Coalition organization rolls out $68m loan for Covid-hit African solar businesses

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Coalition organization rolls out $68m loan for Covid-hit African solar businesses

The outbreak of the Covid-19 pandemic swept across the globe leaving disruptions in its wake. Like many other industries, the solar energy sector did not escape unscathed. From broken supply chains, increased costs of solar components, enforced lockdowns have done much to cripple the energy access industry disproportionately affecting end users.

To support the industry’s progress towards SDG 7 (universal energy access), a coalition of committed global investors and donors have launched a Fund with a first close of $68 million and a target of over $80 million to protect energy access for about 20 million people in Sub-Saharan Africa and Asia.

The Energy Access Relief Fund (EARF) is a timely initiative that makes loan provision to more than 90 small to medium-sized off-grid companies that operated a viable business model before the onset of COVID-19. Provided by a group mobilized by Acumen, a U.S.-based philanthropic investor, the short-term loan will be managed by Social Investment Managers and Advisors.

“We are developing an ESG process that will provide a uniform and incremental approach to facilitate the adaptation of the ESG criteria. We are also developing technical assistance, particularly for the smaller borrowers to build up their capacities and to help the EARF meet its social objectives.

We have also implemented a gender lens into our investment approach, which is especially relevant in light of the outsized impact of COVID-19 on women,” said Michael Rauenhorst, Managing Partner at SIMA.

The EARF is the culmination of the efforts of a diverse group of investors including CDC, FMO, DFC, Green Climate Fund, Dutch development bank, FMO, Acumen, Shell Foundation, The Rockefeller Foundation, IKEA Foundation, USAID, UK Aid, IFC, World Bank and Swedish International Development Co-operation Agency (SIDA).

In spite of constrained budgets and investments risk, the investors have leveraged their collective resources to safeguard sector-wide impact and have played crucial support in overcoming several headwinds in closing the Fund, converting the possibility of EARF into a reality.

In a press statement announcing the Fund, Sam Parker, Shell Foundation director said that it is hoped that similar investors would take the cue because “much more capital will be needed in the coming months to continue progress toward universal energy access.”

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