Covid-19 reverses electricity access progress in Africa
Access to electricity across Africa is increasingly viewed as an impact “success story”. Testament to this claim: the number of people gaining access to electricity in Africa doubled from 9 million a year between 2000 and 2013 to 20 million people between 2014 and 2019, outpacing population growth. As a result, the number of people without access to electricity, which peaked at 610 million in 2013, declined progressively to around 580 million in 2019. Much of this recent dynamism comes from a small number of countries leading the progress, for example Kenya, Senegal, Rwanda, Ghana, and Ethiopia. However, the demonstration effect from scale and best practices achieved in these countries is arguably already spilling over into neighbouring countries in each region, for example through successful “PAYGO” (“pay as you go”) solar financing companies like BBOXX, M-Kopa and PEG Africa who have expanded their operations in recent years beyond their initial African home countries.
Despite the progress, Sub-Saharan Africa remains among the world’s most “unelectrified” regions, with a significant number of countries still with less than 50% of its population having access to electricity. Further, the health crisis and economic downturn caused by COVID-19 has stalled this progress in Africa, with shifting government priorities, supply chain disruptions and social distancing measures slowing access programmes and hindering initiatives that advance decentralised energy access. Initial estimates for 2020 indicate that the aggregate population of Sub-Saharan Africa without access to electricity could actually increase for the first time since 2013.
Mobilising capital from development finance institutions (“DFIs”) and donors therefore remains critical to ensuring that energy access progress continues. Verdant Capital’s Hybrid Fund seeks to use its investment as a way to “crowd in” DFI and impact investor senior debt at a time when mobilizing capital to ensure continued progress in energy access across the Continent is more important than ever. As part of its wider “financing inclusion” investment mandate, the Hybrid Fund will invest in a variety of specialist models for renewable energy, including companies financing climate change abatement, energy efficiency, and PAYGO solar financing companies as well as those providing solar solutions on a lease basis to SMEs. The Fund will also invest in specialized energy financing companies that focus on, for example, improved access to clean cooking, biomass-based electricity, solar-powered irrigation solutions for small-scale farmers, or micro-franchise models focusing on training and credit for local entrepreneurs.
Source: International Energy Agency