While a handful of leading household solar enterprises in Africa have been successful, many solar-energy providers remain early-stage ventures. They struggle to access the financing and technical assistance they need to fuel initial growth, refine their business models, and achieve the initial markers of scale and sustainability that are needed to attract private financing.
A growing number of investors are looking to invest in solar enterprises. However, these investors often choose to focus on mature firms, leaving a “pioneer gap”– the gap in financial support between early-stage and more established ventures. At the same time, many lenders see solar investments as risky and not commercially viable. As a result, many early-stage firms in Africa are left without the funding that can help meet working capital needs and finance growth. Early-stage firms also struggle to find lenders willing to provide loans that meet their working capital needs and finance growth. Many lenders still see these investments as risky and do not have sufficient evidence that this market is commercially viable.
There is also a need to expand the geographic reach of the household solar market. Many enterprises are concentrated in a few markets such as Kenya and Tanzania with very little coverage in markets outside East Africa. Businesses seeking to expand to other countries with large populations living beyond the grid are faced with the challenges associated with entering a young market.
Partners can accelerate the growth of off-grid enterprises by providing financial and technical support. This support can help firms become investment ready, test new products and technologies, and expand geographically. Partners can catalyze private financing into off-grid enterprises and unlock debt financing by structuring transactions to share risks and attract new investors. In addition, they can support the efforts of investors, lenders, and other intermediaries who can directly support firms’ growth.
Scaling Off-Grid Energy works with partners to channel increased financial resources and technical assistance to early-stage firms to help them become investment ready. In addition, partners can provide funding to a wider set of both early stage and maturing firms to help them test new product lines or technological innovations, each new customer segments, or incentivize geographic expansion. We achieve this by:
Scaling Off-Grid Energy Enterprise Awards:
Through the Scaling Off-Grid Energy Enterprise Awards, we are providing seed funding to new start-ups, encouraging companies to expand geographically in Africa, test new business models and tap into private and public sources of finance.
Mobile for Development Utilities Fund: