of the development impact and market systems development. Wider scope: The company could be expected to invest in other sources, but AECF resources will enable it to expand the scope of the goods or services geographically or to different groups of beneficiaries to multiply the development impact, participation, and recognition of effort into its development. More inclusive: The company will be able to access people closer to the bottom of the pyramid than it would otherwise, enhancing the benefit of Women and youth. Women tend to be difficult and expensive to reach, requiring physical networks, smaller packages of goods with smaller profit margins (or none), longer repayment terms, actualized by irregular payment patterns, and/ or susceptible to greater payment default. Applicants/ companies should be able to demonstrate how ETCF funds will be used to cushion their businesses from such operating environment risks.

If selected, applicants must be committed to:

• Collaborate with AECF to finalize contract milestones and Key Performance Indicators. Indicators and milestones are agreed upon with AECF before signing the contract.
• Share data, including performance against indicators and milestones. All data will be treated confidentially unless otherwise agreed in advance.
• Gather, analyze, and share learnings from the project with AECF.
• Report according to agreed schedules and the requirements of AECF.
• Participate in AECF annual programme reviews.
• Ensure financial data and other management systems are accessible for audit purposes upon request.